Seattle, WA Assisted Living Facility

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A Preliminary EB-5 Economic Analysis of a

Seattle, WA Assisted Living Facility

August 1, 2014

Prepared by:

Impact DataSource, LLC

Economic Consulting, Research and Analysis Austin, TX

1.800.813.6267

www.ImpactDataSource.com

This report is preliminary and should not be submitted to USCIS. The information contained in this report is provided for informational purposes only and does not constitute legal advice. These materials are intended to guide your conversations with experienced EB-5 attorneys and other professionals. You should not act or rely on any information contained in this preliminary analysis without first seeking the advice of an attorney.

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Impact DataSource | 2

Overview

Impact DataSource, an Austin, Texas economic consulting, research, and analysis firm, conducted a preliminary economic analysis of the investment in an Assisted Living Facility in Seattle, WA (the “Project”).

 Based on the preliminary information provided, the project has the potential to create 268 eligible permanent jobs under the U.S. Citizenship and Immigration Services (USCIS) EB-5 Immigrant Investor Program.

 A letter dated July 28, 2014 from the Washington State Employment Security Department has certified the location of the project as being located in a targeted employment area (TEA). Therefore, the location currently qualifies for a $500,000 minimum investment per immigrant investor through the EB‐5 program.

 Based on these specifics, the issuer may be able to raise up to $13 million from 26 foreign investors each making the minimum required investment. Factoring in a 20% job cushion, the possible EB-5 raise would be reduced to $11 million.

Projected Employment

Impact DataSource estimates that the investment in the Project has the potential to create a total of 133.6 jobs from construction and 134.8 jobs from operations of the Project for a total of 268.4 potential eligible jobs under the EB-5 immigrant investor program.

Table 1: Employment Generated by the Project

Total Permanent Jobs

Construction 133.6 Operations 134.8 Total Employment 268.4

The total of 268.4 jobs in the table above includes the indirect and induced jobs created during construction and the direct, indirect, and induced jobs from operations after construction is completed.

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Multipliers

Since the project is located in Seattle, the calculations rely on RIMS II multipliers for the geographic area of the Seattle-Tacoma-Bellevue, WA Metropolitan Statistical Area (Seattle MSA), which contains the following counties: Pierce, WA; King, WA; and Snohomish, WA. Utilizing an MSA as a geographic impact area is generally considered reasonable as MSAs are defined based on commuting patterns and are meant to represent areas with strong economic ties. A map of this geographic area, along with the approximate location of the project is shown below. The RIMS II multipliers are shown in detail later in the report.

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Discussion of EB-5 Eligible Jobs Resulting from Construction Activities

Construction Costs Included in Impact Model

The job estimates related to construction activity are based on the allowable construction expenditures from the project budget provided in Project Sources and Uses.pdf.

To be consistent with USCIS guidance, the estimates for land and certain other soft costs have been excluded from the analysis. The following table summarizes the projected development budget along with the amounts included in the impact model to estimate job creation.

Table 2: Summary of Construction Budget and Expenditures Included in RIMS II Model

Cost Budget

Amount

RIMS II Industry Included In Model

Land $2,000,000 Excluded $0

New Construction $15,231,221 23 Construction $15,231,221

Utility and Impact Fees $850,000 Excluded $0

Contingency $761,561 Excluded $0

Civil Engineering $350,000 5413 Arch/Engineering $350,000

Mech., Plumb., and Structural $200,000 23 Construction $200,000

Architectural Fee $850,000 5413 Arch/Engineering $850,000

Architectural Inspection $100,000 Excluded $0

Environmental Reports $15,000 Excluded $0

Dev. Fee $1,500,000 Excluded $0

Acquisition Fee $0 Excluded $0

Utility Hookup Fee $100,000 Excluded $0

Lease-up and Marketing $200,000 Excluded $0

Insurance $75,000 Excluded $0

Real Estate Taxes $25,000 Excluded $0

Tax and insurance Escrows $100,000 Excluded $0

Appraisal $14,000 Excluded $0

ACG Legal $10,000 Excluded $0

Accounting $10,000 Excluded $0

Building Permits $200,000 Excluded $0

Title and Recording $20,000 Excluded $0

Total $22,611,782 $16,631,221

Construction Timeframe

Construction of the Project is expected to last one year, therefore the initial construction activity will only support permanent indirect and induced employment. According to guidance from the USCIS, the direct employment related to construction activity may not be counted in the total job count if the construction activity lasts less than two years but the indirect and induced jobs may be

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counted. The following clarification is provided in a letter from USCIS Chief James W. McCament on January 16, 2009:

“The indirect and induced jobs created as a result of construction jobs whether counted or not may be included in the job count. Even when the construction jobs may not be counted towards the job creation requirement, they do have indirect and induced impacts that are eligible to be included in the final job count because they are "continuous, permanent employment.”

