EB-5 TEA areas: reserved visas, rural TEA and high unemployment TEA

The EB-5 TEA area is one of the key concepts determining the minimum investment and the speed of receiving a visa on the United States immigrant investor programme. Since theEB-5 Reform and Integrity Act 2022 (RIA)took effect on 15/03/2022, the TEA mechanism has been restructured with its own visa quota allocation.

Understanding the EB-5 TEA area and the reserved visa mechanism helps investors choose the right project to optimise both the investment and the time to a green card. This article analyses the three kinds of TEA and how to verify TEA status before investing.

What is an EB-5 TEA area?

The EB-5 TEA area (Targeted Employment Area) is the legal concept for geographical areas in the United States with particular economic characteristics into which Congress wishes to attract foreign investment. Under the RIA, TEA areas divide into three kinds: rural areas (Rural TEA), high unemployment areas (High Unemployment TEA) and infrastructure areas (Infrastructure TEA).

The most important difference between a project in an EB-5 TEA area and one outside a TEA is the minimum investment. A TEA project requires only USD 800,000, while a non-TEA project requires USD 1,050,000. The USD 250,000 difference per investment unit is the main reason more than 95% ofVisa EB-5projects today try to meet the TEA conditions.

Besides the lower investment, TEA projects also benefit from the reserved visa mechanism with their own quota not subject to general competition. This mechanism is particularly valuable to investors from countries with high EB-5 demand such as China, India and Vietnam. For an overview of how to choose a safe EB-5 project, see the articleWhat an EB-5 project is: 7 criteria for choosing a safe and reputable EB-5 project.

The three kinds of EB-5 TEA area under the RIA 2022

The RIA restructured the TEA system into three kinds with specific defining criteria and different visa quotas.

Rural areas (Rural TEA)

A rural area is defined as one lying outside any Metropolitan Statistical Area (MSA) and outside the boundary of any city or town with a population of 20,000 or more. MSA boundaries are set by the United States Office of Management and Budget (OMB), while city boundaries follow the most recent United States Census Bureau data.

EB-5 projects in rural areas receive the greatest advantages of the three kinds of TEA. Besides the USD 800,000 investment level, rural projects receive 20% of the annual EB-5 visa quota, equivalent to around 2,000 visas a year out of 10,000 EB-5 visas in total. The I-526E for a rural project is also given priority processing by USCIS ahead of other kinds of project.

The risk with rural projects is that business viability is usually lower than for urban projects. Rural areas have low population density, few tourists and a limited customer base. Investors need to screen the end market particularly carefully; for example, a rural hotel project needs a steady flow of guests from eco-tourism or local industry.

High unemployment areas (High Unemployment TEA)

A high unemployment area is one with an unemployment rate of at least 150% of the United States national average. For example, where the national average is 4.0%, a high unemployment area must have a rate of at least 6.0%. This rate is calculated from data from theUnited States Bureau of Labor Statistics (BLS)or the American Community Survey (ACS).

An important point is that a high unemployment area may be created by combining adjacent census tracts with differing unemployment rates. This allows a project in a prime location in a major city centre still to qualify as a TEA where combined with a neighbouring census tract with high unemployment. However, the RIA tightened the rules on combining tracts, requiring them to be geographically adjacent.

Projects in high unemployment areas receive 10% of the annual EB-5 visa quota, around 1,000 visas a year. Although the concession is smaller than for rural projects, the ability to choose a project in a major city such as New York, Los Angeles or Miami remains very attractive to investors wanting to live in a developed city.

Infrastructure areas (Infrastructure TEA)

The infrastructure area is a new concept introduced by the RIA, applying to public infrastructure development projects administered by a federal, state or local agency. These projects are usually bridges, roads, airports, ports, or water or electricity systems part-funded by EB-5 capital.

Infrastructure projects receive 2% of the annual EB-5 visa quota, around 200 visas a year. In practice, the number of infrastructure projects approved by USCIS is very limited because of the complexity of the funding model and the need to coordinate with government agencies.

The reserved visa mechanism — the breakthrough of the RIA 2022

Before the RIA took effect, all EB-5 projects competed within the same visa quota, leading to waiting lists of many years for investors from high-demand countries. The RIA restructured the system by reserving 32% of the annual EB-5 visa quota for TEA projects.

The reserved visa allocation under the RIA

Of the around 10,000 EB-5 visas the United States issues each year, the RIA allocates them as follows:

• 20% for rural projects (Rural TEA) — equivalent to 2,000 visas a year
• 10% for high unemployment projects (High Unemployment TEA) — equivalent to 1,000 visas a year
• 2% for infrastructure projects (Infrastructure TEA) — equivalent to 200 visas a year
• The remaining 68% areUnreserved Visa, for all other kinds of EB-5 project

Reserved visas are allocated independently for each kind of TEA, and do not compete with unreserved visas or with the other kinds of TEA. An investor choosing a rural project therefore competes only with other investors who have also chosen rural projects.

