Illinois

Gorman buys Amerock building in downtown Rockford

By Brian Leaf, Rockford Register Star, May 28, 2015

ROCKFORD — Gorman & Co. has completed its purchase of the Amerock building from the city of Rockford.

Under a contract approved by the Rockford City Council, Gorman paid $250,000 for the building.

The company said pre-demolition work will start within a week on the 13-story abandoned factory that Gorman intends to turn into a 160-suite hotel and conference center. It will also feature restaurants, retail space, a swimming pool, business center and a top floor cocktail lounge. Cost of the project is $67 million.

Gary Gorman, CEO of the development company that specializes in historic buildings and revitalizing urban neighborhoods, said ownership was a big step toward completion of the project.

Gorman hopes to raise about $25 million for the project from Chinese investors through an immigration program, EB-5, that provides foreigners a green card if they invest $500,000 in a project that creates at least 10 jobs. Gorman said this month that advisers in China told the company that it would be easier to recruit investors if Gorman owned the building.

The company hopes to have its financing package complete later this summer. The historic renovation of the 104-year-old building, built by William Ziock Jr. for his textile businesses, is expected to start in September.

Our View: Downtown Rockford pieces fitting together nicely

By The Editorial Board Rockford Register Star

Posted May 19, 2015 at 2:03 PM

Monday night’s Rockford City Council vote amending the development agreement with Gorman & Co. may seem like an incremental step toward downtown revival, but don’t underestimate its importance.

Aldermen not only showed confidence in the Gorman project, a $67 million hotel and conference center at the former Amerock/Ziock building, but their 11-1 vote sent a signal to other developers that they are willing to work in the best interests of all parties. Rockford is open for business.

Gary Gorman, CEO of the company that bears his name, had asked to have an option to sell Amerock/Ziock back to the city for the $250,000 he paid for it. That made aldermen nervous that he would back out. So, the deal changed. Now, Gorman will sell the building back to the city for $1 if the project is scrapped.

The worst-case scenario would be that the city resumes ownership of a partially cleaned-up Amerock/Ziock with $250,000 in its coffers.

That’s unlikely, and Gorman sounded confident Monday when he said: “This project is going to happen.”

Gorman is expected to close on the building Wednesday and with that move he will have spent more than $1 million on the project. That’s a huge commitment and doesn’t account for staff time that’s gone into the development.

The buzz about downtown Rockford has never been greater. Gorman is the biggest piece of the revival puzzle, but there are plenty of pieces in place with undoubtedly more to come.

Work on the downtown sports complex, another huge puzzle piece, is progressing well, and the Rockford City Market pavilion looks very good as the market prepares to open its sixth season Friday.

The market has been a catalyst for downtown development. It has shown that people will come to downtown Rockford regularly if you give them a good reason. The market set a record for attendance in 2014 with 75,500 visitors, an amazing number when you consider there were quite a few Fridays with unpleasant weather last year.

This year the pavilion will protect market visitors from the elements, so we expect a new record.

Several small-business owners started at the market and have opened stores downtown.There still are plenty of empty storefronts downtown for aspiring entrepreneurs. As projects such as Gorman’s and the sports complex take shape, those empty spaces will become more desirable.

We can’t remember a time when so many reputable developers were interested in the center of the city. Urban Equity Properties, led by Justin Fern, plans a $10 million development in the 50,000-square-foot Hanley building and is working on other downtown properties.

Morgan Management wants to turn the Rockford Trust Building into 62 downtown apartments, with space for retail and service businesses on the ground floor. The price is nearly $13 million.

Joseph James Partners, led by SupplyCore CEO Peter Provenzano, and Frantz Community Investors of Cedar Rapids, Iowa, also are looking for downtown opportunities.

You can feel the momentum build from our offices here in the downtown News Tower. There has been significant private investment in an area that had seen mostly public dollars spent on it.Downtown Rockford finally appears ready to live up to its potential. Years from now, we will be able to look back at Monday night’s vote as a vital step in the process.

