Sam (00:06):
Hi everyone. This is Sam Silverman, managing partner of EB5AN. Thank you for taking time today to join us in today’s webinar. Today, we’re going to discuss some EB-5 job creation basics and how to go about calculating EB-5-eligible jobs for different types of projects. And we’re also going to share some information about our new EB-5 job creation calculator that we’ve been working on for the last six months or so and was just launched recently. If you have any questions during the webinar, please use the chat box to submit any questions, and we’ll cover all of the questions at once at the end of the webinar. And at the end of the webinar, if you’re interested in learning more information about something that you saw, you can access a video recording of the webinar on our YouTube channel. And if you want to get a copy of these slides, if you send us an email to info@eb5an.com after the webinar, we can provide you with a PDF file of the slides as well.

Sam (01:16):
Okay. So, quick overview of what we’re going to discuss today. First, a little bit about EB5AN, or EB5AN for short. We’re going to talk a little bit about job creation requirements for EB-5 visa investments and why most projects choose to use a regional center. We’ll talk a little bit about our job creation calculator—where it is, how it works, how to use it. And then we’ll talk a little bit more about the calculator and why we believe it’s the most effective free EB-5 job resource available. And then we’ll open it up for a question-and-answer session at the end. So, first, our TEA map is updated with the latest data. So, if you’re looking to determine if your project qualifies as a high-unemployment or rural targeted employment area, or TEA, and thus eligible for investment at the $900,000 threshold instead of the $1.8 million, then check out our TEA map. It’s completely free, and it’ll instantly tell you if your project qualifies and will allow you to generate a free TEA report as well.

Sam (02:38):
Also, for even more information, you can download our free EB-5 guidebook, also up to date with the most current EB-5 regulations. It’s available for free at eb5guidebook.com, or if you want a hard copy, you can also get a hard copy at Amazon. A little bit about EB5AN. As I mentioned earlier, I’m Sam Silverman, managing partner. On the left side of this page here, a little bit more about my bio and background. I’m joined today by my partner, Michael Schoenfeld, in the center. And I’ll let him jump in and introduce himself quickly.

Mike (03:22):
Hi everyone. Thanks for taking some time to dial into the webinar today. As Sam mentioned, I’m Mike Schoenfeld. We founded the company about eight years ago at this point. And prior to launching this, we’d worked together at the Boston Consulting Group, and I worked in private equity doing leveraged buyouts after that. So, one thing we were trying to achieve with this company was bringing more of an institutional focus into the EB-5 space. And I think we’ve achieved that very well.

Sam (03:50):
Great, thanks Mike. A little bit of background about our company. Across all of our regional centers, we have over 1,905 investors from many different countries around the world. We were started in 2013 and we have a 100% approval rate on adjudicated projects to date. This is a quick map showing where our footprint is. So, these are areas where we have approved regional centers, where we can provide project sponsorship to qualified projects that meet our criteria.

Sam (04:39):
Just a quick map showing where some of our investors come from around the world. Most importantly here is that investors from a wide variety of backgrounds have consistently found value in our approach to structuring EB-5 investment projects, ranging from one investor to several hundred. Okay. Now we’re going to jump into some more information about job creation requirements for EB-5 visa projects and what the implications are if you choose to use a regional center to sponsor your project, or if you choose to do an EB-5 project that’s not sponsored by a regional center.

Sam (05:28):
So first, the first thing to understand is that EB-5 job creation can include three different types of jobs: direct jobs, indirect jobs, and induced jobs. When you add those three buckets together, you end up with a total EB-5-eligible job creation number. The main thing to recognize is that when you’re using a regional center, a government license that allows you to do EB-5 in a specific area of the country, the value of having that license is that you’re able to count indirect and induced jobs toward the total jobs created for that project. If you do not have a regional center involved, then you’re only going to count direct jobs. So that’s the main difference between using a regional center and not using a regional center. And we’ll get into kind of why that’s the case on the next slide.

Mike (06:26):
And just for further reference… so each EB-5 investor needs to create 10 jobs to support their I-526 petition. It’s the same amount of jobs as when the investment level was at the $500,000 level. And now it’s at 900,000. So it hasn’t changed in terms of the number of jobs per investor that need to be created. So this actually makes it so you can use more capital in the same project based on the job creation than you previously would have been able to.

