Bloggings On EB-5

by EB5Investors Staff

California Announces Special TEA Designation Process for EB-5 Investment

The Office of Business and Economic Development at the California Governor’s Office, otherwise known as GoBiz, announced on Monday, May 6, that the state of California is offering a new form of applying for TEA designation for projects wishing to raise EB-5 investment. TEA designation, or Targeted Employment Area, is given to areas that are rural or have an unemployment rate of at least 150% of the national average in the United States.

Not securing TEA designation can be highly damaging to projects. Without TEA designation, EB-5 investors will be required to place $1 million into a U.S. business (versus the $500,000 required if the investment is made into a TEA) and it will be much more difficult for the project to secure EB-5 funding.

Earlier this week, an open conference call for stakeholders was held by the Deputy Director, Paul Oliva, of International Affairs and Business Development at the GoBiz, to confer on the Special TEA designation process that California is implementing.

The Special TEA application process is effective beginning May 1, 2013, and is supplemental to the existing designation of individual census tracts, rural areas, counties and cities. Under the new system, a project that does not qualify for TEA designation may apply if it is surrounded by twelve or fewer contiguous census tracts with an unemployment rate of 150% the national average.

Before April 2012, the State of California permitted TEA classification in specific geographic zones, such as those defined as enterprise areas, but GoBiz found the process to be too troublesome and took up too much time. Until May 6, California businesses wishing to use EB-5 capital could only acquire TEA designation in different census tracts, towns, cities, counties, metropolitan statistical areas (MSA), census designated places (CDP) and rural zones meeting the unemployment requirement. If the project did not meet these criteria, the State of California did not approve TEA designation, regardless of whether or not the area around the planned project location met the requirements. Meanwhile, other states have been known to allow different combinations of adjoining census tracts and the required unemployment rate, as long as it meets 150% of the national unemployment average. California opted to streamline TEA designation and reduce workloads.

Under this new application system, EB-5 projects can apply for a custom TEA certification. In order to apply, a map of the project address and a table detailing each census tract and the respective unemployment rate must be submitted. In addition, applicants must submit a letter supporting the EB-5 project from the Economic Development Corporation (EDC) in the city or county where the project is planned to be established. The Governor’s Office will provide a template for the letter; the letter must show support and agreement that the census tracts will be a source of workforce in the project. In this manner, local communities may submit input on how they will be affected by the project and this process will deter arbitrary TEA designation.

The new process for TEA designation in California is expected to increase EB-5 capital funding for hotel and other projects in the state. These projects will create jobs for U.S. workers, at no cost to U.S. tax payers. To learn more about the EB-5 Immigrant Investor Program, visit

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