WILMINGTON, NC (WECT) - EB5 is one of the most promising resources available for development in Downtown Wilmington. It's a federal program through which foreign investors give money to American developers, in exchange for a US green card.
More than two dozen investors from China have already given half a million dollars each to downtown developer Chuck Schoninger via EB5. He plans to use their money to build a hotel, a marina, retail shops and a restaurant along the Wilmington riverfront.
The federal government started EB5 in 1991, but it hasn't been used locally until now. After a lengthy process of getting the governor and the Commerce Department's approval to utilize EB5, Chris Ardalan and Chuck Schoninger of USA InvestCo have been hard at work getting wealthy Chinese businessman to invest in Wilmington.
"We are the pioneer of EB5 in the state of North Carolina," said Ardalan. Schoninger says this project will create 150 direct jobs, and support another 500 indirect jobs, like jobs providing catering for his hotel.
For $500,000, these foreign investors can bypass the eight year waiting list for a green card, and bring their families to America now. Despite being fast tracked, the investors still have to pass extensive background checks to insure they don't pose any national security threat to the US, and to insure that they obtained their wealth through legal channels.
To qualify, their investment must result in the creation of at least ten American jobs. City of Wilmington officials say this is a viable alternative to get downtown development moving again.
"It's been hard for the private sector to find funding for projects, even though there is a demand for the projects," explained Wilmington City Councilman Kevin O'Grady. "This is a new source of funding, and frankly, if the hotel gets built down on the riverfront property and it's built from investment via Chinese investors, that hotel is going to look just the same as if that money had come from a US bank."
The EB5 program has surged in popularity as traditional bank loans became harder to come by. In 2008, there were only 30 businesses nationwide utilizing the EB5 program to finance their developments. Today, there are more than 200 companies using EB5, with many more going through the process of being approved for EB5 financing.
Still, the program has its critics, who say allowing wealthy people to bypass the immigration line is fundamentally unfair.
Despite the philosophical issues, city leaders and developers we spoke with agree EB5 is a win for Wilmington. "These people invest in the United States, and for them making investments, to create American jobs, that's what gets them pushed up in the line," Schoninger said.
To qualify for EB5 investments, an area has to has to be rural or economically depressed, with unusually high unemployment. In our area, Downtown Wilmington, all of Columbus Bladen Counties, and parts of Brunswick and Pender Counties qualify. Some EB5 areas require a $1,000,000 investment for the foreign citizen to qualify for a green card, but Downtown Wilmington is especially attractive to investors because they can get the same green card for half the investment, $500,000.
Aside from Schoninger's downtown hotel and marina project, the Convention Center hotel group, Harmony Hospitality, is also trying to recruit foreign investors through EB5.
Copyright 2012 WECT. All rights reserved.
Land Developer Charles Schoninger says phase 1 of his North Riverfront project is moving ahead on schedule. Phase 1 calls for the development of a marina that broke ground earlier this year, as well as
322 Shipyard Boulevard