A Mansfield apartment development could raise 60 percent of its needed $20 million through a federal program that provides visas in exchange for investments.
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A federal program that allows foreign nationals to earn a U.S. visa by making sizable American investments could provide more than half of the capital for a $20 million apartment complex under construction in Mansfield, according to the developer.
Meadowbrook Gardens, which is preleasing for spring 2016, is awaiting final approval in the coming months to accept foreign capital under the U.S. Citizenship and Immigration Service's EB-5 program. Fairfield County realty developer Zhifeng “Jack” Yang hopes to secure a total of 24 Chinese investors to chip in $500,000 a piece, for a total of $12 million, or 60 percent of the project's budgeted cost.
The apartments would be the second Connecticut EB-5 project to come online since seafood restaurant Nixs opened last year on Front Street in Hartford, with the help of approximately $1 million from several Asian investors seeking U.S. green cards.
Created in 1990, EB-5 has been sparsely used in Connecticut, although that could be changing as an increasing number of federally approved “regional centers” have come online in recent months. The centers, like Yang's, help foreign investors seeking a green card to find investment opportunities in the U.S.
Laying the groundwork
EB-5 projects take a long time and have a lot of moving parts, according to Yang, a Chinese native who is a Westport resident and partner in Richfield Real Estate Investment. Yang has a finance degree from Hunan University in China and an MBA from George Washington University in Washington, D.C.
Yang was the first to get federal approval and then open a Connecticut regional center in Shelton several years ago. The center recently changed its name from the New England Federal Regional Center to the New England Family Regional Center.
Yang said he met with a number of developers representing various projects, but needed to find a profitable venture capable of meeting the EB-5 program's job-creation requirements, which take into account direct and indirect jobs as well as those “induced” by the economic impact of the development.
The Meadowbrook Gardens project will create 337 total jobs, a spokesman for Yang said.
Yang said he used a network of immigration brokers and business partner referrals to locate Chinese investors, who he met with last week in China. He doesn't have their money just yet, but said he is confident USCIS will approve Meadowbrook Gardens for the EB-5 program. That's important to the investors, who care not just about their capital, but about successfully winning approval to live and work in the U.S.
Some of the investors Yang is wooing have already invested some money into Richfield's single-family housing developments in Fairfield County. He said that helped him build a track record so investors would be comfortable anteing up more capital for the Mansfield apartments.
The investors could have to wait at least five years to get permanent approval of their green cards, though conditional approvals could allow them to live here sooner.
Meeting housing demand
Yang and his partners say student housing is still an underserved market in Mansfield, which is home to the state's flagship university UConn and eight miles from Eastern Connecticut State University in Windham.
Yang said he has watched approximately 600 new apartments fill up quickly at Leyland Alliance's massive Storrs Center project.
Linda Painter, Mansfield's director of planning and development, said she often fields inquiries from developers interested in housing, fueled, in part, by UConn's Next Generation Connecticut initiative, which aims to attract 5,000 additional science, technology, engineering and math students over the next decade.
But that student influx is not guaranteed, Painter said
“The university has been up front on multiple occasions that reaching 5,000 additional students only happens if [UConn] has sufficient operating funds,” Painter said.
UConn, which receives significant state support, faces the continued threat of funding cuts as Connecticut grapples with a budget deficit.
The first phase of the Meadowbrook Gardens project is 50 three-bedroom units, with plans for one-and-two-bedroom units in later phases.
EB-5, authorized by Congress in 1990, has taken off in some states, such as California.
Connecticut has been well behind.
Yang speculates that the state's relative small size may be a reason for the late start.
In 2012 and 2013 state lawmakers considered bills allowing regional centers to qualify for state loans and grants and requiring the Department of Economic and Community Development to become a statewide regional center. DECD opposed the bills, which ultimately failed, citing cost concerns.
But private businesses have recently taken an interest in EB-5. Yang said he's pursuing a second real estate deal, and the USCIS website lists two dozen regional centers in Connecticut, up from just several in 2013 and zero in 2012. At least half of the centers covering Connecticut are based in New York.
Interest is high across the country, where there are 745 regional centers, up from 530 last August. USCIS limits the EB-5 program to 10,000 applicants per year, and the cap was hit in the most recent two federal fiscal years.
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