Nearly $23 million in foreign investment authorized under a U.S. visa program is helping fund several large projects heading for the Old Sawmill District in Missoula, the first of which broke ground Tuesday.
The prestigious Yellowstone Club and a gold mine near Boulder also are looking for foreign capital, according to managers who run the EB-5 visa program in Montana at the Northern Rockies Regional Center, located in Missoula.
“In April 2011, we were officially deemed a regional center,” said Arnold Sherman, one of the center’s managing directors. “That has its own special designation, its own status that’s required for visa applicants to get certain privileges as it relates to job creation.”
The EB-5 program, run by the U.S. Citizenship and Immigration Services, was established by Congress in 1990 to stimulate the economy by allowing foreign individuals to invest in projects that create American jobs.
The minimum qualifying investment is $1 million, or $500,000 in rural areas. In return for their investment, the individual and his or her family receive residential status for two years. If their investment creates at least 10 jobs, the investor receives U.S. citizenship.
“We now have 46 foreign investors who have each made a $500,000 commitment to the Missoula community,” Sherman told members of the Missoula Economic Partnership on Tuesday. “It has a ripple effect, a broader effect. They now have roots in our state and they’re interested in expanding their participation in our economic development.”
Ed Wetherbee, who also serves as managing director for the Northern Rockies Regional Center and is a partner in the Old Sawmill District, said $23 million has been committed to the Missoula development through the EB-5 program.
Wetherbee estimates the funding will pay for roughly 15 percent of the larger project, which carries an estimated $200 million price tag when fully built on what once served as an industrial site.
“This project is benefiting from the EB-5 program, as well as local bank financing,” said Wetherbee. “The program is an important piece of the entire puzzle.”
Tuesday’s groundbreaking at the Old Sawmill District represents a patchwork of funding sources brought together over a number of years.
Aside from the $23 million invested by foreign individuals through the visa program, the city of Missoula also spent $12 million to reclaim the site and install critical infrastructure, clearing the way for development.
A 20-unit condominium project dubbed Polleys Square is the district’s first project. It also marks the first real estate development in Montana funded in part by the EB-5 program.
Wetherbee said two other district projects ready to break ground within the next six months – including a 200-bed student housing complex and an executive-style apartment building – will also receive EB-5 funding.
The Northern Rockies Regional Center website said its first 15 foreign investors for the Sawmill District were cleared by Citizenship and Immigration Services on March 15.
“The reason this project fits so well under EB-5 is because there was a big problem,” Wetherbee said. “There was a problem with the site being abandoned. The city wanted parking for the stadium and there were trails they were trying to get done. It had a lot of the components necessary to make it work under this program.”
Wetherbee said his project’s “village” theme interested foreign investors.
“You’re building something out of nothing,” he said. “We’ve got $23 million through NRRC, leveraged up by $40 million in debt. Some has been identified and secured, and some has not. These projects will be coming out of the ground within the next six months.”
The EB-5 program has led to the creation of other prominent projects elsewhere in the U.S., including the Barclays Center – home to the Brooklyn Nets – and the FBI Field Office in San Diego.
Roughly 92 percent of the foreign capital has come from China. Sherman said the Missoula center has placed former Max Baucus staffer Todd Jackson in China to facilitate outreach with potential investors.
Baucus now serves as the U.S. ambassador to China.
“There are dozens of highly visible projects around the U.S. that wouldn’t exist if it weren’t for this critical piece of money,” said Sherman, noting the Sawmill District project as one. “They all add to the economic vitality and vibrancy of the community they’re in.”
The Northern Rockies Regional Center is also working to raise $15 million for the Elkhorn gold project, which has plans to expand portions of its mine. While the mine is looking to raise $100 million overall, Sherman said, the $15 million sought in EB-5 funding would serve as a catalyst for further investment.
Sherman added that NRRC is also sponsoring the Yellowstone Club as it embarks on a $280 million expansion. Of that, he said, $140 million would come through EB-5 investments. That project would create an estimated 4,500 jobs, he said.
“They’re in the market right now and they’re making great progress,” Sherman said. “They’ve already put up $140 million of their own money and they’ve begun this expansion. The second phase will be EB-5 funded.”
Sherman said the center takes a “cautious and conservative” approach to the projects it takes on. He said the approach has paid off, with the Savannah (Georgia) Economic Development Authority signing on with NRRC as it looks to complete a $250 million marina expansion.
Northern Rockies Regional Center is also working on behalf of the Tacoma (Washington) World Trade Center to drum up investors there.
“We’ll have a three-legged stool, Montana of course being the closest to our hearts,” Sherman said. “We’ll also be able to develop projects in Georgia and Tacoma. There are a lot of strategic reasons why that makes sense for us. It keeps our visibility high in the foreign investment climate, and it gives us a steady stream of projects that we can keep investors focused on.”