Seeking EB-5 investment funds for luxury housing

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DOVER — Mount Snow executives want to raise $94 million for their next expansion project, and they expect more than half of that — at least $55.5 million — to come from the EB-5 foreign investment program.

The figures come from a new U.S. Securities and Exchange Commission filing by Peak Resorts, Mount Snow's Missouri-based parent company.

Peak wants to build 102 luxury housing units at the Dover resort. Having already used EB-5 money to fund a snow-making upgrade and a new lodge, executives are now searching for more than 100 foreign investors to cover a significant portion of the housing project. Peak "has begun raising funds for additional development projects at its Mount Snow ski resort as part of its ongoing efforts to enhance visitor experiences and grow its business through return-focused expansion projects," administrators wrote in their Jan. 30 SEC filing.

The federal EB-5 program allows foreigners who invest in qualified job-creating projects to obtain visas and permanent U.S. residency. In most cases, the minimum investment is $1 million. However, in Vermont, each investor must pay a minimum of $500,000 to qualify for the program, because the state is designated as a "targeted employment area."

The program has come under scrutiny in recent years due to allegations of massive, years-long fraud at Jay Peak Resort. Last week, the former owner of Jay Peak, Miami-based developer Ariel Quiros, settled with the SEC for a total judgement of nearly $84 million, although he has not admitted any wrongdoing.

The Jay Peak scandal has also endangered the state's EB-5 regional center, which has managed EB-5 investment in Vermont.

The former head of the state's regional center now works for Mount Snow, which raised $52 million in its first EB-5 offering. But the resort and its parent company have no connection to the Jay Peak mess, and its administrators have been working to further distance themselves by establishing their own EB-5 regional center.

That center, dubbed the Great North Regional Center, was approved by U.S. Citizenship and Immigration Services late last year. Now, Mount Snow is putting it to use.

Peak's SEC filing says Mount Snow has organized a limited partnership, called Carinthia Residential Phase 1 L.P., to raise money for new housing units to be built at the resort's Carinthia base area.

The total price tag is listed as $94 million, and the filing says Carinthia Residential "is seeking to raise at least $55.5 million by offering interests in the partnership to a maximum of 111 qualified EB-5 investors for a minimum subscription of $500,000."

The remainder of the project would be funded through loans. But "any increase in the size of the (EB-5) offering is intended to correspondingly reduce the amount of loan financing needed to complete the projects," the SEC filing says.

Carinthia Residential will be operating "in affiliation" with Great North Regional Center, the document says.

Mount Snow administrators did not respond to questions about the filing or the Carinthia Residential project. But Tim Boyd, president and chief executive officer of Peak Resorts, has said fundraising is expected to take 12 to 18 months with construction scheduled to begin in 2019.

The SEC document includes a brochure for the next EB-5 offering, including a detailed description of the housing project, which will be comprised of two- and three-bedroom units with fireplaces, kitchens, washers and dryers. The complex will be "operated by Mount Snow as a nightly hotel," it says.

Resort leaders say they are addressing "unmet demand" for lodging. "Mount Snow attracts high net worth families from New York City and the surrounding metropolitan area," the brochure says. "These families are seeking luxury accommodations at the base of the ski slopes."

The brochure also touts Mount Snow's past successes with EB-5 investment. That funded the 120 million gallon West Lake snowmaking project, which was completed in time for the current ski season. It also funded construction of a new, 42,000-square-foot Carinthia Lodge, which is scheduled for completion later this year.

State Rep. Laura Sibilia, I-Dover, said she believes "a lot has been learned" about EB-5 from the Jay Peak scandal. "I think there's lot of consensus around reforms that are needed - better controls, better oversight," she said.

But Sibilia doesn't see any reason to equate Jay Peak's problems with Mount Snow's EB-5 projects. Instead, Sibilia said Mount Snow's planned development is an "incredibly important" way to help combat southern Vermont's economic troubles and also inject more tax dollars into the state's education fund.

"The potential this has to really help the Deerfield Valley and the businesses in the region is pretty significant," Sibilia said.

Other items of note in the SEC filing include:

- The Carinthia project is expected to generate 1,396 jobs, or about 12.6 jobs per foreign investor.

That appears to exceed the minimum necessary under EB-5 rules: The federal government says each foreign investor's contribution must "create or preserve 10 permanent, full-time jobs for qualified U.S. workers."

- Annual revenue from the new housing complex is expected to grow steadily and eclipse $15 million by 2032.

- The Great North Regional Center's boundaries include all of Vermont and New Hampshire as well as part of New York and Massachusetts. Peak operates resorts in three of those states but does not currently have a resort in Massachusetts.

- Peak generated "record revenue" of $123.2 million in the fiscal year that ended April 30, 2017.

Mike Faher can be contacted at mfaher@vtdigger.org.

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