Amerock Project Closer to Being Finalized

By Phillip Reed, MyState.com, May 19, 2015

Rockford-The vacant dilapidated Amerock building sits with broken windows in downtown Rockford waiting on aldermen and developer Gary Gorman  to reach an agreement on a purchase of the property to turn it into a hotel. 

Gorman says “(The Amerock) project is going to happen. We have to explore the risk, we have to explore the ‘what if’ scenarios.” 

That’s why Gorman asked for some amendments to the proposed deal with Rockford. The developer wants more then 500,000 dollars waived in fees for permits and utilities, in exchange for hiring local contractors. Aldermen voted yes on that proposal during Monday night’s city council. 

Gorman says “We will do that. That’s part of the trade off, for the waiver of the fees. But the bigger point in the waiver of the fees is we want to put money in the quality of the hotel.” 

Gorman also wanted an option to sell the Amerock back to Rockford for 250,000 dollars. Aldermen were not in favor of that, saying that would be unfair to taxpayers. They changed the amendment to make any sale back to the city cost one dollar. Gorman did not have any objections to the decision. 

He says “Worse case scenario for the city of Rockford, they keep my 250,000 dollars, they will have the building back that they own now, and it will at least be partially remediated because we’re going to start work on it with the month of June.” 

Gorman says he’s confident in the city of Rockford and the Amerock project. He adds, “On 31 years (my company has) never started a project and not completed it, so that’s just not gonna happen.”

Gary Gorman says he’s committed to hotel project in downtown Rockford

By Brian Leaf Rockford Register Star

Posted May 17, 2015 at 12:00 PM Updated May 17, 2015 at 8:45 PM

ROCKFORD — Gary Gorman asked for an audit on how much his company has invested into the vacant, asbestos-filled Amerock/Ziock building that he wants to turn into a $67 million Embassy Suites hotel and conference center.

The accountant’s report: $760,418.16, said Gorman, CEO of the Wisconsin-based company that bears his name. That’s what he’ll lose if the project dies.

That investment, which doesn’t include $75,000 to apply for a hotel franchise and staff time put into the project since 2012, will surpass $1 million Wednesday if, as expected, Gorman buys the property from the city of Rockford for $250,000.

“The concern I’ve heard is that Gorman is not committed to this,” he said. “I just smile when I hear this.”

But worried frowns and questions about Gorman’s commitment rose last week when aldermen considered changes to the company’s development plan. Those changes include a city waiver of $550,000 in fees for permits and utilities, a $3 million federal loan backed by the city and an option to sell the building back to the city for $250,000.

The City Council is expected to consider the changes Monday.Aldermen have questioned whether the changes to Gorman’s development plan are a sign that the deal, which relies on $25 million from Chinese investors, is “imploding,” as Ald. Frank Beach, R-10, put it.

Hardly, said Gorman, who has 30 years of putting together development deals and says they are prone to challenges and change.

“The real key in getting a project done is persistence, pounding away at it until it comes together,” he said. “And I’m betting an awful lot that (Amerock) will.”

So are taxpayers.

The Amerock deal has many parts. It relies on $16 million in city infrastructure investments; development of the $24 million Ingersoll indoor sports center; state and federal historic tax credits; EB-5, an immigration program that gives foreigners a green card for investing $500,000 in job-creating projects; a bridge loan for construction; approval of a hotel brand; and tight construction deadlines.

“This is a lot more complex than the average redevelopment deal that we have worked on,” said Mayor Larry Morrissey, who expects the amendments to be approved Monday.

Gorman Illinois Market President André Blakley met with aldermen last week to address their concerns and questions about the hotel project.

One question centered on why Gorman needs an option for the city to buy back the Amerock building for $250,000. The answer is EB-5, which Gorman hopes will help it raise $25 million from investors in China.

Gorman said he hadn’t anticipated buying the building until later this year, when what developers call the “financial stack” is in place: all of the financial elements — such as equity, loans, tax credits and outside investments — needed to finish a project

Our View: Give Gorman the tools he needs to make downtown Rockford hotel project work

By The Editorial Board Rockford Register Star, May 17, 2015

There seems to be some angst among Rockford aldermen about the future of “The Cinderella Project.” We understand their concerns but are confident that downtown will have a hotel by the end of next year.

