The recession has not been kind to real estate developers. But a little known US Immigration program is helping get one major Cleveland project off the ground.
ideastream®’s Dan Bobkoff explains.
The Flats along the Cuyahoga River in Cleveland has seen many incarnations: first as unspoiled wilderness, then a hub of industry and shipping, and more recently: a party spot full of bars and restaurants. Since that scene died nearly a decade ago, the east bank has been mostly dormant. But in 2005, developer Scott Wolstein unveiled a grand plan that was supposed to change all that. The Flats East Bank project includes a boutique hotel, retail, housing, a corporate headquarters. It was a big deal: half a billion dollars big. Then, Wolstein hit the financial crisis.
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.
ZAI: “Immigrants basically built the US 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 US. He runs the Cleveland International Fund.
And, thanks to a once obscure US Immigration program, he can offer one huge incentive. It’s called EB-5 and here’s the deal: Invest in the US 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 healthcare—access to healthcare—for themselves. And Cleveland has, fortunately, is a leader in both those two areas.
The government’s EB-5 visa has been around twenty 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.
MEHLMAN: “I think most Americans would find it inherently objectionable that we’re selling admission to the United States. We have always prided ourselves in this country on being a meritocracy. And the people who have the most money are not necessarily the most desirable people to have in the country, the people who are the most likely to contribute. ”
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. ”
Zai has been logging a lot of airline miles himself, selling Cleveland to the investors around the world. So far, he’s found remarkable success: lining up 40 investors in just a few months.
Now that the Flats financing gives the Cleveland International Fund credibility, Zai hopes to convince more foreigners to invest in Cleveland’s film and healthcare industries. He just wishes Clevelanders would appreciate what they have and make his job a little easier.
ZAI: Between the great schools, the great quality of life, and we need to promote that. So, as investors do come here and immigrants do come here to plant their seeds, we need to be a little more welcoming and certainly more gracious for those opportunities.
But despite Cleveland’s low self esteem, Zai has set an ambitious goal for the Cleveland International Fund.
ZAI: If we could hit 800 jobs—new jobs—in Cleveland, I think that will be the defining moment of the existence of CiF and what we’re hoping to do.
It could be Cleveland’s next immigration story.