Free EB-5 Project Evaluation Understanding EB-5 Economic Multipliers

Along with a project’s application and its investor petitions, United States Citizenship and Immigration Services (USCIS) requires the submission of an economic report that demonstrates the project will, in fact, create 10 jobs per EB-5 investor. This economic report must be created using accepted methodologies, and typically employs an input/output model.

While the input/output data are from the U.S. Department of Commerce, some economic models produce larger multiples that, in turn, suggest a greater economic impact.

The size of a project’s EB-5 economic multiplier depends largely on the indirect impact of the project on an area as well as the geographic scope of the project.

EB-5 Indirect Economic Impact / Job Creation

Some input/output modeling processes use a dynamic EB-5 economic multiplier. Essentially, this type of multiplier takes into consideration the indirect economic impact of a new business being established in an area. For example, the opening of a new business results in more people moving into the area, which results in new home construction, service sector growth, new retail jobs, etc.

A similar dynamic EB-5 economic multiplier model considers tourism as part of this indirect impact; however, USCIS tends to reject the use of this methodology because it often fails to demonstrate that new jobs are actually created rather than simply shifted from elsewhere within the local economy.

Regional Center Geographic Scope

Regional centers typically involve a narrowly defined area in which the new commercial enterprise will be started—usually a handful of contiguous counties. Sometimes larger regional centers are formed, such as the 36-county area that comprise the New York City combined statistical area, the 43-county area known as the Texas Triangle, and the state of Florida.

Generally speaking, the larger the region, the larger the EB-5 economic multiplier. So a regional center spanning three counties will have a smaller multiplier than that of an entire state, which in turn has a smaller EB-5 economic multiplier than several states combined together. While these larger EB-5 economic multipliers have been used in past economic analyses—and have been accepted by USCIS—this method of using larger multipliers has become more difficult.

The stance of USCIS is that every case will be adjudicated according to its own merit, but in practice, larger areas are harder to get approved. There are no guarantees for the approval of a larger area, but the best approach is to ensure that the proposed EB-5 business is well documented and presents a credible operation plan across the entire proposed geographic area. Furthermore, for large geographic areas, another level of economic analysis combining multiple county clusters together, known as an “Economic Spillover Report”, can also be completed to increase the likelihood of un-challenged approval by the USCIS.