The Times describes a new twist on a long-dormant scheme held over from Bush I: foreign investors who put up $500,000 in a jobs-creating venture in the US skip to the head of the line for green cards:
JAY PEAK, Vt. — At this remote outpost by the Canadian border, Bill Stenger is overseeing what he says is the biggest economic development project that Vermont has ever seen.
He is expanding the Jay Peak ski resort, which he co-owns, but he is also building a biomedical research firm and a window manufacturing plant, extending the runway at the local airport and rehabilitating much of the nearby town of Newport, where he lives. There, he is developing the waterfront, adding the town’s first hotel and a conference center and rebuilding an entire downtown block. He is also creating what he says is the largest indoor mountain bike park in the world and a state-of-the art tennis center.
The price tag for the entire project, which Mr. Stenger says will create 10,000 direct and indirect jobs over several years, is $865 million.
I know what you are thinking. OK, actually, I know what I was thinking - who in their right mind would back this white elephant which is many, many hours from anywhere?
But even more unusual than the size of the undertaking is the method by which Mr. Stenger and his business partner, Ariel Quiros, are financing it. They have tapped into a federal program that gives green cards, or permanent residency, to foreigners who invest at least $500,000 in an American business — the reward for the investment is a chance at United States citizenship.
Mr. Stenger has already attracted 550 foreign investors from 60 countries to put up $275 million for the first phase: a hotel here at the Jay Peak ski complex, an indoor water park the size of a football field, an ice hockey arena, condominiums, restaurants and stores.
The second and third phases, now under way, require 1,000 additional foreign investors to put up $500 million to overhaul Newport and to develop the nearby Burke Mountain ski area.
Mr. Stenger and Mr. Quiros are putting up $90 million themselves. But even at $785 million, this is one of the single biggest projects in the country financed under the investor program.
Congress created the visa program in 1990 to help stimulate the economy. Because of a cumbersome process and complaints of fraud and corruption, it was long underused.
Obviously. with the current problems challenges facing real estate developers this is a slick way to bring in a new pool of investors who are a bit less focused on their investment return and a bit more focused on buying a new life for themselves and thier kids in the US.
I actually like the basic program, which is a plausible way to recycle foreign wealth into the US and bring talented enterpeneurs to our shores. However, the scheme being described makes me worry about the viability of the projects being financed.
If one foreigner (or a small group) bring their capital and their hard-working selves to the US to start a small business, it is their money and their effort. Even if the primary attraction was the residency it seems less likely they will start a business with no legitmate prospects.
But this real estate venture amounts to writing a check and getting a green card while an American entrepeneur builds something for which financing would otherwise be unavailable. I don't see how that ends well. And yes, the American developer has his own money in the project, but I am sure he is also collecting huge management fees, so maybe he wins either way.
So, I suggest a modification of the program - for larger investor pools limit the 'green card' involvement to, say, 50%. If investors and lenders can't be found who will back the project on a stand-alone basis, then the project won't go forward.