How do certain large urban areas qualify as Targeted Unemployment Areas?

It is determined on the state level (or the district level for D.C.). Note that while a TEA may be granted by the local/state government, the most crucial time will be when you either invest or file the I-526 petition. Most TEA designations are valid for only one year at a time, so you will want to consider that when choosing a project. There are many other immigration-related considerations, and I recommend you speak with a lawyer with expertise in this area.

You ask a good question. In fact, virtually all projects are urban and now qualify as TEAs for the $500,000 minimum investment. Urban projects do that by cobbling together a group of TEA census tracts whereby the overall unemployment average allows the TEA to qualify for the $500,000 investment amount. Even though the project itself may be located within the census tract that would not qualify by cobbling together a group, it is possible to obtain the necessary TEA designation from the local mayor, county judge or supervisor that has a vested interest in seeing such projects are located within their jurisdictions.

Political gerrymandering of districts with high unemployment.

If the urban areas have an unemployment rate of 150% of the national average, then they qualify as a TEA.

Currently, a state economic development agency or a local government agency such as the DC department of economic development issues the TEA certification letter. As long as the properly authorized agency certifies that the project is located in the TEA, USCIS will accept it. Baltimore is definitely within TEA, as much of Baltimore and the surrounding county has high unemployment rates whereas the Inner Harbor area may not. It is the same case for DC, although much of North West corridor may not be TEA, some of the Northeast and definitely Southeast DC will be considered in a TEA. Thus, it will depend on how the project’s boundaries will be drawn. Many of the NYC Manhattan projects will use the waterways to dilute the employment statistics to qualify a project as TEA. Because this method is disliked by Senators Grassley and Leahy, a Congressional reauthorization of the regional center program may contain some changes in how a project could be designated as TEA in the future. However, the current program, including the $500,000 investment amount authorization is extended until December 8, 2017.

TEAs are determined by each State's designated agency (usually the state department of labor/workforce) based on the CENSUS TRACT where the EB-5 project/business is located. So, even if the project is located in a major city, it may qualify as having high unemployment (and in some cases by using multiple contiguous tracts).

TEA certification is based on the fact that unemployment is at 150% of the national average and some states permit counting numerous counties. The TEA rules may change by regulation or statute next year.

Existing regulations permit the designation of TEAs by aggregating a number of census tracts and then calculating the average unemployment level. This does lead to some anomalies in that large urban areas without ostensible unemployment levels may qualify. There are proposals to change these rules and, in the future, it may not be so easy to qualify.