Sam (06:57):
Yes, exactly. So when we look at the breakdown here, most EB-5 five projects involve the construction of some type of a building. And so… and some projects additionally also involve the creation of new revenue, right? So an example would be a hotel, right? There’s going to be money spent to build the hotel on construction. And once the hotel is open and operating, it’s going to create new revenue, right? An example of a project that is only going to create construction costs would be a single-family home community where you’re buying land, building homes, and then you’re just selling the homes. And there is no ongoing kind of operational revenue. And there’s just selling homes, which is just sales revenue, which isn’t operational. So, the combination of those two categories, construction and revenue, determines how much EB-5-eligible job creation there is in a particular project.

Sam (08:02):
And it’s really simple math to derive the numbers, which we’re going to get into on the next slide. The thing to remember is that these numbers are all going to be based on an input–output method. So, if you spend $1 million on construction costs in Miami, Florida, you’re going to get, you know, let’s say 7.1 jobs, right. But if you end up spending more than that, then you’re going to end up getting, you know… let’s say you spent $1.5 million, then you’re going to end up with 1.5 times the 7.1 jobs, right? And same thing, you know, if you have a shortfall… let’s say that costs come in below $1 million, then you actually created less than the 7.1 jobs, right? So it’s important to realize that, you know, the job calculation here is going to be based on projected costs and revenue. However, the actual job creation that your project is going to qualify for at the end of the day is going to be determined based on the actual amount of costs that you spent and on the actual revenue that your project generated. And so, that’s why it’s really important to make sure to have a cushion built in so that your project has more than enough jobs to meet the “10 jobs per investor” requirement that Mike mentioned earlier.

Sam (09:36):
Okay. So, when we look at these different cost categories, and again, the first two columns here—hard costs, engineering costs—those are construction costs and then hotel revenue and food and beverage revenue. Again, those are going to be the revenue bucket. And so, the job creation is going to fall into the three categories—direct, indirect, and induced—for each of those sub-buckets, right? So, in hard construction, you’re going to have some direct jobs, some indirect jobs, and some induced jobs. And you’re only going to be able to count the direct jobs if your project is not sponsored by a regional center, right? So, it’s important to realize that having the regional center really increases the number of jobs that you’re going to be able to count and therefore reduces the immigration risk of an investor in that project to not have the sufficient number of jobs that they would need, the 10 jobs per investor that they’re going to need to have their green card become permanent. Right? If you come up with only nine jobs for investors, then some investors in the project would not receive their permanent green cards because you failed to create at least the 10 jobs. So, it’s really important to make sure that your project’s conservatively structured so that, in most cases, you’re using a regional center and so that you don’t have too many investors and not enough job creation.

Sam (11:21):
So, stepping back a little bit to the methodology—that’s kind of driving how these numbers work. The idea is basically a down-multiplier effect. So, you’re spending $25 million on hard construction costs, let’s say, but that money is going to result in additional supplier jobs for raw materials, like bricks and steel and wood. And it’s also going to result in additional transportation jobs. There’s going to be truck drivers and crane operators, other employment effects that happen as a result of you purchasing those raw materials for $25 million. And so, that’s really what the indirect and induced job multipliers are trying to take into account when you look at the breakdown by category.

Mike (12:14):
And a good way to think about it is if a city’s thinking about building a new hospital, they don’t just take into account the number of doctors and nurses that are going to work in the hospital. There’s a lot of spillover, where hotels nearby will get more stays, restaurants will get more business, and that’s the entire point of the multipliers—they’re what an EB-5 economist uses to show what the impact is. Because anytime you construct a project, there’s a lot of spillover, both on the material and construction side, and then also on the operations and revenue side.

Sam (12:51):
And one important thing to look at here is that the multipliers for job creation are going to vary substantially between category. So if it’s hard construction, soft construction, you know, and also they’re going to vary by geographic area, right? So, $1 million on hard construction costs in New York City is going to create a different number of jobs than spending $1 million on soft costs in South Florida. Right? So you’ve got to make sure that you’re using the right category and then, obviously, the appropriate geographic area that matches up with whatever project you’re looking to develop. So, a simple way to approach this is basically saying, okay, if $1 million on hard construction in South Florida creates 16 jobs, and, you know, you’re going to create $25 million in construction costs, hard construction expenses, then if you do build the project and actually spend the $25 million and you can provide the bank statements and the proof that you did spend that money, then you’re going to get 400 EB-5-eligible jobs.

Sam (14:13):
And so, you take that 400, you divide it by 10. So that means you could have 40 EB-5 investors, right? And if your project was located in a targeted employment area, then that would mean 40 investors times $900,000, which means you could bring in $36 million of EB-5 capital investment into that project if it was located in a targeted employment area. Now, you probably wouldn’t set up the project to do that exactly. Because what happens if construction costs come in a little bit below $25 million—then you wouldn’t have the 400 jobs, and then some investors would not get their permanent green cards, right? So, if your absolute maximum was $36 million, maybe you’ll assign a 20 to 30% job cushion and maybe target an EB-5 raise of somewhere between $25 and $28 million or $30 million, maybe, substantially below the $36 million, which would be the maximum based on the anticipated hard construction costs for the project.

