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during and after the sales commence. The timeshare unit sales
are typically conducted over a four to eight year period, well
past the 24-month minimum duration for using direct, indirect
and induced jobs. I know this first hand, as Marriott has a five
condominium project in my neighborhood in South Florida
where I have seen the sales staff guiding prospective clients
along the walking paths for about five to six years now. Yet
some immigration attorneys have advised using only indirect
and induced jobs from sales commissions as they have received
RFEs on using all jobs, despite the length of the sales period.
Additionally, the sales commissions on these large projects are
also very large. Commonly, 20 to 40 percent of the sales price
goes to an operator who provides the sales staff and offices,
such as Hilton, Marriott or another hotel flag. While the sales
transaction amount is always excluded from EB-5 applicable
construction costs, the sales commissions supporting the sales
force are substantial and should be claimed. Should only indirect
and induced jobs be used if the sales staff is employed for longer
than 24 months?
One final issue is construction overhead and profit, and
developer fees. The stakeholder call addressed developer fees,
indicating that if these are included for job creation then
evidence needs to be shown that they were actually used to
create jobs and not simply a return of developer capital. For
the most part, construction overhead and profit are a basic part
of any construction budget. Without overhead and profit, the
94
construction contractor ceases to have a profitable business,
unless it is a cost plus arrangement. We have always included
developer fees and overhead, but have gotten pushback now and
then. Guidance on these items would also be very helpful.
In sum, the type of guidance being suggested here is
straightforward and similar to what was given in the June 4th
call. Streamlining the process will avoid unnecessary and costly
delays, as well as RFEs that no one wants, especially with all
the other inherent delays in this program. It is also necessary to
bring more consistency into the job creation process is necessary so that the job creation studies are above suspicion by all
within and outside of the EB-5 industry, especially those
in Congress.
★
Scott
Barnhart
EB5 INVESTORS MAGAZINE
Scott Barnhart, PhD is president of Barnhart
Economic Services LLC and an Associate Professor of Finance at Florida Atlantic University.
Barnhart Economic Services is a consulting firm
specializing in EB-5 economic job creation studies, TEA designations and business plan writing.
The firm has conducted hundreds of job creation
and TEA studies with 100 percent approval from
USCIS to date. Thus far the
firm has completed projects in
excess of $13 billion in capital
expenditures. Barnhart also
serves on the EB5 Investors
Magazine Editorial Board.