The Business Journal, September 2, 2011, by Sean Ryan
Despite a federal approval process that is slow compared to getting a loan from a bank, developers are starting to get their U.S. approvals to use foreign investors to finance southeast Wisconsin projects.
Gary Gorman, president of Gorman & Co. Inc., has worked for two years to find and get U.S. approval for Chinese investors that will contribute $15 million to a planned extended stay hotel at The Brewery in Milwaukee. The nationwide EB-5 immigration program lets foreign investors get U.S. green cards in return for financing projects that create at least 10 full-time U.S. jobs. The program has risen in popularity locally and nationally after the recession, but increased activity has led to complaints over the time U.S. immigration officials take to process foreign investors’ applications.
Gorman said the review time for investors in his hotel project has ranged from eight to 10 months. However, U.S. officials have approved some investors, and Gorman & Co. will begin renovating a building for the hotel project in September.
“It’s slow, it’s complicated, it’s a lot of work,” Gorman said. “I’ve been going to China about once every two months for the past two years. Every trip is a day in each direction.”
In response to concerns about the speed of review, the U.S. Citizenship and Immigration Services bureau this spring unveiled a plan to shorten review times. The attempt to shorten review times demonstrates federal officials understand the concerns that have been raised, said Peter Joseph, executive director of nationwide EB-5 business group Association to Invest In the USA, Chicago.
“The issue of the length of time of review is always something that our stakeholders have been concerned with, but this is absolutely a step forward,” Joseph said.
Another Milwaukee project that would use EB-5 is the planned $50 million Marriott hotel in downtown Milwaukee. RCI FirstPathway Partners, the Milwaukee-based company that is lining up foreign investors for the Marriott and other projects, has gained approval for about 20 of more than 100 investors that have applied, said Peter Beitzel, international consultant for the Metropolitan Milwaukee Association of Commerce. The MMAC administers some functions of the EB-5 program in southeast Wisconsin.
Foreign EB-5 investors also would raise potentially $3 million to $6 million for a 124-unit senior housing project proposed in The Brewery by Whitestone Realty Capital LLC, New York City, said Robert Lubin, a Virginia attorney specializing in EB-5 investments. Lubin also participated in the project using EB-5 investors to renovate the Lodge at Geneva Ridge resort in Lake Geneva.
He said another EB-5 investment proposal is planned to add more units to Geneva Ridge, including potentially senior housing. That project could begin in the second or third quarter of 2012, he said. The EB-5 program also will finance a senior housing project in Elkhorn with 26 apartments offering memory care services and adult daycare space. Zoe Makhsous, spokeswoman for the Elkhorn senior housing project, said the developer this year wants to use a new accelerated application review process proposed by federal officials. That program would guarantee a 15-day review of investors’ applications in exchange for a higher processing fee. She said foreign investors through the EB-5 program will raise $2.5 million for the project.
“The investors will know that in the immediate future, the project will take off,” Makhsous said. “They will not have the possibility of having to wait one to two years for a groundbreaking.”