Sam (15:35):
Okay. So one thing I mentioned briefly earlier is that you’re going to need to provide documentation showing that the job creation that you’ve initially projected actually occurred, right? So, in the initial I-526 application to the government, you’re basically explaining how the project is going to meet EB-5 rules and requirements and how each investor’s going to get at least 10 jobs assigned to him or her. And that’s going to be based on a projection of what the projects costs are and what the project’s revenues are going to be. Right. Then, later on, at the end of the EB-5 immigration process, the investor’s going to have to demonstrate that the project actually did create at least 10 jobs for his individual EB-5 petition to be approved. And so, the regional center, in conjunction with the project itself, is going to have to provide all of the documentation and the proof to be able to tell the USCIS that this project could get built. And, you know, initially we projected hard construction at $25 million, let’s say, but construction came out at $27.5 million. And, you know, so that means we actually created a few more jobs than we were originally anticipating. And here’s all the bank statements. And here’s all the check draws and invoices with the construction company showing that the $27.5 million was actually spent. And here’s how it was spent, here’s what it was spent on. And here’s the resulting job creation that we should get credit for.

Sam (17:30):
And so, again, when you’re using an EB-5 regional center, you’re getting favorable job creation. So you’re getting to count those indirect and induced jobs, which you would otherwise not be able to count. You’re also getting easier tracking. We didn’t discuss this in detail earlier, but if you’re not using a regional center, then you’re only going to get credit for W2 full-time employees. And so, that means any employees that you hire, any jobs that you’re going to create, are going to only be counted if they’re W2, full time, for at least 24 months. And so, that means for every one of those jobs, you’re going to have to provide all the paperwork, employment agreements, contracts, all the W2 information, the pay stubs, and show that that person was employed continuously for at least 24 months. Right? And you’re going to have to do that for 10 employees for each EB-5 investor that comes into the project, whereas if you’re using a regional center, then you only need to show the construction costs and the revenue creation.

Sam:
So, you just need to document how much money you spent and be able to provide all the records showing how it was spent when it was spent, and then revenue, you know… provide the financials of the business, showing the revenue that it generated and where the revenue was from. So, it’s typically a lot less complicated and less expensive administratively to prove the job creation using the regional center input–output cost revenue model than it is to do the documentation for all the W2 employees and also actually hire and pay, you know, with a salary, 10 full-time employees for two years—that can get quite expensive. And a lot of the businesses typically don’t fit well into that approach.

Mike (19:38):
Exactly. And that’s why over 95% of investors choose to go down the regional center path, even for some projects that could qualify by hiring 10 people per investor, like let’s say a restaurant or a hotel that will have some people on staff. It’s still much cleaner and easier to use the regional center. And I think that’s the perfect bridge to get us into showing the new job creation calculator that we’ve launched, which does focus on the regional center model of job creation. It’s not going to show you W2 jobs—instead, it focuses on the true jobs, the full job creation impact, by using the regional center methodology.

Sam (20:19):
Exactly. Thank you, Mike. So on our job calculator, the first step is go to our website at eb5an.com. Under the resources tab, you’ll see “Job Calculator,” or you can just go to Google type in “EB-5 affiliate job calculator,” and it’ll show up as the first result. So, you’ll get to the job calculator page. The first step on the left side is going to be to enter the location of the project. You want to determine the EB-5 job creation estimate for right because, as we discussed earlier, the job multipliers are going to vary by geographic area. So, the first thing is we need to figure out where is your project going to be located so we can pull up the correct job multipliers for that area. Then, the second step is determining which industry category best fits your project. The job multipliers, again, are going to vary by category as well, right? So if you’re building condos versus a restaurant versus single-family homes, the job numbers are going to be slightly different. And so, we’ve broken them out into these nine, you know, fairly encompassing categories for you to pick, as the second step, once you’ve determined geographically where the project is going to be located. So then— go ahead, Mike.

Mike (21:50):
And these are the most common middle-of-the-fairway categories for EB-5 projects. Of course you can do a lot of other things, and you can reach out to us if you’re doing a project materially different than this, and we can do a preliminary job analysis for you, but this is… well over three quarters of the projects in the EB-5 space would fall into these categories, and this is the bread and butter of EB-5.

