EB-5 Investment Voice
Mona Shah & Associates Global Podcast Series
Reported by Hermione Krumm, Esq.
EB-5 Investment Voice is the only Podcast series that focuses on and the United States immigrant investor visa, EB-5 and foreign direct investment. Mona Shah, Esq. welcomes guests from the industry, including: Developers, Regional Center Operatives, Attorneys, Legislators and Politicians.
Economics is essential to EB-5 yet can be confusing and complex. It is very much involved in all stages of EB-5, and is often necessary to enlist the help of an economist to navigate the complexities of the industry.
In this episode, Mona welcomes Kimberly Atteberry, President of Vermillion Consulting and a former Chief Economist of USCIS from 2009 to 2011, to demystify the economic side of EB-5, the perceived risk of being among the last investors to sign on to a project, and the benefits of using the Regional Center model for a standalone project.
Vermillion is a full-service firm that helps organizations in the public and private sectors leverage the benefits of EB-5 by providing expert advice on project feasibility, EB-5 compliant structure, job creation methodology and TEA analysis.
The Complexity of EB-5 Economics
There is no textbook to guide the EB-5 industry, so all parties are trying to figure out what USCIS wants to see and determine what makes a good submission. Kimberly recommends providing the specific information USCIS will need to make an informed decision about your project.
The Risk of Coming in Last
Some immigration lawyers caution their clients against being the last investor to a project regardless of the circumstances. While it is true that the first jobs are attributed to the first investor, it isn’t always a bad idea to sign on to a project late in the game. Investors should be very aware of the anticipated number of jobs a project will create, the number of investors involved, and the timeline for job creation. The best EB-5 projects establish a significant buffer to protect investors in case of situations like value engineering, i.e. where projects come under budget, arranging for more than the 10 jobs required.
Using the Regional Center Model for Standalone Projects
Kimberly recommends spending the money on an economic report if you hope to count jobs other than direct full-time qualifying jobs. In reality, projects generate jobs beyond the people working directly for an organization, and the documentation of those jobs is easier when you leverage the Regional Center model. Economic modeling allows you to employ a variety of inputs: on the development side, if applicable, you can use any qualified building expenditures to calculate construction-phase impacts. On the other side, operational impacts can be calculated with either operational revenues or direct jobs, although the latter is less often used as it tends not to create as many jobs as using operational revenues. Investors from countries in retrogression would benefit from utilizing expenditure and revenue inputs rather than direct job inputs, to make sure the jobs would be coming along while waiting in line. It is extremely important for those investors to ensure that job creation is taken care of and be certain they have the necessary documentation when they finally reach the I-829 milestone.
When You Need an Economic Report
Economic reports are used in the case of I-924 Exemplars, I-526 filings, I-829 filings and annual I-924A filings for Regional Centers. Mona and Kimberly both recommend filing a separate economic report for the I-829 filing to communicate that jobs were created and bridge the gap between what was approved in the past and what USCIS understands now, as adjudications can shift over time and different methodologies are adopted throughout time.
Targeted Employment Areas (TEAs)
Many question how a vibrant, job-plentiful area like Manhattan qualifies as a TEA. Kimberly explains that there are pockets of unemployment north of Central Park, and projects on the south side of the island are a short commute for those who are willing, able and available to work. To qualify as a rural TEA under the current rule, the county must be outside of any county included in a metropolitan statistical area and also be outside the boundaries of any town of population of 20,000 or more. Urban TEAs are based on high unemployment levels, typically calculated by aggregating census tracks or census block groups. Each state (or county even) has its own requirements and data sets. The newly proposed legislation includes a rural carve-out of the 10,000 visas allocating additional visas to investors in rural projects. This would most affect China and other countries that are likely to fall into retrogression like Vietnam and India.
Please see the link below for access to the podcast episode http://mshahlaw.com/demystifying-economic-reports-with-kimberly-atteberry/ .
About the Author:
Hermione Krumm, Esq. is an associate attorney with Mona Shah and Associates Global. Hermione works with EB-5, corporate, merger and acquisition (M&A), intellectual property and foreign direct investment (FDI) matters involving China, the UK and the US. Hermione writes and comments frequently on current business and immigration issues. Her articles have been published by LexisNexis, ILW, EB-5info, EB-5 Supermarket, etc. Hermione received her LL.B. (Hons) from the University of Manchester School of Law (UK), and obtained her LL.M. from Cornell Law School. Hermione speaks fluent English, Mandarin and Cantonese.