The carryover visa mechanism

Where in a financial year the reserved visas for one kind of TEA are not fully used, the unused visas carry over to the following year and remain reserved for that kind of TEA. Where they remain unused after 2 consecutive years, the surplus visas then become unreserved visas.

This mechanism ensures TEA areas always have enough visas to attract investors, even where demand fluctuates over time. For investors, it means that investing in a TEA project almost never runs into a visa quota shortage in the short term.

The benefits of the EB-5 TEA area for Vietnamese investors

On the figures published monthly in theUnited States Department of State Visa Bulletin, Vietnam is among the countries with high EB-5 application numbers. Vietnamese investors may face a fairly long visa waiting list where they choose an unreserved project.

The priority date and the visa wait

The United States Department of State issues the Visa Bulletin monthly to publish the current priority date for each visa category and each country. For EB-5, the priority date is the date the I-526E was filed. Investors can only take the next steps once their priority date matches or precedes the current priority date in the Visa Bulletin.

For investors choosing a project in an EB-5 TEA area with reserved visas, the priority date is usually always current. This means there is no waiting list and the next steps can be taken as soon as the I-526E is approved.

Concurrent filing — filing the I-526E and I-485 together

For investors already lawfully present in the United States on a non-immigrant visa (B-1/B-2, F-1, H-1B), where they choose a TEA project with a current reserved visa, they may file the I-526E andI-485together from the outset. This mechanism allows the investor to receive a 2-year conditionalUnited States Permanent Resident Card (green card)as soon as the I-526E is approved.

Concurrent filing brings several parallel benefits. While awaiting approval of the I-485, the investor may apply for a temporary work permit (EAD) and advance parole (AP) to work lawfully in the United States and travel in and out freely.

How to verify an EB-5 TEA area before investing

When considering an EB-5 project, investors should not take the project marketing claims on trust but should ask for independent TEA verification documents.

The TEA letter from an economic analysis firm

The TEA Letter is a document issued by a reputable independent economic analysis firm confirming that the project area fully meets the criteria under the RIA. The reputable firms in this field comprise Vermilion Consulting, Impact DataSource, Evans Carroll & Associates, and Baker Tilly.

A TEA letter must contain the following information:

• The specific kind of TEA (Rural, High Unemployment or Infrastructure)
• The exact census tract or geographical area
• The statistical data underlying the TEA determination (BLS LAUS or ACS)
• The specific unemployment rate for the area (where it is a High Unemployment TEA)
• The date of issue and period of validity (usually 2 years)
• The signature of the economist responsible

Checking the validity date

A TEA letter has a limited period of validity, usually 2 years from the date of issue. Where an investor files theI-526Eafter the TEA letter has expired,United States Citizenship and Immigration Services (USCIS)may require an updated letter, which may cause delay or change the project’s TEA status.

Preparing the TEA Letter and the I-956F file is the responsibility of the Regional Center sponsoring the project. The details of a Regional Center’s role and the criteria for choosing one are analysed in the articleWhat an EB-5 Regional Center is: criteria for choosing a reputable regional centre.

Updated reference data

The statistical data from the BLS and the Census Bureau is updated periodically, so a TEA area may change with new data. An area that is a TEA in 2024 may no longer be one in 2026 through local economic improvement. However, once an investor has filed the I-526E while the area was still a TEA, USCIS continues to recognise TEA status through to the end of the assessment.

A quick comparison of the three kinds of EB-5 TEA area

Kind of TEA	Visa quota	Investment	Characteristics
Rural TEA	20% (~2,000 visas a year)	$800,000 USD	Priority processing, lower business viability
High Unemployment TEA	10% (~1,000 visas a year)	$800,000 USD	Allows projects in major cities
Infrastructure TEA	2% (~200 visas a year)	$800,000 USD	Few projects, complex structure
Non-TEA	Shared with all	$1,050,000 USD	No reserved visas

Summary

The EB-5 TEA area and the reserved visa mechanism are two of the most important factors shaping modern EB-5 investment strategy since the RIA 2022 took effect. For Vietnamese investors, choosing a TEA project not only saves USD 250,000 in capital but considerably shortens the time to a green card thanks to the reserved visas.

Of the three kinds of TEA, rural projects bring the greatest advantages in quota and processing speed, but demand careful screening of business viability. High unemployment projects balance the concessions with the ability to choose a location in a major city. Infrastructure projects are a special option available in limited numbers.

Before investing, investors should ask for a TEA verification letter from an independent economic analysis firm, check the validity date and cross-check the data against the official sources from the BLS and the Census Bureau. Alongside this, preparing the documentation proving the lawful source of funds from Vietnam is a stage needing close attention. Full guidance is in the articleProving the source of EB-5 funds: SOF and POF guidance for Vietnamese investors.