EB5 Investors Magazine Volume 3 Issue 3 | Page 95

“…on average, the size of the U.S. multiplier is slightly more than double that of the local MSA multiplier.” the regional center.” Thus the regulations call for impacts to be shown regionally or nationally as well as both within and without the regional center (boundary area). In addition, the December 2010 letter from USCIS Director Mayorkas to Congressman Patrick Leahy (the well-known “Leahy Letter”) advises that although regional centers are required to focus their investment activities on a single contiguous area, there is nothing in the regulations that mandates all indirect job creation to take place within that area, implying that indirect jobs outside the regional center boundary can be considered. By contrast, in the September 15, 2011 stakeholder meeting USCIS released a PowerPoint presentation advising practitioners under the heading “Common Issues Resulting in RFEs or Denials in Form I-924 Applications,” of the inappropriateness of “The application of national or state data in the economic model when more accurate regional data is readily available to demonstrate the economic impacts/job creation of the regional center’s investment projects.” Although these are but a few citations of seeming inconsistency in guidance versus regulations, there are likely others, and the issue is that there are large differences in total multiplier effects between the various areas. MSA multiplier would result in 2,268 jobs versus 5,056 for the entire United States, an increase of 123 percent (note that inflation adjustments were not considered in this calculation for expositional purposes). The size of the U.S. multipliers relative to that of the MSA multipliers in the table range from a low of 79 percent larger for Nursing and community care facilities to a high 148 percent larger for “Construction of new commercial structures” (the sector used for hotel construction). For example, the following table illustrates total final demand (expenditure) employment multipliers for common EB-5 project industries using the IMPLAN model 2013 data-year for three areas: the entire United States, the State of Florida, and then the Miami-Fort Lauderdale-West Palm Beach Florida MSA. As can be seen, the difference in local MSA multipliers versus the national multipliers is dramatic: on average, the size of the U.S. multiplier is slightly more than double that of the local MSA multiplier. The implication is that use of a U.S. multiplier would result in approximately 100 percent more jobs than the MSA multiplier. For example, for a $100 million, 28 month construction project modeled under IMPLAN sector 60 (multifamily residential construction), using the Mi ami Guidance on real estate commissions (not asset sales price) on real estate would also be helpful. In general, our firm considers that realtor commissions do create jobs. But it is an especially thorny issue when dealing with large real estate projects involving timeshare condominiums. Our firm has been hired for several projects where the construction budget for the condominium may be $300-$500 million, but the sales of each unit for 52 weeks per year generates hundreds of millions of dollars of total sales income that can total two to three times the size of the construction budget. From these sales, commissions are paid to the sales staff and this is a line item in the developer’s construction budget – not part of operations which takes place Insurance is another line item that economists see in almost every project, and no guidance has been given on this issue to which our firm is aware. While we know insurance companies employ many people across the United States, the premiums are most assuredly split between local agents, underwriters, and the corporate headquarters, which are likely to be located in large financial centers such as New York City or Chicago. Our firm has conducted economic studies on large projects with insurance expenditures of as much as $60 million, and we used this in the economic model, which was approved by USCIS. In the absence of clear guidance from USCIS on the treatment of insurance payments, some clients are hesitant to use expenditures on insurance, and ask us to remove them. IMPLAN IMPLAN Industry Sector United States Florida Total Miami MSA Sector Total Effects Effects Total Effects Code Multiplier Multiplier Multiplier 57 Construction of new commercial structures, including farm structures 47.3707 21.4364 19.1250 60 Construction of new multifamily residential structures 50.5546 25.3977 22.6794 449 Architectural, engineering, and related services 54.5641 30.3060 27.9636 483 Nursing and community care facilities 61.5462 37.0907 34.3400 499 Hotels and motels, including casino hotels 53.9243 29.3364 26.1161 501 Full-service restaurants 64.0053 37.4122 33.9460 Continued to page 94 WWW.EB5INVESTORS.COM 93