Sam (22:13):
Yep, yep, exactly. And on that note, as well, like, the numbers that this calculator produces are going to be estimated, right? We’ve done hundreds of projects all over the country, and we built a comprehensive database to drive this calculator, but it’s not 100% exact. To get the 100% exact numbers, you’ll want to reach out to us directly, and we’ll break down all of the different costs and revenue categories of your project and then make sure that they’re all directly assigned into the correct categories. But as Mike mentioned, these are the most common nine that are used. And so, this calculator is a great way to get a kind of directionally correct answer on, you know, how many jobs, roughly, is my project going to gonna create. Okay. So once, what, let’s say for this project, we’ve decided that we’re doing a condominium project and it’s in Fort Lauderdale, Florida. So, we put in the address, we selected “condominium,” and then now we’re going to enter in the costs and revenue numbers for the project, right? So we’re going to put in hard costs $155 million. We’re going to say that it’s a project that’s going to take longer than 24 months. There is a difference in the job creation if your project is going to be under construction for 24 months or longer.

Sam (23:46):
And so, that’s important to include in determining the job creation. Then, soft costs. So, things like architecture, engineering fees, and then FFNE—so fixtures, furniture, interior finishes, for the most part. And then operating revenue—for this example, we’re assuming that it’s a condo–hotel project combined. And so, you know, we’ve got a stabilized revenue number in there as well. So once you’ve got those numbers in the calculator, and if you mouse over and you see the question marks on each of the boxes, that’ll give you some more information and explanation, basically of what specific line items would be included in that number that you would put in the box to the right of those colored boxes.

Sam (24:44):
Then, once you’ve got all that information entered, then you just hit the green button at the bottom, “Calculate EB-5 Job Creation and Maximize EB-5 Raise.” And then, it’ll tell you how many jobs the project creates based on the numbers that you’ve entered. And it’ll also tell you how much EB-5 capital the project could support, right? And, of course, that number is going to vary depending on if it’s a TEA or if it’s not right. But we’ve set it up so that it initially tells you that it is in… it reflects as though you are located in a TEA as a minimum amount of EB-5 investment. Remember, the $900,000 and $1.8 million, those are minimums. There’s no rule against an investor putting in more than the $900,000 or more than the $1.8 million, right? So, at a minimum, that’s the amount the project is eligible for if it’s in a TEA, which means it would qualify at the $900,000 level. And then, obviously, if you need more information or you’re looking to figure out what your next step is going to be for your EB-5 project, just plug in your name in an email, and we can set up an appointment to discuss any of those items with you further.

Sam (26:15):
Another thing that job calculator does as well is based on the address that you provided for your project, it will determine if regional center sponsorship is available under one of our EB-5 regional centers. So, as we mentioned earlier, more than 95% of EB-5 projects are sponsored by regional centers, and our regional centers cover more than 20 states around the country. And so, if one of those regional centers covers the location of your project, we’ve included that notation here so that you’ll be able to get your project sponsored immediately by one of our regional centers and then be able to take in EB-5 investors without any delay.

Sam (27:16):
All right, now we’ll shift gears a little bit and just kind of summarize… we spent a long time building this job creation calculator and kind of took into account all the different types of calculators and information that we’ve seen in the market available for people to determine job creation for projects. And so, here’s a quick kind of summary as to, you know, why we think our calculator is going to be the most effective resource for someone considering EB-5 for a project. So, number one, simplicity. A number of other calculators and approaches had just a lot more complicated variables. At the end of the day, most projects overwhelming majority fall into those nine buckets, and most of the costs fall into those costs. And then, the few revenue buckets that we’ve identified—so, very simple and can get you to, you know, a very accurate answer with, you know, just a minute or two of time.

Sam (28:18):
Second, our calculator uses RIMS II multipliers, which costs about $270 per geographic area. As I mentioned earlier, we’ve done hundreds of economic studies around the country, so we have a lot of this data already internally. And so, we’ve combined all of that together and basically provided access to it in an organized approach for free. So, instead of paying $270, waiting a few days, then figuring out how to do the math yourself, our calculator does it instantly and for free. Third, instant results—so, a number of other professional economists out there charge to put together an analysis for a project. And it takes a few days, depending on if they have the RIMS II multipliers already on hand. Ours is instant. You don’t have to wait. And then, accurate calculations. So, you know, we’ve done hundreds of these studies around the country, so we know what the different regions are, how to break them up, and then what types of adjustments need to be made to make sure the data is calculated as accurately as it can be. So, in summary, our calculator is accurate, instant, and gives you a really good idea of how much EB-5 investment capital your project could be eligible for based on the construction costs, soft costs, FFNE costs, and then the revenue that it’s projected to generate.