Aldermen will be asked Monday night to approve amendments to the development agreement with Gorman & Company, which plans a $67 million downtown hotel and conference center in the former Amerock/Ziock building. We urge aldermen to do so.

“So we’re at the dance, and the clock’s getting close to midnight. We want to make sure Cinderella keeps her dress on,” Rockford Mayor Larry Morrissey said last Monday at the Planning & Development Committee meeting.

Hence our reference to “The Cinderella Project,” which seems appropriate for a building that we expect will be a rags-to-riches story when completed.

The change that seems to make aldermen most nervous is Gorman’s request to have an option to sell Amerock/Ziock back to the city for the $250,000 Gorman paid for it.

Good businessmen hedge their bets, and Gary Gorman, CEO of the company that bears his name, is a good businessman. Gorman has invested more than $760,000 in the project, so the option request should not be seen as a warning that he’s getting cold feet. In a worst-case scenario, he’d like to get some of his investment back.

Even if that happened, which we think unlikely, the city would be better off than before Gorman came on the scene.

Gorman plans to close on the building May 20 and as soon as the company takes ownership, remedial work — such as asbestos removal and demolition — will begin. If things didn’t work out, the building would be in better shape for the city if it had to buy the property back Aug. 1 and would be more enticing to the next developer.

Gorman also wants the city to waive $500,000 in permit fees in exchange for his buying local furniture, art and fixtures for the building and making “the attempt to utilize local contractors, tradesman, makers and artists” during construction.

If there were no project, there would be no fees, so this also is a reasonable request.

Gorman wants a 300-vehicle parking lot on the site of the former Tapco building, south of Amerock, instead of on Green Street where it would have been attached to an Amtrak train station.

Downtown could use more parking no matter what the fate of the hotel project.

Aldermen, especially those who have served for many years, have been disappointed more often than not when it comes to downtown development proposals. So have we, and mostly we’ve taken a we’ll-believe-it-when-we-see-it attitude toward downtown development.

However, Gorman is a reputable company that not only has had success in its home state, Wisconsin, but has done good work in the city of Rockford. Gorman’s record should ease aldermen’s concerns.

Also, aldermen should consider that Gorman has increased the size of the project since it was proposed in February 2014. What was a $50 million project is projected to be $67 million. Gorman wants more hotel rooms, going from 150 to 160, and wants to double the convention space.

Those are indications that Gorman is committed to Rockford.

Financing such a huge endeavor is helped by the use of state River Edge Historic Tax Credits and through an EB-5 program, which allows foreigners who invest $500,000 in a project that creates 10 jobs to get green cards. There is huge interest among Chinese investors in the EB-5 program, so odds are good that Gorman will get the money he needs.

Gorman has experience with EB-5. The company raised $15 million for the $19 million historic renovation in Milwaukee of the former Pabst brewery into the Brewhouse Inn & Suites. Gorman wants to raise $25 million for the Rockford project.

We appreciate aldermen doing due diligence on this project and hope they agree with us that the rewards far outweigh the risks in approving the amendments for this vital project.

Gorman Close to Deal with Hilton for Amerock Project

By Mike Buda, May 14, 2015

ROCKFORD (WIFR) — Major developments surround Rockford’s downtown Amerock building. Wisconsin-based developer Gorman and Company tells 23 News that they have received preliminary confirmation the chain will be the franchise for the Amerock project.

Gorman Illinois Market President, André Blakley, says it’s an exciting time to be in Rockford.

Construction is about to begin on Rockford’s former Amerock building, a structure that’s sat empty for more than two decades.

“We think this will be a significant development,” said Blakley. “Significant in terms of jobs, significant in terms of just reactivating this area and revitalizing the downtown district.”

Amerock is not the only thing being re-used and revitalized. As a part of an agreement with Gorman, Rockford is looking at ways to update neighboring Davis Park by complimenting its surrounding buildings.

