EB-5 ALERT: California's New TEA Approach Will Discourage EB-5 Investment In California

EB-5 LAWYER ALERT: California has adopted a new TEA policy as of April 30, 2012. It will severely affect California's ability to compete for EB-5 financing.

My partners, Catherine Holmes and Victor Shum, have alerted us to an important new development that will affect new development projects in California.

The State of California has decided that it will not certify any new "targeted employment areas" or TEAs under the EB-5 immigrant investor visa program. If you develop hotels and other real estate, you are well aware of the financing opportunities provided by the EB-5 immigrant investor visa program -- and you are also know the importance of locating your project in a TEA. (If you are new to the intricacies of EB-5 financing, check out our articles on the topic on the Hotel Law Blog.)

The purpose of the EB-5 financing program is to create new jobs for Americans using investment from foreign investors who want to get a green card. Hotel developers, who have been unable to develop projects for years because of lack of traditional financing, are successfully using for new projects.

Our hotel lawyers have advised clients on more than 40 EB-5 projects, and we know this program is working. There are cities and counties throughout the U.S. -- including California -- that want these projects and the jobs that come with them.

For the full story, read the article below. We hope you will be moved to contact your city and state representatives and let them know that restricting TEA designations will restrict economic growth! This action is contrary to what virtually every other state in the Union is doing. Some of the biggest states have gone to great lengths to facilitate TEA designation both with speedy processing (it normally takes only 24-48 hours to get designation) and by flexibility in finding ways to meet the requirements. Why would California turn away this "free capital" from foreign investors to create jobs for Americans? Something is wrong.

EB-5 ALERT: California's new TEA approach will limit ability to compete for EB-5 immigrant investor financing by

Catherine DeBono Holmes and Victor Shum | Hotel Lawyers

California has adopted new policies that will deny EB-5 financing to many projects. On April 30, 2012, the California Department of Business, Transportation and Housing Agency released a bombshell that will have substantial negative effects on California businesses seeking to raise financing through the EB-5 immigrant investor visa program. For all practical purposes, the State of California's action will deny many California cities the ability to attract EB-5 investments because the State has decided that it will no longer issue "Targeted Employment Area" or "TEA" designations to any new areas other than the ones it designated in a letter dated April 30, 2012.

This means that cities like San Francisco, San Diego, San Jose, Anaheim, and dozens of other cities, will be denied the ability for all practical purposes to raise EB-5 financing for new projects. Californians have a strong interest in the EB-5 program, as indicated by the fact that 59 of all approved U.S. Citizenship and Immigration Services (USCIS) regional...