A federal program that has created over 100 jobs and brought tens of millions of dollars to the Wilmington economy is on the chopping block. The EB-5 program allows foreign investors to jump to the front of the line for a US visa in exchange for a $500,000 investment in a qualifying US business.
Blackfin restaurant opened about six weeks ago on the downtown Wilmington riverfront. Vida, another restaurant and nightclub, is set to open next door in about a month, and tickets for an adjacent concert venue went on sale Monday.
They were all projects of developer Chuck Shoninger, paid for in large part by dozens of investors from China. Shoninger pioneered EB-5 investing in North Carolina, and his planned riverfront hotel and marina next to Blackfin and Vida was the first EB-5 project approved in the state.
"It's not easy finding EB-5 capital,” Shoninger said of the process of recruiting investors. “You have to go to China and you have to pitch a deal half a world apart."
But when the recession hit around 2008, traditional bank financing for projects like his was difficult to come by. That’s when Shoninger’s idea for the marina hotel and restaurant complex was hatched, and he began looking for alternative forms of financing.
"A foreign investor can invest in a limited partnership. He gives you the capital to do that. If you create American jobs and you are successful at that then they get a green card as part of that investment," Shoninger explained.
Foreign investors are required to prove 10 US jobs have been created as a result of their investment to reap all the benefits of the EB-5 program.
About 10,000 investors, mostly from China, participated in the EB-5 program last year. There is a cap on how many people can use the program each year from any given country, and in countries like China, there’s a waiting list.
If you have the means, it's arguably the easiest way to move here from another country and attain the American dream. EB-5 has been around since President George H.W. Bush’s administration, but is set to expire in September if lawmakers don’t vote to extend the program.
Despite the money it has pumped into our country, some critics in Washington think the program is fundamentally unfair to would-be immigrants who don't have deep pockets. Sen. Dianne Feinstein (D-CA) and Sen. Charles Grassley (R-IA) have even introduced a bill to scrap the program.
Wilmington Mayor Bill Saffo agrees it's not perfect, but thinks the EB5 program is a program the federal government should keep.
"I would hope that they would look at that program very seriously and evaluate it before they do away with it because I think it's done great things for our community," Saffo said.
Shoninger thinks it would be bad for our economy if this program went away, but says his current EB-5 investors will be grandfathered in. He said traditional bank financing is easier to come by now than it was when he first got involved in EB-5, but he still feels it’s a valuable tool for financing projects that banks feel are too risky.
About 70 EB-5 investors have put money into Shoninger’s Wilmington developments, including the cold storage facility at the state port. He said EB-5 investors are not required to live in the city where they invest.
While they have visited Wilmington to see their projects, none of Shoninger’s EB-5 investors have made the Port City their home. He said most opt to live in places like California, Florida, New York and Seattle, Washington.
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