EB-5 TEA Trends due to COVID-19

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When using typical methods of TEA calculation, changes in local and national unemployment rates caused by COVID-19 will not be immediately captured in TEA data. However, the April 2020 labor force numbers at the county-level have been released, allowing us to start analyzing TEA trends due to COVID-19.

Before we dig in, recall that American Community Survey (ACS) data won’t begin to reflect COVID-19 impacts until December 2021. ACS is the only source of tract level data, and when the December 2021 release occurs, the year 2020 will only be one year out of five in the data collection period, blunting the unemployment impacts of COVID-19. So, in short, if you have a location that currently qualifies as a TEA using ACS data and you have investors that will be ready to file relatively soon, you don’t need to worry about COVID-19 impacts.

Similarly, if you have a location that qualifies under the typical census-share method (but not an ACS-only method), you won’t need to worry about COVID-19 impacts until April of 2021. Census-share is not as stable as the ACS-only method, as it incorporates COVID-19 impacts sooner.

However, if you are just beginning to look into EB-5 for a project, then you may want to start analyzing COVID-19 impacts. To assist with the new TEA uncertainty due to COVID-19, please see tea.impactdatasource.com which will analyze a project location under current/typical TEA calculations, and also provide a trend analysis incorporating the most recent months of labor force data.

April 2020 Data Trends

Under typical census-share (such as the states used to use), county-level data from a calendar year is used to complete the TEA calculation, which is why impacts from COVID-19 would not show up until April 2021, when calendar year 2020 data is finalized. However, BLS releases county-level data on a monthly basis. So, we can look at different “rolling” periods, instead of the calendar year, to see how COVID-19 is impacting TEA calculations.

The table below demonstrates what percentage of total Metropolitan Statistical Area (MSA) tracts qualify as a single tract (without needing any aggregation) under different time periods. As a disclaimer, the results below do not take into the account the “directly adjacent” possibilities and so the information below does not encompass all the possibilities of how a census tract can qualify under the new rules. However, analyzing the single tracts that qualify on their own will give us insight on general COVID-19 impacts.

Census-Share Calculations over Different Time Periods

As shown in the first row, the total number of single census tracts that qualify on their own is relatively stable when analyzing the different time periods (hovering around 19% to 21%). However, as April 2020 (the first month to reflect the full impacts of COVID-19) takes up more of the overall calculation, that stability is diminishing (many more single tracts are being added and dropped from qualification). When compared to Calendar Year 2019, the 12-month period of May 2019 to April 2020, yielded only 8.7% newly added qualifying tracts. However, when isolating April 2020 on its own, the total number of newly added qualifying tracts jumps to 23.3% (a similar percentage was dropped from qualifying). Intuitively this adding/dropping of qualifying tracts makes sense, as COVID-19 is having drastically different impacts throughout the country.

In summary, a TEA calculation does not have to incorporate COVID-19 impacts immediately. However, depending on where you are at in the EB-5 timeline, it might be beneficial to continue to take stock of these trends as the impacts of the pandemic work their way in and out of the labor force statistics.


About The Author

Michael Kester is an economist.


The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.