Jobs
Expenditure model
Also called expenditure methodology, construction expenditure model.
An expenditure model estimates EB-5 job creation by feeding a project's spending into an economic input-output model, rather than feeding it the project's projected revenues or a verified count of direct hires. USCIS does not use the label itself, but it recognizes expenditures as one of the input types an investor may rely on and requires the investor to show that the expenditure figures are reasonable.
What it decides
USCIS states the test in 6 USCIS-PM G.2(D)(5): where the inputs into the model reflect expenditures, the investor must demonstrate the expenditures input is reasonable, using receipts and other financial records for expenditures that have occurred, and a detailed projection of sales, costs and income such as a pro-forma cash flow statement associated with the business plan for expenditures that will occur. That passage sits under the Policy Manual heading for regional center petitions filed before 1 July 2021; for current Form I-956F project applications, 6 USCIS-PM G.5(A)(4) and G.5(B)(3) require a credible economic analysis based on economically and statistically valid and transparent methodologies without restating the receipts test. Not every budget line is an eligible input. USCIS outreach guidance of 4 June 2015 states that real estate acquisition is not recognized as a job-creating activity in itself, so funds spent acquiring real estate are not generally reasonable inputs, and that a number of soft costs, including legal and financing fees tied to EB-5 compliance, may be ineligible. Because the count scales with eligible dollars, a budget that is cut or a phase that is dropped cuts the estimated jobs with it. Indirect jobs may satisfy up to 90 percent of the ten under 8 U.S.C. 1153(b)(5)(E)(iv)(I). Where the jobs come from construction activity lasting less than two years, (E)(iv)(II) lowers that indirect share to 75 percent, and (E)(v)(II)(cc) prorates modeled direct construction jobs by the fraction of the two year period the work lasts.
Related terms
- Economic impact reportAn economic impact report is the economist's analysis that turns a project's spending, revenues or direct hiring into an estimated job total, and the project application a regional center files for each investment offering must include one. The statute and USCIS call it a credible economic analysis.
- Input-output modelAn input-output model is an accounting framework of interindustry purchases that estimates how spending on a project spreads into output and jobs across a regional economy. In EB-5 it is the standard way a regional center investor shows job creation, and it produces estimated jobs rather than a verified headcount.
- MultiplierA multiplier is the ratio an input-output model applies to an initial change in a project's spending, earnings or jobs to estimate the total change in output, value added, earnings or jobs in a chosen industry and region.
- NAICS codeA NAICS code is the North American Industry Classification System identifier for an industry, six digits at its most detailed level, and in EB-5 it fixes which input-output multipliers a job study applies to a project's spending and revenue.
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