Is Vermont financing its future with foreign investors? - WCAX.COM Local Vermont News, Weather and Sports-

Is Vermont financing its future with foreign investors?

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JAY, Vt. -

The Jay Country Store is thinking big, adding a creemee stand and more Vermont products.

General Manager Jeff Dezotell says business is up thanks to the $250 million expansion at Jay Peak Resort up the road.

"It's allowed us to plan for further expansion. We're doing expansion as far as freezer space, we're also doing a clothing expansion," Dezotell said.

More people are stopping at the store on their way to check out the new water park, golf course and hockey rink.

"Jay is known as a hard core skier's mountain, but we're seeing people who aren't ordinarily Jay people" Dezotell said.

Bill Stenger is the president of Jay Peak. Stenger says Jay Peak had great ideas but not the money to make them reality-- that was until 2007 and the EB-5 program.

"It gives us access to capital and it's patient capital," Stenger said.

The resort got access to foreign money during the economic downturn, when getting loans and cash was difficult. In return, foreign investors gain residency in the U.S. for helping create jobs.

"We're 38 percent ahead in sales for year over year and it's because of the things we built here," Stenger said.

Jay Peak has 500 investors from 56 countries. Each one has given the resort $500,000 interest-free to grow. In return for each investor, Jay Peak has to create 10 jobs. That means 5,000 jobs either at the resort or in the surrounding community.

"The whole business of having to create 10 jobs has disappeared into the world of fuzziness," said David North, a critic of EB-5.

North is with the Center for Immigration Studies in Washington, D.C. He says the jobs created through EB-5 rarely add up because the government doesn't count jobs, it uses a model to guesstimate. For every full-time job at Jay Peak, the government multiplies that number by 2.5 or 3 to calculate how many indirect jobs are created.

"The whole thing is, I think, kind of suspect," North said. "I certainly don't think it has created 5,000 jobs."

Reporter Gina Bullard: So, there's no one going around counting who's working at the general store now?

Bill Stenger: No, but those people are working there and teachers are being hired and electricians and contractors.

The 5,000 jobs Jay is supposed to create can be counted across Lamoille, Orleans and Franklin counties. The resort has two years from the time they finish all construction to show they've reached that number.

Already Jay Peak has tripled its payroll, hiring 700 people directly. They also will employ 500 construction workers. By our math when you multiply 1,200 by 3-- the number of indirect jobs assumed-- that's 3,600 jobs. But according to Labor Department statistics, 1,750 net new jobs have been created in those counties in the past 5 years. Still, Stenger is confident the target will be met.

"I think without doubt between direct and indirect we'll hit that number and probably exceed it," Stenger said.

The EB-5 director for the state, James Candido, says Jay is doing everything by the books and that change takes time. He's confident the jobs will be there.

"It wouldn't make sense to take a snapshot right now of the development and say there wasn't a significant impact to it," Candido said.

"It sounded at that time too good to be true; I give you $500,000 of my money and I never see you again, thank you very much," said Anthony Korda, an immigration attorney.

Korda is one of the first investors in the Jay Peak project. In exchange for his $500,000, his family got green cards.  They are from the UK, but currently live in Naples, Fla.

"You're not going to get rich from an EB-5 investment," Korda said. "What you're getting for your investment is the chance to live and work in the U.S. and to have a life here."

Which they will—by this time next year they will be U.S. citizens.

Gina Bullard: Some people argue these are the 1 percent-- we're sending them to the front of the green card line.

Bill Stenger: It's not a free ride; they're investing in a rural high unemployment area that desperately needs development.

At the Jay Country Store they've added two jobs because of the expansion at Jay Peak, plus they're keeping local construction workers busy. A small dent with overall unemployment at 9.4 percent in the Northeast Kingdom.

Gina Bullard: There are pros and cons to everything-- what's the con to the EB-5 program?

Bill Stenger: There's really not one.

Jay Peak might be a shining example of the EB-5 program so far, but other states are not having the same kind of luck. Many projects haven't been viable enough to create jobs; it's been criticized for expediting visas, fraud, and a lack of transparency. Despite those problems, it does not appear the government is investigating. It was very hard for us to even find a critic of this EB-5 program. When we did find North he told us that U.S. Citizenship and Immigration Services seems to be taking the back seat on this program because it's bringing so much money into the country.

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