RIMS II and Targeted Employment Areas

							  RIMS II and
    Targeted
Employment Areas



                         Scott W. Barnhart
                    EB-5 Foreign Investor Seminar
             Lake Buena Vista Resorts, Orlando, FL
                                 October 24, 2008


     Barnhart Economic Services
          What is RIMS II?
• Multiplier based on input-output
  tables. For each industry, an I-O table
  shows the distribution of the inputs
  purchased and the outputs sold.
• Table is regionalized to the local area.
• Measure the economic impact of a
  change in final demand, in earnings,
  or in employment on a region’s
  economy.
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RIMS II Multipliers




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Information Needed for RIMS
             II
• Which industries are associated with
  the enterprise?
• What is the change in final demand,
  employment or earnings paid to
  employees?
• What is the geographical area that will
  be affected by production in the
  enterprise?
• How long will the initial phase last?
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• Will there be more than one phase?
      RIMS II Multipliers for
           Industries
• Recently updated to 2006
• Available for 60 aggregate industries
• When possible, the BEA recommends
  using multipliers from detailed
  industries.
• There are up to 473 detailed
  industries.
• A particular multiplier may not be
  available for a specific region.
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 Application Example: Impact of
  Performing Arts Company in
Do use the detailed multiplier for the
 industry of performing arts.

Do not use the aggregate multiplier for
 the industry of Performing arts,
 museums, and related activities.

. Why? It includes several other
  industries.
            Barnhart Economic Services
      2006 RIMS II Multipliers
         Detailed Industry
Industry     Final Demand Multipliers                   Direct Effect
             Output     Earnin   Employ         Value- Earning Employ
             /          gs       ment           added    s         ment
             (dollars   (dollars (jobs)         (dollars (dollars) (jobs)
             )          )                       )
711100       1.5892     0.5657    35.8397 0.8655        1.4098    1.1940
Performing
arts
companies
711200       1.6647     0.7245    20.6412 1.0929        1.3815    1.4503
Spectator
sports
712000       1.7519     0.5635    17.5310 0.9359        1.5350    1.6158
Museums,
historical
sites,                     Barnhart Economic Services
zoos,&
    2006 RIMS II Multipliers
    by Industry Aggregation
Industry         Final Demand Multipliers               Direct Effect
                 Output    Earnin    Empl     Value     Earnin    Empl
                 /         gs        oyme     -         gs        oyme
                 (dollar   (dollar   nt       added     (dollar   nt
                 s)        s)        (jobs)   (dollar   s)        (jobs)
                                              s)


55. Performing   1.6382    0.6363 23.95       0.9457 1.4061 1.347
arts, museums,
and related
activities



                    Barnhart Economic Services
    Detailed vs. Aggregate
           Multiplier
The final-demand employment
  multiplier for the
Performing arts industry is 35.8397.

Implication:
A $1,000,000 increase (or decrease) in
  final demand for performing arts will
  generate an additional 36 jobs.
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    Detailed vs. Aggregate
           Multiplier
Suppose you use a less detailed
 multiplier in this example.
The multiplier for the Performing arts,
 museums, and related activities
 industry is 23.95

Implication: Using the aggregate
  measure would result in an additional
  24 jobs.
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 How Do I Define a Geographic
           Region?
• BEA recommends: identify the area
  that supplies the majority of the direct
  inputs.
• If the region is too broadly defined,
  the analysis may overstate the
  impacts.
  – A larger region usually results in larger
    multipliers because of fewer leakages
  – A common mistake is to use statewide
    multipliers to estimate local level impacts
• If a region is too narrowly, the
             analysis may understate the
  economic Barnhart Economic Services
                     EB-5
Each year, the USCIS makes 10,000
  investor visas available.

Two requirements for applicants:
• Must establish a commercial
  enterprise and invest $1,000,000.
• Must demonstrate various benefits of
  the investment, including the creation
  of at least ten full time jobs.
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      Regional Centers
2003: Congress created a
 special program that sets
 aside 5000 of the EB-5 visas
 for foreign nationals applying
 for these USCIS-designated
 “Regional Centers.”

