You are here[HOT] CA's new policy on issuing TEA certification letters for EB-5 projects

[HOT] CA's new policy on issuing TEA certification letters for EB-5 projects


By eb5attorney - Posted on 16 June 2012

We listened in on the teleconference, and basically, their new policy is as follows:

Links where you can find info on this new policy being implemented immediately:

http://business.ca.gov/Programs/EB5Program.aspx

http://www.business.ca.gov/Portals/0/AdditionalResources/Reports/2011%20...

Our take/analysis:

No averaging of census tracts will be allowed, unlike states of NY, FL, etc. However, where a new business is located in an individual census tract, a TEA certification for that project will be issued. CA Governor's Office appears to realize that this will put the CA state at a disadvantage. Actually, allowing a new business located in an individual census tract by pure luck to get TEA certification is senseless. This policy is even worse than the policy they had before. Not even "political subdivisions" will be allowed! In this respect, it could be argued that CA's new policy is in violation of the federal EB-5 law.

We actually do not care what position CA takes on this issue, but you can kiss goodbye to CA attracting many EB-5 projects. [Note Los Angeles City is a TEA] CA Governor's Office just wants a simple method of issuing TEA certification letters. Grandfathering previoiusly issued TEA certifications of EB-5 projects will be allowed but a cut-off date will be provided in future.

Our conclusion is that the CA's new policy gives advantage to small RC based EB-5 projects and also non-RC EB-5 projects. We have to say CA at least has made its position very clear, regardless of whether we disagree with or like this new policy. However, we do sympathize with many new RCs or wanna-be RCs which might have spent a lot of time and money trying to set up EB-5 projects in TEA area, which will be very disappointed with this new CA policy, which is an exception rather than a rule among 50 states.

By the way, did anyone notice the CA representative spoke with disapproval on FL and NY states' policies of issuing TEA certification letters for aggregated census tracts? Also, it appeared that CA did not consult with many of the bigger RCs successfully operating in CA in reaching this decision, which led one stakeholder to rightfully question with whom CA has been talking to reach this decision. Anyway, RCs located in other states will like this new CA policy because it will mean RCs located outside California will attract more EB-5 projects.