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"EB-5 Visas and the Ramifications for Regional Development" May 9, 2012 Economic Consulting Group, LLC.

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Presentation on theme: ""EB-5 Visas and the Ramifications for Regional Development" May 9, 2012 Economic Consulting Group, LLC."— Presentation transcript:

1 "EB-5 Visas and the Ramifications for Regional Development" May 9, 2012 Economic Consulting Group, LLC

2 The ECG Team Riley Moore Lorrie Brown Lizbeth Martin-Mahar Hart Hodges Dave Wallace Kari Qvigstad 2

3 Employment-Based Immigration - Fifth Preference (EB-5) EB-5 Visa – Started in 1990 – Invest $1 million or $500,000 in a targeted employment area (T.E.A.) – Need to directly create jobs for at least 10 U.S. workers EB-5 Regional Pilot Program (Regional Center) A Regional Center (RC) is defined as "any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, or increased domestic capital investment. – Pilot program started in 1992 (extended until September 30, 2012) – Invest $1 million or $500,000 in a targeted employment area (T.E.A.) – Need to either directly or indirectly create jobs for at least 10 U.S. workers – Investor can be limited partner – 3,000 EB-5 green cards each year are held for people who invest in designated "regional centers.“ 3

4 USCIS RC EB-5 Homepage 4

5 “It should surprise no one that citizens of other countries are eager to invest in the U.S. economy. And along with the positive message a healthy and productive program like this sends to investors around the world, the core purposes of the EB-5 Regional Center Program are to generate capital investment and create jobs in communities around the United States. I want to underscore that both of these benefits are accomplished at no cost to taxpayers, and are not reliant on what is currently a very restrictive credit market. Under the program, in order to become a non-conditional lawful permanent resident, a foreign investor must prove the creation of 10 new jobs. The job creation requirement is central to the program, and ensures that foreign investments translate into tangible benefits for Americans. We can all acknowledge that the issue of immigration is a difficult one. But I view the Regional Center program as less about immigration than about job creation and capital investment in American communities”. Senator Patrick Leahy (D-Vt.), Hearing On "Promoting Job Creation And Foreign Investment In The United States: An Assessment Of The EB-5 Regional Center Program" July 22, 2009 5

6 United States not Unique Immigration through investment is not unique to the United States. Other countries with similar programs: – Canada – Australia – New Zealand – United Kingdom 6

7 EB-5 RC Options New commercial enterprise and create new full-time jobs Existing and troubled enterprise and save full-time jobs 7

8 Complicated and detailed process Source: 8

9 Program of Contradictions & Limited Transparency EB-5 is an economic development program that is administered by a federal agency that is mainly focused on “immigration enforcement” Continues to evolve and limited transparency Regional center pilot program still not permanent and continues to be repeatedly extended for three year periods (extended again until Sept. 2012) Up until recently, review of RC’s economic impact reports were conducted by non-economists 9

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11 More Recent Local Coverage 11

12 Source: U.S. Department of State: Report of the Visa Office 12

13 * Estimate of visas issued to the investor and dependents ** As of March 2012, Source: U.S. State Department 13

14 Top 5 EB-5 Countries Percentage of Total Visas Issued FY2006FY2008FY2009 RankCountry% % % 1S. Korea47%S. Korea48%China47% 2China12%China25%S. Korea21% 3Taiwan8%U.K.8%U.K.8% 4Canada*6%Taiwan3%Taiwan4% 5U.K.5%Canada2%Canada2% Source: U.S. Department of State, Visa Office * Tied with Netherlands at 6% 14

15 Top 10 Countries Issued EB-5 Visas Source: U.S. Department of State: Report of the Visa Office 15

16 Source: U.S. Department of State: Report of the Visa Office 16

17 Economic Impact Analysis Steps 1)Identify the targeted area of the proposed regional center 2)Identify the new expenditures that are being introduced 3)Identify sectors affected 4)Incorporate transaction value dollars adjusted for year of the model 5)Run the input/output model and evaluate the change in employment, output, value added and labor income by industry sectors 17

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19 Some Drivers for Direct Jobs Business plan Square footage (and expected use) Projected business revenue Average employment per industry 19

20 Components in the Economic Report Defining the region: characteristics How the regional center investments will affect the regional center’s economy – Direct, indirect and induced employment, output & value- added impacts Assumptions behind the economic impact results for the proposed project Demonstrate that the proposed project activity results in new jobs Competition with existing businesses 20

21 Latest USCIS Issue: Tenant-Occupancy Methodology USCIS has clamped down on allowing the counting of future tenants jobs towards the regional center’s direct job count USCIS is only counting those jobs resulting indirectly from construction activity and applicable building management 21

22 Explosion in Supply of Regional Centers * As of March 2012, Source: USCIS 22

23 States with 5 or more RCs* State#% California5827 Florida209 Texas146 Washington136 New York105 Georgia63 Michigan63 Nevada63 Arizona52 Hawaii52 Illinois52 * As of March 2012, Source: USCIS 23

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25 States currently with no RCs* * As of March 2012, Source: USCIS Alaska Arkansas Connecticut Delaware Minnesota Nebraska New Mexico Rhode Island West Virginia 25

26 13 Regional Centers in Washington Aero Space Port International Group (ASPI Group) Regional Center American Life Ventures Everett, Washington American Life, Inc. - Lakewood Regional Center American Life Seattle RC | Gold Rainbow | Freedom Fund American Life Ventures, Tacoma, Washington Eastern Washington Regional Center Farm for America Regional Center Path America Sonoco, LLC Seattle Regional Center Twin Development LLC Regional Center Washington Regional Center Western Washington Regional Center LLC Whatcom Opportunities RC Source: U.S. Citizenship and Immigration Services 26

27 Regional Centers: Public vs. Private Source: U.S. Citizenship and Immigration Services 6 27 Top Regional Center Firms/Agents American Life, Inc. Henry Liebman Can Am Enterprises, LLC Tom Rosenfeld Invest in the USA Stephen-Yale Loehr

28 New Kid on the Block with New Paradigm? 28

29 Introducing 520 Bridge Project in Shanghai 29

30 Other Issues & Patterns Priced too low……as RMB strengthens the cost of entry becomes more affordable…..cost of apartment in Shanghai ~$600K…..get green card for whole family for $500K Trend towards investment following students studying abroad (based on discussions with agents in China)….universities can be drivers 30

31 Conclusions Supply vs. Demand: Big increase in RCs in recent years but RCs need to assess demand USCIS moving towards more transparency and permanency Transition from private to public projects if current policies stay in place 31

32 THANK YOU QUESTIONS? Reminder Pacific Northwest Regional Economics Conference Seattle Westin May 17-18

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