By: Kate Kalmykov and James Cormie
March 2015 Update: Since the publication of this article, the BEA announced that sufficient funding was received to supplement the RIMS II model. The new cost-saving modified model will only be updated on benchmark years (those years ending in two and seven), with new input-output data. Accordingly, when the modified model debuts later this year, it will incorporate 2013 regional economic data and 2007 benchmark I-O data. In the meantime, RIMS II multipliers have been and will continue to be available for customers. Furthermore, as of the writing of this March 2015 update, USCIS continues to recognize RIMS II as a verifiable methodology for indirect job creation.
EB-5 regional centers and economists take note—the Bureau of Economic Analysis (BEA) announced today that it will no longer produce the Regional Input-output Modeling System II (RIMS II) model that many economists rely on when calculating Regional Center jobs. RIMS II is a commonly used regional economic model that EB-5 economists use to gauge the economy-wide impact of a change in economic activity on a local community or particular region of the country. The BEA is a government agency under the Department of Commerce that, simply put, provides economic statistics, most notably America’s gross domestic product. It is the principal group within the U.S. Federal Statistical System- a decentralized group of federal agencies that produces statistical information on people, economy and infrastructure. Most importantly for the EB-5 world, the BEA creates and sells the economic multipliers that economists use, such as RIMS II modeling, to estimate how many jobs will be created by a particular project, as well as the impact the EB-5 project will have on regional demand, economic growth and corresponding job creation. Without these multipliers, economists will no longer be able to produce job creation numbers and will need to use other commonly accepted economic methodologies such as IMPLAN, REDYN or REMI. The BEA has said that they will keep producing RIMS II until the end of the fiscal year, but is discontinuing the RIMS II multipliers due to funding concerns. After the fiscal year ends, EB-5 economists must rely on other forms of economic data such as REDYN or IMPLAN.
This update from the BEA comes on the heels of the May 30th USCIS EB-5 memorandum which for the first time noted that amendments no longer need to be filed in cases where a regional center changes its economic methodology from project to project. While many regional centers are comfortable with RIMS II and will need to now work with new economic methodologies, the good news is that they will not have to wait 10 months for an amendment to be approved before they can do so as a result of the favorable and binding EB-5 guidance issued by the USCIS on May 30th.