The Northeast Kingdom Economic Development Initiative, an ambitious set of projects funded by immigrant investors and spearheaded by Jay Peak owners Bill Stenger and Ariel Quiros, is getting traction and changing shape.
Stenger said two of the pair’s planned projects for Newport — construction of a mixed-use “Renaissance” block on Main Street, plus a waterfront marina and conference center on Lake Memphremagog — have now been rolled into one proposal estimated to cost a combined $175 million.
The hospitality projects are still in planning stages, as are efforts to bring the German manufacturer Menck Windows to town — a roughly $20 million prospect.
Once the business plans are finalized, Stenger and Quiros will apply for permission to start raising capital in $500,000 increments from foreign investors.
Two other projects have received the foreign investment approval: expansions at Burke Mountain ski resort for $160 million, and a $110 million plan to build a biomedical research park on a hill overlooking the city of Newport.
A sixth endeavor at the Newport State Airport in Coventry was originally planned for EB-5 investment. Stenger and Quiros, along with the latter’s son, later decided to seek conventional financing for those efforts.
Brent Raymond heads up the Vermont EB-5 Regional Center. The office administers aspects of the federal Immigrant Investor Program in the state. The program — which provides green cards to qualified foreign investors if 10 jobs are created or preserved as a result of $500,000 to $1 million investments — often is called simply “EB-5,” in reference to the type of visa it affords.
Raymond explained the distinction among the projects Stenger and Quiros are putting together:
“For marketing purposes as well as to explain the overall impact of all these projects on the Northeast Kingdom and what kind of positive economic impacts all these proposed projects could provide, they call it the Northeast Kingdom Economic Development Initiative,” Raymond said.
But each project within the initiative is distinct and must pass its own EB-5 vetting process, he said. As such, each project also must meet a distinct job creation target.
The following projections total $465 million. In $500,000 increments, that would total 930 immigrant investors, if no additional, private financing were to be utilized. Multiplied by 10 jobs per investment, the combined projects could add up to 9,300 workers to the regional and national economy.
Current projections place the combined job creation at 10,600 to 10,750, including both direct and indirect or induced positions. Any conventional financing utilized would reduce EB-5 job creation demands, although it may not alter the ultimate job-creation impact of the projects.
NEK job creation
In order to predict the job creation that will stem from each investment opportunity, the state requires third-party econometric modeling to back up the EB-5 business plans it considers.
Raymond said this level of scrutiny goes above and beyond what’s mandated by U.S. Citizenship and Immigration Services — the federal agency that ultimately approves or denies the conditional visas offered to immigrant investors.
“We’re not allowing a company that has an in-house economist … to provide that data for us,” Raymond said. He thinks this higher standard and objective analysis is part of what makes the Vermont regional center successful.
Stenger said he doesn’t pretend to understand the statistics behind the modeling, but the directives it provides are clear enough.
“We give them sales numbers and operational expenses and cost of doing business, and they throw all that stuff into a computer formula,” Stenger said. “So, if we build what the model tells us to, then everybody’s happy.”
Those models and business plans are proprietary business information, so they’re not public records. But Stenger and project manager Alexandra MacLean shared with VTDigger some of the details.
Raymond said that, based on the developers’ track record, there’s good reason to be confident that the approved projects will succeed and the others will be approved. “They do things right,” he said.
Raymond emphasized, as did Stenger and MacLean, that the project’s costs, job creation estimates and timelines are fluid. This especially applies to the business plans that are not yet finalized for EB-5 participation — namely, the window manufacturing facility and the downtown Newport hospitality projects.
Burke Mountain
Estimated cost: $160 million
Project description: Phase I ($98 million) will see construction of two hotels, with a combined 112 suites. The company recently received project approval under Act 250, Vermont’s land use law; it anticipates breaking ground by the end of August or early September and welcoming guests in December 2014. Construction of an aquatic center, tennis facility and indoor mountain biking park will start next summer, with plans to open in summer 2015. In Phase II, two additional hotels, again with 112 suites, also are planned for construction starting in 2015.
Job creation projections: Development and construction will create about 2,000 full-time direct and indirect jobs. More than 400 permanent, full-time jobs in Vermont will support the resort’s ongoing operations.
AnC Bio
Estimated cost: $110 million
Project description: Stenger and Quiros have set up a Vermont-based subsidiary of the Korean biotech firm AnC Bio. They plan to apply for permits this fall to demolish half of the vacant building where Bogner sportswear formerly was made on a hill overlooking Newport. A new five-story building will house the company’s operations for manufacturing medical devices and conducting stem cell research; 50 “clean rooms” also will be available for rent to other biotech researchers. If all goes as planned, the company will break ground in spring 2014 and open in summer 2015.
Job creation projections: Development and construction will create a bit more than 1,400 full-time direct and indirect jobs. About 3,800 permanent, full-time jobs within Vermont will stem from the biomedical company’s ongoing operations through a mix of both direct and indirect job creation. About 500 of those positions are anticipated on-campus in the first year of operations.
Menck USA *
Estimated cost: $20 million
Project description: The other half of the vacant building at the Bogner site will be repurposed to house the North American manufacturing operations of Menck Windows. Project developers hope to begin renovations in the fall and start basic operations by spring, at which time they’d commence construction to expand the facility and ramp up to full operational capacity by fall 2014.
Job creation projections: Development and construction may create 100 to 150 full-time direct and indirect jobs. Between 400 and 500 permanent, full-time jobs may stem from the company’s ongoing operations through a mix of both direct and indirect job creation, within Vermont and outside the state.
Newport Marina Hotel and Conference Center and Main Street Renaissance Block *
Estimated cost: $175 million
Project description: Stenger and Quiros expect to complete the purchase of a downtown block by Sept. 30. Pending Act 250 approval, the pair intends to raze the current buildings (now mostly vacant) and construct a four-story, mixed-use building for restaurants, retail establishments, offices and hotel suites. The Renaissance Block will be linked to a planned waterfront marina and conference center where a strip mall currently stands. The developers are in negotiations with Vermont real estate mogul Tony Pomerleau, who owns the waterfront property. Stenger said part of the negotiations and planning will include accommodating current leases and assisting the businesses — in particular the grocery store and drugstore — with possible relocation.
Job creation projections: Development and construction may create 2,000 full-time direct and indirect jobs. About 500 permanent, full-time positions in Vermont may support the development’s ongoing operations.
* The business plans for Menck USA and the Newport Marina Hotel and Conference Center and Main Street Renaissance Block are still being finalized, so all numbers and timelines are preliminary and subject to change.
This article was updated at 10:45 p.m. on Monday, Aug. 12, 2013, to correct the total estimated cost of the projects and the resulting EB-5 investment and job creation requirements.
