Due diligence, Offering documents, USCIS compliance issues
Sep 20, 2015
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Kurt Reuss
Kurt Reuss
Kurt Reuss is a registered securities broker who has been specializing in EB-5 since 2012. He offers advice on investment structuring and market conditions related to EB-5 investments.

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Review of Economic Models: RIMS II Discussion

Michael, I had mentioned in the introduction that your firm uses RIMS II. Can you talk about the different economic models available to you and why you choose to use RIMS II?

Michael Kester: Kurt, as you mentioned, there are a number of models that are accepted under USCIS EB5, so if you’re looking at having an economic impact study done, it’ll likely be done in RIMS II, IMPLAN, REMI, REDYN and possibly even iRIMS, though I’m not sure if anyone has seen one of those studies or not. 

In a sense they’re all input/output models that generally have the same theory behind them; that output from one industry sector is put into another industry sector and that one round of spending with money changing hands will trigger the cascading effect of other rounds of spending to create economic impacts.

We utilize RIMS II for a number of reasons. RIMS II is different from all the other models in that the data you get is just a flat file. All you basically get are spreadsheets, so you have to create the model yourself. You’re dealing directly with the multipliers that are used to calculate the economic job impacts. 

I think RIMS II is preferred for a few reasons. Primarily, RIMS II output is produced by the Bureau of Economic Analysis, so it’s a product of the federal government and because we’re dealing with another government agency, i.e. the USCIS, we feel they have a comfort level with RIMS II. Also, RIMS II is very transparent; we’re dealing directly with the multipliers.

The multipliers are usually included in the economic study and the USCIS adjudicators, who are going to be reviewing things very carefully, can physically go in and confirm the calculations themselves. With IMPLAN, REMI and REDYN there are calculations going on behind the scenes. 

So in a nutshell, the reason we use RIMS II is because it’s more transparent for the USCIS and because we’ve found that the USCIS adjudicators don’t like to have to go digging for things.

Kevin Wright: I’ll second what Michael said. We started out using IMPLAN and perhaps did a hundred IMPLAN studies. Then a few years back, the USCIS started questioning and issuing RFEs on economic studies. A lot of them had to do with the transparency aspect and proving you didn’t do something in the backend. The IMPLAN model is more of a computer-driven software model where there’s a lot more customization available. 

We found RIMS II to be a lot easier so we switched. We now do about 90% RIMS studies simply based on the transparency and ease; cutting and pasting the multipliers straight in makes it very clear-cut and no one argues with it.

Kurt: Do you see think RIMS II is likely the future as well, Kevin, or do you think that iRIMS might become more frequently used?

Kevin: I’ve never used it and I’ve never seen anyone else use it. I know we played around with it for a little bit, but RIMS II just works better and it’s just more straightforward to me. The multipliers also tend to be a little better.

Michael: IMPLAN developed iRIMS when they thought RIMS II was on the chopping block due to sequestration. Now, RIMS II is back online so to speak, and supposedly there’s a new release coming out this year. Thus the concerns of RIMS II going away are somewhat alleviated and we wouldn’t anticipate any issues with USCIS accepting RIMS II in the future. 

Rohit, of all the studies you’ve seen, have you ever seen an iRIMS study used? I’m curious if USCIS would even accept it or not.

Rohit Kapuria: I’m really curious about that. I’ve discussed iRIMS with a couple of clients and, obviously, on the one hand I can’t counsel them to utilize it, but I’m dying to see someone use it, just so we can get a reaction from USCIS. In its May 30th policy memo USCIS compliance doesn’t specifically call out any particular model. The memo basically refers to “reasonable economic methodologies,” but there was a FOIA request done about five or six years back where we got access to the training manuals that USCIS utilizes, which was in the California office, so we really don’t know what’s being utilized in the D.C. office, but at that time the models that were specifically called on in PowerPoint were RIMS II, IMPLAN, REMI and REDYN.

There is and always has been some comfort with RIMS II and all the models that you see on the slide (IMPLAN, REMI, REDYN), but RIMS II is by far the most common. I would estimate that about 92% of all the deals I work on utilize RIMS II. 

There is the transparency aspect, but in many cases when we’ve done comparisons, we do see RIMS II come out with slightly more jobs. Obviously, that depends on what multiplier they use, whether it’s 2007 or 2010 data.

I’ve only seen IMPLAN used in a handful of deals; maybe 3% or 4% of all the deals I work on. As far as REDYN, there’s only one economist in particular that I know who utilizes it. REMI, I think, in my EB 5 visa related life, I’ve seen only in one or two deals at the most. It’s really not something that USCIS commonly sees. Certainly sticking to RIMS II is something that USCIS is most comfortable with because it comprises the majority of all reports.

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