As it turns out, the state of Vermont regional EB-5 center came off as more of a lap dog, cozying up with the developers and turning a blind eye to complaints by investors of mismanagement and from contractors for lack of payment. Eventually the federal government had to step in and have the courts appoint an administrator to sort out the mess.
For those who don’t recall, the EB-5 program allows foreign investors basically to purchase a path to citizenship. For a $500,000 or $1 million investment, they are given a green card and a way to eventually become United States citizens. The investment is used to fund development projects and to create jobs. The program has been around for more than 20 years, but has really taken off in the past decade or so.
The decision by the US Citizenship and Immigration Service to shutter the regional center does have local implications, and they may be serious ones. Mount Snow is in the middle of a massive project using EB-5 funding. Foreign investors have supported the West Lake snowmaking reservoir project and the new base lodge at Carinthia. Mount Snow officials are in the process of pitching more EB-5 investment for a condominium development around the new base lodge, and have plans for more development down the road.
Mount Snow officials have proven they can run a clean EB-5 program, and there is no reason to believe any of the malfeasance that occurred at Jay Peak has happened locally. But there’s still that cloud of association, and the cloud just got a little darker with the closing of the Vermont center. Mount Snow officials have said in the past they would like to create their own regional center. The federal overseers of the program have said that in the future they would like private enterprise to run projects in Vermont. So in that respect there is probably still a path forward for projects at Mount Snow and elsewhere.
One of the most frustrating things about the whole morass is not just the alleged fraud. That is certainly bad in and of itself, but in some ways the lack of information and transparency from the federal government is even more frustrating. That adds to the murkiness of the program and stirs distrust in many. Looking back on the Jay Peak boondoggle, much of the information about the fraud allegations came after media filed Freedom of Information Act requests to get state and federal officials to release any information. That’s not good government and it just adds suspicion and uncertainty.
No one in business likes uncertainty. Unfortunately for Mount Snow and the potential investors in their projects, that’s exactly what Monday’s announcement created. Even though the closing of the Vermont regional center was not a big surprise, it still creates doubt about what the future will hold for the EB-5 program in Vermont.
EB-5 has been many benefits, some of which can be seen in construction projects around the valley right now. Mount Snow, its staff, its contractors, and its investors have benefited from the program. Vermont now needs to move out from under the Jay Peak cloud. Shutting down the regional center is one step in that direction. Investors need to know their money is protected and will be spent on the projects presented, and developers need to be able to count on EB-5 investment as part of their funding toolbox.