“It was designed to be a festival park,” said David Sidney, Rockford’s Comprehensive Planning and Design Manager. “We’re trying to assess whether that still makes sense to go forward and how to make it more active in light of the hotel and conference center and all of the other development happening around it.”

Rockford aldermen still need to approve the updated contract with Gorman. It would provide set deadlines for specific parts of the project to be completed.

“We certainly appreciate the stewardship of our council on these issues in making certain that they test these ideas and make certain that the city’s interests are well taken care of,” said Rockford’s Legal Director Patrick Hayes. “We’re excited to be able to continue to present opportunities for this project to move forward.”

Blakley says by the time the new 160 room Amerock Hilton opens up in early 2017, downtown Rockford should be booming once again.

Gorman says they will be closing on the property in the next week or so and should have their finances approved by September.

Hayes says that on the off-chance that Gorman does not get the money, the developer would have the option to sell the building back.

Aldermen to consider Warren Buffett’s entry into downtown Rockford hotel plans

By Brian Leaf, Rockford Register Star,  Jan. 31, 2015

ROCKFORD — If it were a boxing match, the hype would be huge at next week’s City Council meeting.

“In this corner of North Main and Mulberry streets,” a ring announcer might say, “weighing in at $14.5 million, with aspirations of turning a crumbling, two-story building back to life as a five-floor, 76-room boutique hotel, from Rockford, Illinois — Joseph James Partners.”

“And in this corner of Wyman and Cedar streets, weighing in at $64 million, a developer pining to turn an eyesore skyscraper into a shimmering waterfront Embassy Suites hotel, the cornerstone of a downtown revival. He’s backed by the world’s best-known capitalist, Warren Buffett. From Oregon, Wisconsin, ladies and gentlemen — Gorman & Company.”

Those ringside at City Hall on Monday will hear aldermen consider only a proposal by Joseph James to redevelop 134 N. Main St., where the advertising agency Trekk used to lease space. But a memo from the heavyweights, who plan to turn the Amerock building into a 150-room hotel, will also be on their minds.

CEO Gary Gorman shocked the city last spring by proposing a $53 million hotel and convention center downtown, the type of central city revitalization that generations of Rockford mayors have tried and failed to orchestrate. Gorman announced Thursday that a subsidiary of Buffett’s Berkshire Hathaway is investing $18 million in the project, which has swelled to $64 million. Plans for the hotel will be finished Friday and bidding for construction contracts will commence the next week, he said.

Gorman’s interest was catalyzed by the $21 million indoor sports center being built in another vacant factory across the Rock River from Amerock and the availability of state and federal tax credits worth up to 45 percent of construction costs. When the sports complex ramps up, proponents say, it will draw thousands of families, players and fans downtown for basketball, volleyball and other sports tournaments.

They’ll need a place to stay.

Joseph James, which is led by SupplyCore CEO Peter Provenzano, submitted its first hotel proposal in November 2013. It initially sought to develop hotel rooms in two buildings, then settled on one hotel with a restaurant in the former Trekk building.

Both hotel camps sent memos to aldermen and city officials this week.

Gorman said he’s concerned about too many new rooms in an unproven market.

“We have done our due diligence analyzing the market trends and data and consulted with our partners on this project and have concluded that another hotel in the downtown opening at the same time or sooner is a serious threat to the viability of our project,” he wrote.

Provenzano quoted a Jan. 24 memo from a hotel consultant hired by the city and Rockford Area Convention & Visitors Bureau, Hunden Strategic Partners of Chicago, that said there’s plenty of room downtown for both projects.

Provenzano said the sports complex is slated to open in June 2016 and he hopes to have his hotel open then. The Gorman project won’t be ready until early 2017, he said. Hunden said both hotels will have time to ramp up and succeed because there is a six-month gap between the scheduled openings. Branded hotels and boutique hotels also serve different types of travelers, the consultant noted.

Provenzeno said one could argue that his project will pave the way for Gorman by helping create a hotel market downtown. With no hotel rooms downtown, there’s a risk that demand will be satisfied by east-side Rockford hotels.

