Concerns raised over plan to close EB-5 center
by Mike Eldred
Sep 21, 2017 | 4783 views | 0 0 comments | 120 120 recommendations | email to a friend | print
Contractors pour concrete for the pumphouse foundation at Mount Snow’s West Lake snowmaking reservoir.  The project, along with the new Carinthia Base Lodge, is being paid for by EB-5 investors.
Contractors pour concrete for the pumphouse foundation at Mount Snow’s West Lake snowmaking reservoir. The project, along with the new Carinthia Base Lodge, is being paid for by EB-5 investors.
DOVER- The Vermont Agency of Commerce and Community Development has responded to a recent US Customs and Immigration Service notice of intent to close the Vermont Regional Center that administers EB-5 projects in the state.

In the meantime, Mount Snow, which currently has its West Lake and Carinthia Lodge EB-5 projects administered through the Vermont Regional Center, is pushing forward with its own proposed regional center.

In a response signed by attorney Robert Divine, the Vermont Regional Center says the USCIS plan to close the center would place current projects in peril, including Mount Snow’s, and penalize investors who have already invested but haven’t received their visas. “104 innocent investors at Mount Snow, 31 innocent investors in (the Von Trapp Enterprises resort and brewery project in Stowe), and 72 innocent investors in Jay Peak projects, who have not yet been admitted as conditional permanent residents would be prevented from immigrating to the US,” according to the regional center’s response. “Those investors would lose their priority dates and, to continue in the (EB-5 visa) program, be required to make entirely new investments pursuant to a potentially revised set of regulations.”

Under the federal EB-5 program, foreign investors can invest $500,000 in projects located in special “Targeted Employment Areas,” which include rural Vermont. For their investment, investors receive a conditional permanent residency visa in the United States. The program is intended to provide economic opportunity and employment in targeted areas.

Last month, the USCIS proposed the immediate closure of the Vermont Regional Center, which is operated by the VACCD, following a review of the center’s operations in the wake of fraud allegations connected to EB-5 projects at Jay Peak. Although the Vermont Regional Center has not been implicated in the Jay Peak scandal, in their notice of intent to close the center, the USCIS concluded that the regional center does not fulfill its mandate of “promoting economic growth, including increased export sales, improved regional productivity, job creation, or increased domestic capital investment.”

According to the VRC’s rebuttal, however, the opposite is true. “In total, EB-5 projects affiliated with the VRC have created at least 3,700 jobs and deployed hundreds of millions of dollars of foreign investment into the Vermont economy.”

The VRC noted that Mount Snow has spent $25.48 million of their $52 million in EB-5 funding, and, according to a letter from Peaks Resorts Vice President Dick Deutsch, is meeting “targeted projections for job creation.” The VRC warned that immediate closure of the center as proposed by the USCIS could be a crushing financial blow not only to EB-5 investors, but to the companies involved in the projects. “Terminating the VRC may leave (Von Trapp Enterprises), and/or Mount Snow to undertake efforts to refund those investors. The latter would be costly and harmful to those businesses, as it would likely require businesses to access capital at potentially higher costs to accomplish refunds and result in the loss of jobs in the region.”

The VRC attorney also argues that the USCIS notice of intent to close the regional center is not supported by the relevant federal law.

In a report released following a review by the Vermont Department of Financial Regulation, the state also called for the closure of the VRC. Their recommendation, however, was for a gradual wind-down of the center’s activities, allowing for the completion of current projects. In their rebuttal to the USCIS notice of intent, the VRC’s attorneys call on the USCIS to work with the state to implement a “wind-down in an orderly fashion, thereby protecting existing investors and supporting the economic development associated with the existing projects.”

In the rebuttal, the VRC notes that Mount Snow, prior to the USICS’s notice of intent to terminate the regional center, “had begun discussions with the VRC about affiliating for its next phase, which would produce an estimated nearly 1,400 additional jobs.”

According to Mount Snow officials, the next phase includes five residential buildings with a total of 102 units adjacent to the new Carinthia Base Lodge, which is currently under construction. The luxury two- and three-bedroom condominium units will range in size from 1,130 to 2,155 square feet.  The proposed development also includes an amenities center with a year-round outdoor pool, exercise equipment, sauna and massage rooms.  

Mount Snow, however, has submitted an application to the USCIS to operate its own EB-5 regional center, citing their desire to “divorce” themselves from any connection to the allegations at Jay Peak. Responding to a question during a September 7 conference call with investors and media, Tim Boyd, CEO of Mount Snow’s parent company Peaks Resorts, said the Jay Peak allegations had “a real effect” on their efforts and suggested they have had no intention of using the VRC for several months. “We had planned previously of not using the state of Vermont,” Boyd said. “That’s why, back in December, we applied for our own regional center, which is in the office of the USCIS now, awaiting final approval from them. It was always our plan once the state started having problems with the Jay Peak issue to move out of that regional center and move to one of our own, so that we aren’t associated with that state organization. So that’s our intent, we don’t believe that it’s going to have a major impact on our ability to raise funds, because we’ll be raising those funds out of our own regional center. ”

Later in the meeting, Boyd said Mount Snow has asked the USCIS to expedite their application, so they can apply for their next EB-5 project through their own regional center. Boyd said Peaks Resorts expects to have the EB-5 offering ready “sometime before the end of the year.”
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