Methodology

The total estimated jobs from construction are calculated based on the construction expenditures of the Project by utilizing the industry-specific demand employment multipliers. The final-demand employment multiplier used in this analysis represents the change in the number of indirect and induced jobs that occurs in all industries for each addition 1 million dollars of output delivered to final demand by the industry. The final-demand multipliers for the relevant industries are shown in the table below.

Table 3: RIMS II Multipliers for Construction

RIMS II Industry Indirect & Induced

Employment Multiplier

230000 Construction 8.6580

541300 Architectural/Engineering 9.1717

Note: The above multiplier reflects the number of indirect and induced jobs created per $1 million of eligible expenditures.

The following table provides a summary of the jobs calculations for the project utilizing the construction expenditures.

The RIMS II multipliers are based in 2010 dollars, so the relevant construction expenditures are first deflated to 2010 dollars before applying the multipliers.

Table 4: Employment Calculations for Construction

Expenditures (millions) 2014$ Expenditures (millions) 2010$ Multiplier Jobs* Hard Construction $15.43 $14.26 8.6580 123.4 Architectural/Engineering $1.20 $1.11 9.1717 10.2 Total 133.6

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In summary, the construction expenditures of the project have the potential to support 133.6 EB-5 eligible jobs.

Discussion of EB-5 Eligible Jobs Related to Operations

Assisted Living Operations Calculations

The job estimates resulting from the assisted living facility’s operations are based on the annual revenue projections of $5,837,270 which were provided by Property Partners, Inc.

Methodology

The jobs created during operations are based on the facility’s revenues by utilizing the industry-specific Type II final-demand employment multiplier. The final-demand employment multiplier used in this analysis represents the change in total jobs that occurs in all industries for each additional 1 million dollars of output delivered to final demand by the industry. The final-demand employment multiplier for the relevant industry is shown in the table below.

Table 5: RIMS II Multipliers – Operations

RIMS II Industry Type II Total

Employment Multiplier 623000 Nursing and residential care facilities 26.0122

Note: The above multiplier reflects the number of total jobs created per $1 million of revenue.

The revenue method utilizes the final demand employment multiplier and the price-adjusted revenues to determine the total employment. Similar to the construction expenditures shown in the previous section, the revenues must first be deflated to 2010 prices.

Table 6: Revenue Method Employment Calculations for Operations

Revenues (millions) 2016$ Revenues (millions) 2010$ Multiplier Jobs* Operations $5.84 $5.18 26.0122 134.8

*Reflects total jobs (direct, indirect and induced)

In summary, the revenue projections provided indicate that 134.8 EB-5 eligible jobs could be created as a result of operation of the facility. This estimate relies on the revenue method.

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About Impact DataSource

Impact DataSource became involved in the EB-5 industry in 2010 as EB-5 began to grow in popularity. Our firm has prepared more than 40 EB-5 economic impact analyses since that time, however, our knowledge and experience in economic analysis and economic impact analysis is much deeper. Over the past 20 years we've done over 2,500 non-EB-5 economic and fiscal impact analyses in over 30 states in nearly all industry groups. If you would like further information such as pricing or references, please contact:

Michael Kester, Economist michael@impactdatasource.com

512-861-5202

Comprehensive EB-5 Economic Analysis (Jobs Reports)

We produce reports that meet USCIS requirements for regional center or I-526 applications. Impact DataSource provided the economic study for 11 regional center approvals and numerous outstanding regional centers and projects currently being adjudicated in the following areas:

 Assisted Living Facilities

 Hotels

 Multi-family Residential Projects

 Oil and Gas Drilling and Extraction Projects

 Restaurants

 Renovation Projects

 Solar Installation and Operations

 And many more.

Preliminary EB-5 Jobs Assessment

Our preliminary EB-5 job creation reports are a valuable tool to help assist in project planning including determining what percent of the project’s capital stack may be composed of EB-5 funds.

Targeted Employment Area Map

Our TEA map http://www.impactdatasource.com/map is developed using the most recent census tract data from the American Community Survey and most recent calendar year data from the BLS at the county level. This user-friendly, point and click map covers the entire US and is meant as a guide to assist in finding TEA-eligible sites.

TEA Analysis / Letter Coordination

We have evaluated over 500 sites for TEA-eligibility and have helped clients obtain more than 70 state TEA letters.

EB-5 Industry Involvement

Impact DataSource is a member of the Association to Invest In the USA (IIUSA) EB-5 editorial committee, offering the economist’s perspective for the Regional Center Business Journal and has led economist-related webinars.