Chinese Investors Prefer TEA
— October 5, 2015
By Jeanne Calderon and Gary Friedland
Enough attention has been devoted to the perceived shortcomings of the current methodology to demonstrate that an EB-5 project is located in a Targeted Employment Area (“TEA”). Now is the time for Congress to devise a solution to what has become the most controversial part of the proposed legislative reforms to the EB-5 program. Technically, the continuing resolution to extend the key part of the program expires on Dec. 11. This is a battle between the rural areas that have not benefited from the program in recent years, and the urban areas, particularly the gateway cities, where the bulk of EB-5 capital has been channeled.
By way of background, if an immigrant invests in a real estate project located in a TEA, the minimum investment threshold is $500,000, rather than $1 million. Since the EB-5 investors secure the same visa and green card irrespective of the investment amount, and the investors generally receive interest of less than 1 percent per year, they strongly prefer to invest in TEA projects.
Read full article as published in Commercial Observer.
Jeanne Calderon is a Clinical Associate Professor of Business Law.