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the metro area, or one-quarter or more of its employment is
composed of workers who live in central counties. However,
this inclusion would enable far more abuse of the TEA process
than anything currently possible through gerrymandering. This
would automatically grant full TEA status for 450 non-rural
counties all across the country, many of which have low levels
of unemployment. These counties are all parts of MSAs and
have strong social and economic ties to the central county
based on commuting patterns and employment. In many of
these counties there are a very limited number of census tracts
(if any at all) that have qualifying rates and even if it were to
be allowed, blatant gerrymandering extending through many
distant counties could not get such areas qualified as a TEA.
Yet, Senators Grassley and Leahy, along with many others, who
are so concerned about allowing an urban TEA when the high
unemployment areas may be a few miles (or sometimes even
less) away from a project area, apparently have no concerns
about allowing TEAs in these non-rural areas with low
unemployment rates.
the case with many previously designated TEA projects in Los
Angeles, Riverside, and San Bernardino counties).
This ‘outlying county’ concept was inserted to gain TEA
status for any county within an MSA that may potentially have
a rural component. There are legitimate rural type areas within
these counties; however, why game the system and open up the
EB-5 program to exploitation just to grant TEA status to a few
chosen areas within these counties that may be rural in nature?
A much more effective, fair, and simple approach to expanding
rural TEA opportunities within MSAs would be to grant rural
TEA status to all census tracts not within an urbanized area
of 50,000 or more population, as defined by the most recent
decennial census data, if the individual census tract meets
a predetermined minimum size and maximum population
density criteria.
Conclusion
The TEA provisions in Grassley-Leahy are clearly flawed, but if
those in the industry work together there is no reason that we
can’t achieve positive reform. With different interests at stake
and the urban-rural divide, it is foolish to believe that everyone
will be in complete agreement with any proposal, but the final
provisions do need to be fair to all. The EB-5 program was
created to bring private foreign investment into the United
States and to create jobs. Rural counties already receive what
some may consider an unfair advantage by getting automatic
TEA status, and rural states have the lowest unemployment
rates in the nation. As one example, Vermont, which already
receives full TEA status for 11 of its 14 counties, would now
increase that number to 13 counties under the ‘outlying
county’ concept as it would gain full TEA status for Franklin
and Grande Isle counties with respective 2015 annual average
unemployment rates of 3.7 percent and 4.1 percent. I have
proposed some suggested language for high unemployment
and rural definitions that tighten up the high unemployment
definitions and expand the definition of rural. This could be
used as a starting point for discussion on achieving a balanced
TEA reform.
TEA and Non-TEA Investment Amounts
Should Rise Together
Why raise the TEA investment from $500,000 to $800,000
while keeping the non-TEA amount at $1 million? I agree that
the amount needs to be raised, but shouldn’t we keep the same
proportion or at least something similar? Why not $600,000
and $1.2 million (same proportion) or $750,000 and $1.25
million (same dollar increase). If we don’t want EB-5 investments concentrated in low unemployment, high-income areas,
why are we narrowing the investment gap between TEA and
non-TEA?
TEA Proposals Not All Bad
Some of the TEA proposals make sense. Making TEA designations valid for a two-year period is a positive and I would
even recommend going to three years. It is important to not
put already TEA designated projects at risk and to not force
some investors to come in at higher entry levels (as will now be
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This will also relieve the unnecessary burden of having to
re-apply each year. A local unemployment rate in relation to
the U.S. rate is unlikely to change dramatically over a short
period of time, but if it does decline, why should a project be
penalized for an improving economy, which it may even have
contributed to? After all, isn’t that what the EB-5 program
set out to do: to create jobs in communities with high
unemployment?
A nice inclusion in the TEA definition is areas within the
geographic boundaries of any military installation closed
during the last 20 years, based upon a recommendation by the
Defense Base Closure and Realignment Commissio n (BRAC).
I’m less enthused, but okay with the proposal to give equivalent TEA status to infrastructure projects and manufacturing
projects.
Suggested Language for Defining High
Unemployment and Rural Area TEAs
High Unemployment Area
A high unemployment area is defined as an area that has
experienced unemployment of at least 150 percent of the
national average rate, using the most recently available annual
average or 12-month average data.
Acceptable data sources for purposes of calculating unemployment include U.S. Census Bureau data (including data
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