Location of Lake Point Projects Will Continue to Qualify as TEA

Will the location of AVS EB-5 Projects’ continue to qualify as a “Targeted Employment Areas” and be eligible for the minimum threshold for investment based on the proposed regulations? 

Invest in the USA (IIUSA) released a report on April 20, 2017, evaluating ‘How TEA policy proposals will shape the future landscape of the EB‐5 Regional Center Program. The results are compelling and comprehensive, demonstrating how different approaches would affect stakeholders, projects, geographies, and metropolitan areas throughout the U.S.’

IIUSA’s Executive Summary concluded that:

• Under the proposed TEA methodology limiting gerrymandering, only 41% of the 589 EB‐5 project samples analyzed at this report will qualify as a TEA project;
• When considering areas in severe economic distress only 8% of projects in sample would qualify as a TEA
• For projects located in Metropolitan Statistical Areas (Urban Areas), on average, 20% would independently qualify as a TEA under the Contiguous and Adjacent methodology

In order to qualify for the minimum investment threshold, EB-5 Projects and Regional Centers may need to meet the Economically Highly Distressed Area Definition:

• Poverty rate greater than 30%;
• Median family income (MFI) does not exceed 60% of statewide equivalent MFI or MSA-wide MFI;
• Unemployment rate which is at least 1.5 times the national average.

Are the Lake Point Projects located in an Economically Distressed Area?

• YES. Lake Point Projects’ census tract is in the highest category of economic distress.

In order to qualify for the minimum investment threshold, EB-5 Projects and Regional Centers may need to meet the Contiguous and Adjacent Methodology Definition:

• The project must be conducting business in a census tract or adjoining census tracts where the average unemployment rate at least 150% of the national average.
• Future weighted average methodologies, including gerrymandering, will likely be discontinued.

Do the Lake Point Projects meet this definition?

• Yes! Lake Point is located in a “True TEA” and no Gerrymandering or other methodologies were utilized to define the projects census tract, therefore none of these policy changes will impact the project’s qualification as a TEA. The Lake Point Projects are in Census Tract 18.02. AVS annually re-certifies its TEA designation.

In order to qualify for the minimum investment threshold, EB-5 Projects and Regional Centers may need to meet the New Market Tax Credit Criteria:

• Poverty rate greater than 25%;
• Median family income (MFI) does not exceed 70% of statewide equivalent MFI or MSA-wide MFI;
• Unemployment rate, which is at least 1.25 times the national average.

Do the Lake Point Projects meet this definition?

• Yes! The Lake Point Projects’ census tract is located in the highest category of the New Market Tax Criteria. In fact, in 2010, the Lake Point mining project was awarded $56 Million in New Market Tax Credits, which was the largest grant ever issued in Florida.

So to conclude, we are happy to answer the most important question of all: Will Lake Point’s TEA status remain even if all the proposed regulations are passed?

• The answer is a resounding: Yes! Lake Point is located in a True TEA and an economically distressed area, so it qualifies as a TEA even under the new proposed rules.

Tags: EB-5, EB-5 Changes, EB-5 Law Update, IIUSA Report, Lake Point, TEA