“I hope his project happens,” he said Friday. “We think these projects are very beneficial to one another.”

In 2011, Gorman and Mayor Larry Morrissey were part of an Illinois trade delegation to China, a country that is likely to produce most, if not all, of the 96 wealthy foreigners who will invest $46 million into Gorman’s hotel in a federal cash for a visa program called EB-5.

Morrissey, a three-term mayor first elected in 2005, campaigned on downtown revival. Provenzano, a longtime Morrissey supporter, rehabbed the former Pioneer Life building, 303 N. Main St., for his company’s headquarters and other offices.

Morrissey wants both projects to move forward.

“I’ve had a number of conversations directly with Gary Gorman,” he said. “I think he understands my position and I understand his. He’s got a project. He’s doing everything he has to do to manage it. I’ve committed to do everything I can to do to support his efforts.

“What I’ve explained to him and others is that we’re not just selling one project. We’re selling our downtown renaissance.”

Warren Buffett to invest $18M in Gorman & Co.’s downtown Rockford hotel

By Brian Leaf, Rockford Register Star,  Jan. 29, 2015

ROCKFORD — Warren Buffett’s money has joined Gary Gorman’s plan to turn the former Amerock building into a $64 million hotel and conference center on the west bank of the Rock River.

But the water is not placid.

Gorman is concerned about a separate downtown hotel plan pitched by Joseph James Partners. The Rockford developer wants to put a $14.5 million, 76-room boutique hotel at 134 N. Main St., about six blocks north of the 150-room project that Gorman hopes will carry the Embassy Suites banner. Gorman has applied for the brand with Hilton Worldwide.

A Jan. 24 report from Chicago-based Hunden Strategic Partners, which was hired by the city and Rockford Area Convention & Visitors Bureau to assess the local hotel market, suggests that there is enough room for both projects, saying the proposals represent distinctive products and would provide a critical mass of lodging options downtown instead of just one.

Gorman was drawn to Rockford by a group of historic preservation, Friends of Ziock, that didn’t want to see the city’s original skyscraper demolished. Gorman originally estimated that it would cost $53 million to turn the old factory, first known as the Ziock Building, into a hotel and meeting space.

The price is now $64 million and includes an $18 million investment from a subsidiary of Buffet’s Berkshire Hathaway Inc. The Wall Street Journal highlighted the Amerock project in a story Thursday about EB-5, an immigration program that allows foreign nationals to obtain a U.S. visa if they invest $500,000 in a U.S. project that creates at least 10 jobs.

Gorman’s EB-5 investors, mainly from China, will put $46 million into the Amerock project, which city leaders see as a cornerstone to revitalizing an aged central city.

“A lot of aldermen see this as a showcase development and don’t want to do anything to hinder that,” said Ald. Tim Durkee, R-1, who chairs the city’s Planning and Development Committee.

Late last year, Joseph James, a development company run by SupplyCore CEO Peter Provenzano, proposed developing two hotels: one in the city’s oldest building, the Chick Hotel, and another in the building known for its last tenant, Trekk, an advertising agency that dropped its lease in the decaying building and moved to the east side.

Joseph James later dropped the Chick Hotel from its plans and decided to focus on the two-story Trekk building, 134 N. Main St. The company would add three floors, turning it into a five-story hotel and restaurant. Joseph James has been working with IDM Hospitality Management of Madison, Wisconsin, on its proposal, which has been introduced to the Rockford City Council but not approved.

Joseph James cited a memo from Hunden to support its proposal to Durkee’s committee. The memo suggests that there is room enough in the market for Joseph James and Gorman to succeed. The proposal was introduced but laid over for a month so the City Council could hear from Gorman.

The Register Star could not reach Provenzano or Bryan Davis, director of government affairs for Joseph James, on Thursday for comment.

Observers have commented that they thought they’d never see the day that developers would compete for projects in downtown Rockford, so it is a “positive trend that should be encouraged by both the public and private sector,” Gorman wrote in an email Thursday to Mayor Larry Morrissey, aldermen and city staff.

