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Steve Chiotakis: The recession has not been kind to real estate developers. But a little-known U.S. immigration program is helping get some big development projects off the ground in an unexpected way. From station WCPN, Dan Bobkoff tells us how it’s working in Cleveland.
Dan Bobkoff: In their heyday, the Flats along the Cuyahoga River were a hub of shipping and industry. Then manufacturing collapsed and the Flats were reborn as a party spot with bars and nightclubs. That scene died a decade ago and it’s been dormant ever since. In 2005, developer Scott Wolstein unveiled a half billion-dollar plan to rebuild the Flats, complete with boutique hotel, retail shops, housing and corporate headquarters. Then came the financial crisis.
Scott Wolstein: Until the fall of 2008, financing was pretty easy to come by.
Wolstein couldn’t get credit and the Flats East Bank project was put on hold.
Wolstein: We had certainly hoped to be under construction by now.
But cranes may soon be moving into place after all. A group of foreign investors have put up $20 million to get the development off the ground. They come from countries as diverse as England, China and Brazil.
Eddy Zai: Immigrants basically built the U.S. and will continue to do so.
Eddy Zai is an immigrant himself, and he’s using that experience to encourage other foreigners to make investments in the U.S. He runs the Cleveland International Fund. And, thanks to a once obscure U.S. immigration program, he can offer one huge incentive. It’s called EB-5 and here’s the deal: Invest in the U.S. economy, create at least 10 jobs, and you can be on a fast track to a green card: months instead of years. Zai says the wealthy foreigners are willing to put up with piddly returns for what they really want.
Zai: Primarily it’s education for the children and health care — access to health care — for themselves.
The government’s EB-5 visa has been around 20 years, but the number of investors getting green cards through the program has nearly tripled during the recession. Not everyone is thrilled, though. Ira Mehlman is with the Federation for American Immigration Reform:
Ira Mehlman: I think most Americans would find it inherently objectionable that we’re selling admission to the United States.
But Zai says this immigration program is just like first class versus coach on an airplane.
Zai: The method of getting into the flight between going through TSA security is the same as everyone else. The way the flight operates is like everyone else. But they’re just paying a higher amount to get in.
And Zai is not stopping. Next, he hopes to get more foreign investors to put money into Cleveland’s film and health care industries in exchange for that first class Green Card.
In Cleveland, I’m Dan Bobkoff for Marketplace.
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