By Emerson Lynn
There are few things less understood and less intuitive than the EB-5 program that continues to add the growth essential to the prosperity of Jay Peak and the surrounding environs of Franklin and Orleans counties, as well as projects in Addison County and throughout rural Vermont.
It’s given Vermont the expansion we see today at Jay, including the ski area, condominiums, a waterpark, a golf course and two new hotels. Instead of being a one-season resort providing wintertime-only jobs, it’s a four-season resort employing roughly 250 people full time and another 1,000 seasonally (in Jay’s case seasonal jobs could last as long as nine months). It’s still considered the most ambitious and most successful expansion project in Vermont.
A couple of weeks ago, the news became even better. It was announced that construction would begin May 14 on a manufacturing and research center in Newport. It’s a biotechnology enterprise, AnC Bio, that is intended to take advantage of the burgeoning stem cell therapy industry.
According to the research firm Frost and Sullivan, the market for stem cell therapy is projected to be $40 billion by 2020 and $160 billion by 2030. Much of the demand is driven by a quickly aging population, and the need for such facilities is acute. Not only will the facility be involved in the biological manufacturing of the stem cells, it will also focus on medical devices for the heart, kidney and liver.
To accomplish this, the company will need to employ roughly 200 people on the manufacturing side of the business (wage range between $15 and $20 an hour) with the remaining 200 jobs being filled by scientists ($40,000 to $60,000 a year with senior scientists making $90,000-plus).
Some of those jobs will fall to people living on this side of the mountain. Regardless, it’s precisely this sort of job creation that is essential to northern Vermont’s prosperity. It’s the intellectual side of the business equation that has the potential to attract similar businesses.
But why Newport? Typically, these sorts of high-tech manufacturing centers locate in urban areas where the labor supply is plentiful and the amenities are a given. They are normally built near universities and other research centers. Why not Burlington? Or Boston? Why Newport?
Because that is how the EB-5 program works. The federal program (championed by Vermont’s Sen. Patrick Leahy) was designed as a means by which rural America would have an easier time attracting investors. The program allows developers (like Bill Stenger at Jay Peak) to solicit investors to be part of job creation projects. The investors are people living in other countries who want to immigrate to the United States. For rural projects like ours, the cost to participate (and to receive a green card) is $500,000. For urban areas the cost is $1 million. In return, the investment must create 10 new jobs.
Thus far, Mr. Stenger’s EB-5 projects have generated over $300 million in investments from immigrants, which is astounding.
What makes the AnC Bio project work is that the operation begins debt free. That’s what makes the project possible in Newport, whereas it would be less so in urban areas in which the developers would have to borrow the money from conventional sources. The proposed stem cell manufacturing plant for Newport is cutting-edge technology; the cost of borrowing from traditional sources would be considerably more, which could make the project less feasible.
Investors in EB-5 projects are, by law, not guaranteed that they will get their money back, or that they will see a return on that investment. It’s a jobs creation program, not a stock. Essentially, the $500,000 is the price of their visa. If they get their money back and then some, that’s a bonus.
The intent of the law was to promote development in rural areas.
Newport is the selected site because that’s where Mr. Stenger and his partner Ariel Quiros have centered their EB-5 projects. It’s as rural as Vermont gets. And that’s where the available capital is.
The Northeast Kingdom continues to lose population. It doesn’t take much of an imagination to think what things would be like if Mr. Stenger’s EB-5 program were not in place. In fact, Mr. Stenger’s example has been copies throughout Vermont. We’d be hard pressed to name another program that has created as many new jobs as the EB-5 immigrant investor program has created.
What other mechanism is available to attract jobs to Newport, or to other parts of Vermont?
The state has proven an able partner in the EB-5 projects, and it has expanded its reach to require all the state’s EB-5 projects to undergo financial oversight by the Department of Financial Regulation. That should give investors all the more assurance that projects pass the rigor necessary to keep this vital program as robust as rural Vermont needs to be.
How better to counter the state’s population decline in rural Vermont?
Emerson Lynn is the publisher of the St. Albans Messenger, a sister paper to The Mountain Times.