“It is very clear from our experience that a vibrant city center is the key to creating a thriving community. Having said that, I am very concerned about too many hotel rooms coming into the unproven downtown Rockford market at one time.”

Gorman said his company, which operates in 25 cities in five states, had relied on an earlier Hunden report when it made its decision to invest in a downtown hotel. “The fact that the Hunden letter stated that the market could absorb both our project and the Joseph James proposed project seems to contradict their concerns expressed in the market study they completed just over a year ago.”

Gorman wants first crack at opening the downtown hotel market. Final plans for Amerock will be complete by next Friday, and construction bids will go out the following week, he said.

“We remain confident that we will get the Amerock project done successfully, but bringing on competition before our project is stabilized is not helpful,” he wrote. “I hope that once we are up and stabilized, the market is such that it will support additional hotel rooms. If that is the case, we will welcome the Joseph James project or others like it.”

Hunden reiterated in a Jan. 24 memo to the city and the tourism bureau that two hotels would be better than one and would attract the guests needed for success. Hunden said the market could handle the extra rooms, although simultaneous openings could be problematic.

“However, if the projects open at least six months apart, this will allow each a ramp up-period,” the latest Hunden memo said. “Such a period is the toughest for any hotel, so the spotlight and market demand should be focused on each for their first few months.”

Chinese-Buffett Deal Food for Thought for Seekers of U.S. Visas

Chinese Investors Fueling U.S. Construction Boom, With Green Card as Payoff

Amerock rendering

An artist’s impression of the Amerock development in Rockford, Ill., which is mostly being funded by EB-5 investors. PHOTO: GORMAN & CO.

By WEI GU, Wall Street Journal, January 29, 2015

What was once the only skyscraper in Rockford, Ill., is getting an overhaul under an urban-renewal program that is bringing together Warren Buffett and Chinese investors looking for a U.S. visa.

The plans to turn the 13-story Amerock building, in this declining former industrial city, into a $66 million hotel and convention center is the latest example of how Chinese have fueled a construction boom in the U.S. via the EB-5 cash-for-immigration program.

A subsidiary of Berkshire Hathaway Inc., owned by Mr. Buffett, is in talks to provide equity for the project, which also includes a new train station, a sports center and a park. The debt financing is expected to come from 92 foreign investors, mostly from China. By investing $500,000 each, these foreigners hope to fulfill their American dream by obtaining U.S. permanent residency.

For U.S. developers and investors, such investments make for a cheap source of credit, while immigrant hopefuls need projects that can help them qualify for EB-5 visas by investing at least $500,000 in projects that create at least 10 jobs in the U.S. Chinese nationals accounted for 85% of the EB-5 visas issued in fiscal 2014.

EB-5 investments have gone from small hotels and strip malls to projects run by mega developers. Related Cos. said $600 million from 1,200 Chinese families will help it build the foundation of three skyscrapers at Hudson Yards, New York’s biggest real-estate project in a generation. In San Francisco, home builder Lennar Corp. has raised about $200 million through the visa program for projects that include more than 12,000 housing units on a former naval shipyard. In lower Manhattan, World Trade Center developer Larry Silverstein is trying to raise about $250 million for a 937-foot Four Seasons hotel and condominium property.

“Every day we get information about several new EB-5 projects. It seems that there are more projects than clients,” said Forra Luo, owner of Canway Investment Consulting Service Co. in Shenzhen, in southern China.

It helps to have a celebrity associated with it: The Sage of Omaha is a trusted name in China. That works out to a deal that has many advantages for Mr. Buffett, including tax credits, while for the EB-5 investors, who are funding 70% of the Amerock project, the selling point is mainly the prospect of a U.S. green card.

They will receive an annual interest rate of just 0.5%, compared with the typical 5.5% a year for similar projects, according to Gary Gorman, CEO of Gorman & Co., the developer of the Amerock project. If the project fails to create the necessary jobs, they won’t get their visas.

graph

“It appears that EB-5 investors assume most of the risks in this project,” said Ms. Luo, who has reviewed the deal’s details and says she hasn’t decided on whether to recommend it or not.

