1.8 Updated Economic Impact Analysis 12

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1 1.8 Updated Economic Impact Analysis 12 The changes made to the original Rockbridge Assisted Living at Riverwalk EB-5 Project require an update to the economic impact analysis. An expanded project facility on an expanded site as well as an updated development timeline has implications on the project construction budget and operations. These changes in project parameters, construction budget, and operations all have a bearing on the inputs utilized in the economic impact analysis Impact Study Inputs The relevant information and data used to develop the I-O model inputs for this updated study of the Rockbridge Assisted Living at Riverwalk EB-5 Project included the amount and timing of the construction expenditures for the Project on an annual timeline and an income statement projecting revenues and expenses for the first five years of operations activity. The revised information from the project developers are laid out in a comprehensive and detailed business plan that will be filed along with the other materials in the petition. Using these project parameters, EPR quantified the new business activity of the Project in each year and assigned it to the proper NAICS activity category, as shown in Table 8 Economic Impact Study Inputs below. These items are found in Table 2 above (highlighted in green), although the Architecture & engineering services expenditures used in the impact study are only a portion of the total for architecture and engineering expenditures for the project overall. Table 8: Economic Impact Study Inputs Construction Expenditures ($ Millions) NAICS Commercial buiilding construction 2362 $9.35 Site preparation contractors 2389 $0.88 Professional/commercial equipment & supplies 4234 $1.86 Architecture & engineering services 5413 $0.60 Year 1 Year 2 Year 3 Year 4 Year 5 Construction Operations Operations--Assisted living facilities for elderly 6233 Revenues ($ Millions) $1.93 $4.62 $5.36 $5.66 Note: All dollar values are presented in millions of nominal dollars. o Commercial building construction the primary renovation activity, which total $9.35 million over the single-year construction period; o Sitework construction, which total $0.88 million in the single-year construction period; o Commercial equipment and supplies wholesalers, which total $1.86 million in the singleyear construction period; and o Architecture, engineering and other design services, which total $0.60 million during the single-year construction period. 12 Update to Section 1.6 Economic Impact Analysis Summary of Results in the Rockbridge Assisted Living at Riverwalk EB-5 Project Business Plan and an update to the original economic impact analysis report entitled Economic and Job Creation Impacts of Proposed Rockbridge Assisted Living at Riverwalk Project in the Carolina Center for Foreign Investment Regional Center. 10

2 Total project expenditures for the Rockbridge Assisted Living at Riverwalk EB-5 Project have been updated to $21.04 Of this total, $13.64 million of construction expenditures have been used as impact study inputs. All project expenditures not detailed in the list above were excluded from the impact study either because they are not appropriate for inclusion or because they are expected to have relatively insignificant impacts on the economy. The expenditures excluded from the impact study over the three-year period total $6.97 o Expenditures not appropriate for inclusion in the impact study are land acquisition costs, contingencies and other non-specific line items, certain fees, insurance expenditures, and financing and interest costs. Operations of the assisted living facility are expected to commence in 2017 (Year 2) of the project development timeline. o Revenues from operations used in the impact study of the EB-5 Project were obtained from the income statement from the project developers. Revenues for the assisted living facility in Year 2 are projected to be $1.93 Revenues for the assisted living facility in Year 3 are projected to be $4.62 Revenues for the assisted living facility in Year 4 are projected to be $5.36 Revenues for the assisted living facility in Year 5 are projected to be $5.66 Please refer to Addendum Appendix 2 Sector Analysis for the required reporting of impacts in the selected NAICS categories. The categories identified in the regulations are as follows: 1) the Utilities (NAICS 221) subsector; 2) the Construction (NAICS 23) sector; 3) the Professional, Scientific and Technical [Business] Services (NAICS 541) subsector; and 4) the Maintenance and Repair (NAICS 811) subsector Overview of Updated Project Impacts The input-output model, REDYN is capable of estimating all measurable linkages associated with the incremental economic activity in the NAICS categories modeled to describe the Rockbridge Assisted Living at Riverwalk EB-5 Project. This incremental activity will create and sustain employment. The EB- 5 Project is expected to add new jobs within the geographic scope of the Carolina Center for Foreign Investment Regional Center due to the expended business activity related to the Project, an increase which has a ripple effect throughout the economy of the United States. As shown in Table 9 Summary of the Total Project Impacts, this study finds that, as a result of this new business activity and the subsequent ripple effects stemming from it, the Project will have significant economic impacts on the economy within the geographic boundaries of the Regional Center, the remainder of the United States outside the Regional Center geography, and, consequently, the United States as a whole. 13 The EB-5 Program regulations at 8 C.F.R (m)(3)(iv) state that the petitioner shall submit a petition which contains a detailed prediction regarding the manner in which the regional center will have a positive impact on the regional or national economy in general as reflected by such factors as increased household earnings, greater demand for business services, utilities, maintenance and repair, and construction both within and without the regional center. [Emphasis added]. 11

