A N A L Y Z I N G
B I L L
S . 1 5 0 1
TEA Definition in the
Leahy-Grassley Proposal
Would Severely Hinder
Potential EB-5 Projects
by Michael Kester
Introduced to the U.S. Senate on June 3,
2015, Bill S. 1501 would reauthorize the EB-5
Regional Center Program for five more years
while making many other significant changes
to the existing program. Co-sponsored by
Senators Patrick Leahy of Vermont and Chuck
Grassley of Iowa, the bill represents a bipartisan
attempt to renew and revise the program.
While the bill does adequately address some
concerns about the program, several aspects
are unclear and controversial.
One of the many changes included in the proposed bill is
limiting a high unemployment Targeted Employment Area
(TEA) to a single census tract1—a severe detraction from
current policy that is over-limiting and that would likely prove
detrimental to the program.
In S. 1501, the definition of a high unemployment area
would be changed to mean “an area, using the most recent
census data available, consisting of a census tract that has an
unemployment rate that is at least 150 percent of the national
average unemployment rate.”2
This limiting policy could severely hinder many potential
projects and investments, which would otherwise have positive
impacts on the labor force in areas of high unemployment.
50
Current Policy Related to TEA Boundaries
Currently, USCIS defers to each individual state on the
certification of TEA shape and boundaries, which allows the
unique needs of different areas to be addressed. States, metropolitan statistical areas (MSAs), counties, cities, and census
block groups are all currently eligible as general boundaries for
high unemployment TEAs. Census tracts and block groups are
allowed to be combined, as long as they are contiguous, in the
creation of high-unemployment TEAs; the state authorities
determine how and if the combination of these subareas may
be certified.
The May 30th Policy Memo from USCIS clearly gives authority to the states on this matter, stating that, “[c]onsistent
with the regulations, USCIS defers to state determinations of
the appropriate boundaries of a geographic or political subdivision that constitutes the targeted employment area.”3 This
authority equips states with the flexibility necessary to address
their respective needs.
However, some have grown concerned with the flexibility the
states have been afforded. Critics of the EB-5 program’s current
TEA policy believe this flexibility has lead to “gerrymandering,”
and some believe that a limit on the number of tracts for high
unemployment areas would prevent such “exploitation.” As such,
the idea of an arbitrary across-the-board limit on the number of
contiguous census tracts allowed in the construction of a TEA
gained traction over the past few months; in April, Secretary of
Homeland Security Jeh Johnson proposed such a limit in his
letter to Senators Grassley and Leahy.4
EB5 INVESTORS MAGAZINE