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     Advantages of a Regional
             Center?
• The ten jobs required includes
  those created either directly or
  indirectly “by the new commercial
  enterprise through revenues
  generated from increased exports,
  improved regional productivity,
  job creation, or increased
  domestic capital investment
            from the pilot
  resultingBarnhart Economic Services program.”
    Advantages of a Regional
            Center?
The required investment is only
  $500,000 if a Regional Center is in a
  Targeted Employment Area (TEA):
• a rural area: areas not located within
  a MSA or within a city or town with a
  population of 20,000 or more; or
• a high unemployment area:
  unemployment rate is 150.0 percent
  of the national average unemployment
  rate.      Barnhart Economic Services
  High Unemployment Areas
• A high unemployment area may
  include an MSA, a county, city, or
  town, or, other political or
  geographical subdivision designated
  by a State authority (appointed by the
  State’s governor) as having an
  unemployment rate of at least 150% of
  the national unemployment rate.

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   High Unemployment Area
• For a political or geographical area
  other than an MSA, county, city, or
  town, the State authority must also
  certify, in writing, that such area is in
  fact a “high unemployment area”
  meeting the requisite 150%
  unemployment rate standard.



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     Florida Regions Qualifying as
          Rural Areas in 2008
     Bradford County
 
      
      
       Jackson County

   Calhoun County
 
        
      
       Lafayette County

   Citrus County
    
      
      
       
       Levy County

   Columbia County
 
       
      
       Liberty County


   De Soto County
 
        
      
       Madison County

   Dixie County
     
      
      
       
       Monroe
    County* 

     Franklin County
 
      
      
       Okeechobee County
     Glades County
 
        
      
       Putnam County

   Gulf County
      
      
      
       
       Sumter
    County

   Hamilton County
 
       
      
       Suwannee County

   Hardee County
    
      
      
       Taylor County

   Hendry County
    
      
      
       Union County

   Highlands County
 
      
      
       Walton County

   Holmes County
 Barnhart Economic Services
                      
      
      
       Washington
Rural Areas in Florida:
     2004-2008




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      Rural Areas in Florida
• The list of rural areas has remained
  relatively consistent the last five years.

• Five counties were dropped in 2005:
  Baker, Gilchrist, Indian River, Jefferson,
  and Wakulla.

• Flagler County was added in 2005, but
  dropped in 2007.
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  High Unemployment Areas in
           Florida
• For calendar year 2007, the national
  unemployment rate averaged 4.6
  percent.

• Therefore, a non-rural area qualifies
  as a high unemployment area if its
  2007 annual average rate was at least
  6.9 percent.

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    Where Are the High
Unemployment Areas in Florida?

• Under this provision, there is only one
  area in Florida that qualifies as a high
  unemployment area in 2008:
 
• Ft. Pierce City (in St. Lucie County)—
  8.2 percent


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  Annual Average
Unemployment Rates:




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   Who Identifies TEA’s for
          Florida?
• The Florida Agency for Workforce
  Innovation (AWI).

• They administer the state’s Labor
  Market Statistics program,
  Unemployment Compensation, Early
  Learning and various workforce
  development programs.

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        AWI Methodology
• The AWI derives labor market
  estimates with standard Bureau of
  Labor Statistics (BLS) methods for
  small geographic areas (i.e. areas with
  population under 25,000). 

• The small area estimates are not
  submitted to BLS and are only
  available from the AWI.
           Barnhart Economic Services
  High Unemployment Areas in
           Florida
• The city listing mentioned earlier is in
  effect until 2008 annual averages are
  available in early 2009 (usually March).

• Unemployment estimates are routinely
  calculated only for cities with
  populations of at least 25,000.
  Estimates for smaller areas can be
  calculated by request.
              Barnhart Economic Services
     Smaller Area Requests

 Contact Sue Patterson, AWI,

 Susanna.Patterson@flaawi.com


 The smallest area they can estimate
  the unemployment rate for is a
  “Census tract”– geographical area
  based on the Census:

http://ftp2.census.gov/plmap/pl_trt/
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Example of Census Tracts in
    Riviera Beach Area




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Example of Census Tracts in
    West Palm Beach




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     Where Can I Find
  Unemployment Rates for


 Can download city and county
  data from the AWI Site :

 LAUS - Local Area
 Unemployment Statistics http://
 labormarketinfo.com/library/laus.htm

            Barnhart Economic Services
      Where Can I Find
   Unemployment Rates for
• The BLS has a site to request tables for
  cities.

• Menu requires a couple of steps.

• http://data.bls.gov/cgi-bin/dsrv?la



              Barnhart Economic Services
Where Can I Find the National
   Unemployment Rate?



 Data are available at the Bureau of
  Labor Statistics. Annual Data for 2007
  became available in March 2008.

ftp://ftp.bls.gov/pub/special.requests/
  lf/aat1.txt


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     Scott W. Barnhart

    sbarnhar@fau.edu


          Barnhart Economic Services