It is a week too late for an April Fools Day joke, so I am serious when I write that a new stadium for the Tampa Bay Rays – built in St. Petersburg or Tampa – could be financed partially by wealthy Chinese immigrants.
Mike Sasso reports that Chamber of Commerce leaders from Tampa and St. Petersburg who have been studying how to pay for a new Rays stadium landed on an obscure federal immigration program called EB-5 that might help with the half-billion-dollar tab.
Created as part of the Immigration Act of 1990, the program allocates 10,000 green cards per year to foreigners who invest $1 million (or $500,000 in a targeted employment area) in qualifying U.S. businesses that create or preserve at least 10 jobs. Three thousand green cards are set aside annually for designated “regional centers” as part of the EB-5 Regional Center Pilot Program created by Congress in 1992 with the purpose of concentrating pooled investments in defined economic zones.
Even though the EB-5 program has been around since 1990, it is only in the last few years that state and local economic development officials have begun to look toward using EB-5 for development in target sectors. Austin, Tex. has recently proposed creating the state’s first regional center that will focus specifically on green tech and renewable energy projects. It would be one among eight other regional centers in Arizona, California, Michigan, and Nevada that are geared toward renewable energy development. Other regional centers have focused on other industry sectors with considerable success, such as the redevelopment of former military bases into mixed-use projects.
Chuck Sykes, co-chairman of the Tampa chamber group, has his eye on the program. He was traveling last week and responded to Sasso’s questions by e-mail.
“Yes, we have explored EB-5 visa financing,” Sykes wrote. “There may be a role for it in financing a stadium.”
Of course, Sykes and Co. have yet to say where a new stadium might be built. Still, this is an intriguing idea.
As for why it will be Chinese immigrants who likely will play a large role in any prospective financing, Sasso reports that the Immigrant Investor Program is going gangbusters in China lately. Last year, 935 people from China won initial approval for the program; the next biggest contingent came from South Korea, where 92 people were approved.
The EB-5 program has had its share of problems, which accounts for its low use since being introduced more than two decades ago. The latest data reveals that since being established, the EB-5 program has so far created 43,300 full-time jobs and attracted more than $2.2 billion, with half of this happening just since 2008. While the $2.2 billion number is small (annualized that is just over $100 million a year, a fraction of $236 billion the U.S. brings in foreign direct investment), in the current economic context this source of international financing can make a difference for local projects and the communities that host them.
The complexity of the application process, the uncertainty of meeting the requirements and the long adjudication process to move from conditional to permanent residency have been cited as stumbling blocks for potential investors in a study by the GAO. Add to those a complex international set of intermediaries, little oversight of the marketing of EB-5 visas, and unclear guidelines regarding the measurement of job creation, and the proposition weakens for many potential investors.
Whatever the weaknesses, if this program would keep the Rays in St. Pete/Pinellas without breaking the taxpayers’ bank, by all means, it should be looked at as an option.
Material from the Brookings Institute was used in this report.