The EB-5 Reform and Integrity Act of 2022 brought many changes to the EB-5 program. For the latest information, please click here.
The Bureau of Economic Analysis (“BEA”), in a cost cutting measure, announced last month that it will cease building data required to update the RIMS II dataset.
RIMS II is a regional economic model that economists have often employed in calculating job creation in the regional center projects. The model produces multipliers, used in economic studies, to estimate the total economic impact of a project on a region. The framework is based on the idea, first proposed by the nobel laurete and Professor of Economics Wassily Leontief, that changes in economic activity within a given region will most likely result in at least a few additional rounds of monetary impact within that same region. These multipliers are simply the ratio of the total economic impact, derived from all spending within the relevant region, divided by the value of the intial impact within the same region.
For example, if a $50 million hotel construction project serves as the initial impact in City of San Jose, and we suppose that the aggregate economic impact within the City, inclusive of the $50 million construction, amounts to $85 million, the multiplier will be 1.7 (85/50). Of course, in order to maintain a level of credibility and prevent the use of inflated multipliers, RIMS II accounts for leakages (e.g. capital related to the project that is spent on goods/services produced outside the region) which could occur in spending.
Over the last few years, while controversial in some schools of thought, RIMS II has been a very popular model among noted EB-5 economists. While there are certainly other models avaible, such as IMPLAN, REMY, and REDYNE, it is unforunate to see RIMS II exit the stage. On the plus side, regional centers that are currently approved for only RIMS II should not worry about filing an amendment. The May 30, 2013 EB-5 Adjudications Policy Memorandum makes it clear that a formal amendment is not required for a change in economic methodology. It will be interesting to see which of the remaining USCIS approved economic methodologies become the next favored tool for EB-5 economists.
For more information, please see:
http://www.bea.gov/about/pdf/bea_fy2013_budget_impact.pdf