Mr. Buffett, reached by phone, said he doesn’t keep track of individual projects such as the Amerock investment, which is being run by Berkshire’s Affordable Housing Partners. However, he said, Berkshire has invested in dozens of affordable-housing projects over the years in return for tax credits under a 1986 federal low-income housing tax-credit program. Such investments are popular with U.S. banks and other corporations.

The federal government encourages the preservation and reuse of historic properties by offering tax credits, representing a dollar-for-dollar reduction of federal taxes owed. Asan equity investor, Berkshire Hathaway’s subsidiary expects to invest $17.9 million of its own money on top of the foreign investors’ financing. It expects to receive a total tax credit of $21.6 million, in addition to a 99% stake in the project, according to a letter of intent reviewed by The Wall Street Journal.

Berkshire is protecting its downside. If the actual amount of tax credits is reduced, AHP’s capital contribution will also be reduced, the letter said.

Gary GormanGary Gorman, CEO of Gorman & Co., in the Brewhouse Inn & Suites, a brewery-turned hotel in Milwaukee.  PHOTO: GORMAN & CO.

The project-selling document cautions that if things don’t go well, the foreign investors can lose all of, or a substantial portion of, their investment, though Mr. Gorman argues that it is highly unlikely. The EB-5 investors will get paid when the project refinances itself after five years, he said.

“I can tell you Buffett’s company is very thorough at conducting due diligence about the developer and project,” Mr. Gorman said.

Some Chinese investors feel such conditions are well worth it. Jack Sun, who recently immigrated to the U.S. under the EB-5 program, said he wanted U.S. residency for his children’s education and didn’t  expect to necessarily make money from the investment. He didn’t want to lose it, of course: To reduce risks, he used Google maps to check individual projects and carefully read business plans before investing.

Immigration lawyers advise clients to be careful about projects that rely too much on foreigners’ money. “We advise our clients to steer away from projects where EB-5 becomes the chief financing source,” said Jean François Harvey, managing partner at Harvey Law Corp. in Hong Kong who advises EB-5 applicants.

—Anupreeta Das contributed to this article.

Ziock developer: Work to start in 2015 on downtown Rockford hotel

By Brian Leaf, Rockford Register Star, Aug. 14, 2014 @ 4:00 pm

ROCKFORD — The company planning to renovate the Ziock Building, an abandoned 13-story downtown factory, into a $53 million hotel and conference center won’t begin work until February 2015.

“We forecast being able to open in early spring of 2017,” said Laura Narduzzi, regional manager for developer Gorman & Co. of Oregon, Wisconsin.

City crews, meanwhile, will be active this fall in the neighborhood as part of a development agreement with Gorman. Eminent domain proceedings on three properties owned by S&L Warshasky Inc. at 501 and 431 S. Main St. and 319 Cedar St. are working their way through the Rockford City Council. The city purchased a warehouse at 514 S. Church St., City Engineer Matthew Vitner said, and has another storage building at 330 Cedar St. under contract.

Buildings on all five parcels are to be razed for parking for the hotel and a train station at a yet-to-be-determined site along Union Pacific tracks running parallel to Cedar Street.

The hotel complex is expected to feed off visitor traffic from a $21 million indoor sports center being developed across the Rock River in the former Ingersoll building.

Narduzzi said Gorman has internal architectural and design, construction and operations teams working on the project.
“The history of the building will play the driving role in the overall design,” Narduzzi said.

Construction costs will be partially offset by state and federal historic tax credits because the building is designated a landmark. Gorman can sell tax credits to investors to help the investors lower their tax liabilities while helping the company raise money to pay for construction.

Gorman also plans to pursue project funding through EB-5, an immigration program that grants foreign nationals a visa if they invest $500,000 in a project in high-unemployment areas that create or preserve 10 full-time jobs.

“We have been working on the marketing materials so our partner can begin marketing to potential investors,” Narduzzi said.