3 Table 9: Summary of the Total Project Impacts Year 1 Year 2 Year 3 Year 4 Year 5 Construction Operations Regional Center Economy Total Jobs Output ($ Millions) $32.05 $4.96 $9.53 $10.51 $10.87 Labor Income ($ Millions) $14.80 $2.60 $3.79 $3.95 $4.08 Household Earnings ($ Millions) $13.05 $2.29 $3.34 $3.48 $3.60 Outside the Regional Center Economy Total Jobs Output ($ Millions) $28.13 $4.20 $7.07 $7.59 $7.86 Labor Income ($ Millions) $10.43 $1.56 $2.61 $2.80 $2.90 Household Earnings ($ Millions) $9.34 $1.40 $2.34 $2.51 $2.60 Total United States Economy Total Jobs Output ($ Millions) $60.18 $9.16 $16.60 $18.10 $18.73 Labor Income ($ Millions) $25.23 $4.16 $6.40 $6.75 $6.98 Household Earnings ($ Millions) $22.39 $3.69 $5.68 $5.99 $6.20 Note: All dollar values are presented in millions of 2015 dollars. This updated economic impact study finds that the Project, through planned construction activity and operations, will result in new and significant economic impacts for the economy within the geographic scope of the Regional Center as follows: The new job totals in each year are as follows: o Year 1: 284 new construction jobs. o Year 2: 53 new operations jobs. o Year 3: 75 new operations jobs. o Year 4: 78 new operations jobs. o Year 5: 79 new operations jobs. A 5-year cumulative increase of $67.93 million in output. A 5-year cumulative increase of $29.21 million in labor income. A 5-year cumulative increase of $25.75 million in household earnings. This updated economic impact study finds that the EB-5 Project, through planned construction activity and operations, is expected to generate new and significant economic impacts for the United States economy outside the geographic scope of the Regional Center as follows: The new job totals in each year are as follows: o Year 1: 156 new construction jobs. o Year 2: 23 new operations jobs. o Year 3: 39 new operations jobs. o Year 4: 41 new operations jobs. o Year 5: 42 new operations jobs. A 5-year cumulative increase of $54.84 million in output. A 5-year cumulative increase of $20.31 million in labor income. A 5-year cumulative increase of $18.20 million in household earnings. 12

4 This updated economic impact study finds that the EB-5 Project, through planned construction activity and operations, will generate new and significant economic impacts for the United States economy as a whole as follows: The new job totals in each year are as follows: o Year 1: 440 new construction jobs. o Year 2: 76 new operations jobs. o Year 3: 114 new operations jobs. o Year 4: 119 new operations jobs. o Year 5: 121 new operations jobs. A 4-year cumulative increase of $ million in output. A 4-year cumulative increase of $49.52 million in labor income. A 4-year cumulative increase of $43.95 million in household earnings. In summary, an increased construction budget and expanded operations of the Rockbridge Assisted Living at Riverwalk EB-5 Project has resulted in increased economic impacts Direct and Indirect Jobs Table 10 Direct and Indirect Jobs on the following page presents the United States job creation associated with the updated Rockbridge Assisted Living at Riverwalk EB-5 Project separated into those jobs that are direct and those that are indirect. 14 By definition, all direct jobs are assumed to occur within York County, South Carolina, where the project activity is located. The number of direct and indirect jobs created as a result of the Project was determined using the REDYN model. The numbers highlighted in red correspond to the job impact numbers used by petitioners to support the EB-5 program job benefits request as presented in Table Direct jobs are defined herein as those that are created immediately by the incremental change in final demand for a given project (e.g., the developer hires a construction management firm). Indirect jobs are created as materials and other inputs to production are supplied to the project (e.g., the supplier of steel to the construction firm hires additional staff). It should be noted that induced jobs, which are a subset of indirect jobs, are created when the new workers occupying the direct and indirect jobs spend their new income resulting from the project at other businesses (e.g., the workers patronize restaurants and retail stores). 13

