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