"EB-5 Visas and the Ramifications for Regional Development"

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

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

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.“

4. USCIS RC EB-5 Homepage

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

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

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

8. Complicated and detailed process Source: http://www.whicheb5.com/flow-chart-eb5-visa-application.php

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

11. More Recent Local Coverage

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

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

14. Top 5 EB-5 CountriesPercentage of Total Visas Issued Source: U.S. Department of State, Visa Office * Tied with Netherlands at 6%

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

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

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

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

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

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

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

23. States with 5 or more RCs* * As of March 2012, Source: USCIS

25. States currently with no RCs* * As of March 2012, Source: USCIS

26. 13 Regional Centers in Washington Source: U.S. Citizenship and Immigration Services

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

28. New Kid on the Block with New Paradigm?

29. Introducing 520 Bridge Project in Shanghai

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

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

32. THANK YOUQUESTIONS?ReminderPacific Northwest Regional Economics ConferenceSeattle Westin May 17-18www.pnrec.org