5 Table 10: Direct and Indirect Jobs Commercial building construction (NAICS 2362) Direct Jobs 126 Indirect Jobs 251 Total Jobs 377 Site preparation contractors (NAICS 2389) Direct Jobs 12 Indirect Jobs 24 Total Jobs 36 Commercial equipment wholesalers (NAICS 4234) Direct Jobs 2 Indirect Jobs 6 Total Jobs 8 Architecture & Engineering services (NAICS 5413) Direct Jobs 5 Indirect Jobs 14 Total Jobs 19 Year 1 Year 2 Year 3 Year 4 Year 5 Construction Operations Assisted living facilities (NAICS 6233) Direct Jobs Indirect Jobs Total Jobs Notes: Indirect jobs and total jobs are located both within and outside of the regional center for all of above construction activities; Indirect jobs and total jobs for operations (i.e., Assisted living facilities) are located only within the regional center Request for Jobs Attributable to the Regional Center For each NAICS category included in the modeling, Table 10 Summary of Model Specifications and Jobs Attributable to the Regional Center on the next page summarizes the following: 1) the model input specifications (expenditures for construction and revenues for operations) by year; 2) the total number of jobs created in the United States by year; and 3) the jobs the petitioner is requesting be attributed to the Regional Center under the EB-5 Program. As shown, the request for jobs attributable to the Regional Center totals 370 new jobs. This total consists of 295 indirect jobs created from construction activities in Year 1 throughout the United States; and 75 direct and indirect jobs created from the operations activities in Year 3 within the geographic boundaries of the Regional Center. 14

6 Table 11: Summary of Model Specifications and Jobs Attributable to the Regional Center Project Component NAICS Activity Code Model Inputs ($ Millions) Commercial building construction Total United States Job Creation Job Creation Attributable to the Regional Center CONSTRUCTION Year 1: $9.35 Year 1: 377 Year 2: $0.00 Year 2: Year 3: $0.00 Year 3: 0 Year 1, Total U.S. Year 1: $0.88 Year 1: 36 Year 2: $0.00 Year 2: 0 24 Site preparation contractors NAICS 2389 Year 3: $0.00 Year 3: 0 Year 1, Total U.S. Professional/commerical equipment and supplies wholesalers Architecture & engineering services Project Component NAICS Activity Code Model Inputs ($ Millions) Assisted living facilities for the elderly NAICS 2362 NAICS 4234 NAICS 5413 Year 1: $1.86 Year 1: 8 Year 2: $0.00 Year 2: 0 6 Year 3: $0.00 Year 3: 0 Year 1, Total U.S. Year 1: $0.60 Year 1: 19 Year 2: $0.00 Year 2: 0 14 Year 3: $0.00 Year 3: 0 Year 1, Total U.S. Total Regional Center Job Creation Job Creation Attributable to the Regional Center OPERATIONS Year 1: $0.00 Year 1: 0 Year 2: $1.93 Year 2: NAICS 6233 Year 3: $4.62 Year 3: 75 Year 3, Regional Center Year 4: $5.36 Year 4: 78 Direct + Indirect Year 5: $5.66 Year 5: 79 Total Job Creation Attributable to the Regional Center (Construction + Operations): 370 The economic impact analysis presented in this updated study demonstrate how a project consistent with the parameters of the Project will promote economic growth within the economy of the geography of the Regional Center, in the economy of the remainder of the United States outside the geography of the Regional Center, and, consequently, in the economy of the United States as a whole. Therefore, EPR has concluded that approval of the updated petition containing this impact study by the USCIS under the EB- 5 Program will result in the creation of a significant number of new jobs for workers in the United States. 1.9 Updated Targeted Employment Area Certification Letter Please see the updated TEA certification letter from the South Carolina Department of Commerce dated September 17, 2015, attached as Addendum Appendix 3 Updated TEA Letter to the end of this addendum. 15