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Sunday, 25 May 2014 22:00

Q&A: Joe Borgstrom, Director, State of Michigan EB-5 Regional Center

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Joe Borgstrom Joe Borgstrom COURTESY PHOTO

In April, Michigan became only the second state in the nation after Vermont to receive approval from the federal government to open its own regional center for the employment-based visa program known as EB-5. In essence, the program allows foreign investors come to the U.S. to fund commercial projects that create jobs and bolster the local economy. The federal government sets aside 10,000 EB-5 visas each year, available on a first-come, first-served basis. MiBiz talked with Joe Borgstrom, director of the newly established EB-5 Regional Center, about the implications the added visas could have for the state

Why is the creation of the center significant for the state?

This is really geared around trying to attract foreign investors to Michigan. The most successful (regional center) is in Vermont, and they have done about $600 million (in foreign investment). This is an opportunity to bring in hundreds of millions to the state for different kinds of projects.

Why is EB-5 commonplace in the private sector but not in the public sector?

There is a level of credibility that comes with the government. In the private sector, there have been some very good regional centers and there have been some that were not so good. Some have done some bad deals or there has been some outright theft. There is kind of a bad vibe around EB-5 because there have been some bad players.

How do you counter those ‘bad players’ by having the state set up the center?

We are trying to bring a level of credibility, being an independent third party. We’re the government, so we have to be transparent. … That helps bring some confidence to potential investors.

How can we build on best practices as EB-5 gets rolled out in the state?

We have done a lot of due diligence about this. Vermont has done a lot with their tourism industry. We have seen a lot of mixed-use development in California and Arizona. Philadelphia has also done quite a bit. We see (the visas) as a tremendous opportunity for mixed-use development, tourism.

What was the process for getting the regional center established?

Part of our due diligence was traveling abroad over the last year and talking to people. We have the complete support of the governor as well as the congressional districts on both sides of the aisle. That helped push through the process (of getting the regional center established) much quicker. So we are beginning to evaluate projects right now. We hope to send four to six in the next few weeks to Washington, D.C. (for approval).

What kinds of projects are you looking at?

I can’t give specifics yet, but we are evaluating many. I can tell you that mixed-use (development) is going to rank pretty high up there. There is potential for hotel and condo developments. There’s also potential for tourism and office properties. I can tell you we are evaluating at least two or three projects in Grand Rapids.

Are you seeking out projects or are they coming to you?

It’s a little bit of both. It’s a multi-pronged approach.

Where are you turning for prospects?

First, we have 25,000 foreign national students currently at our universities. Not all of those folks come from affluent families, but a good number do. So we are looking at leveraging those relationships.

Are there particular global regions or countries that you’re targeting for these investments?

China obviously has been a big user of the program. They use about 80 percent of (the visas) currently. We are also looking significantly at the Middle East and potentially South America as well. The Middle East is a market that is virtually untapped by EB-5. There is a natural connection between Michigan and the region because of (the state) having the largest concentration of Arabs outside the Middle East.

Do people have to move to Michigan to qualify for the visa?

We can’t require them to live here, but we are certainly encouraging it. That is one thing that sets our regional center apart from others. (Private-sector centers) want to separate the person from their money. They say, ‘Just write us the check and go live in Florida or California.’ Because it is a federal green card, they can live wherever they want to, but we are certainly encouraging them to come to Michigan. We are promoting our universities. We have a lot to offer and we have a high quality of life. We have been very proactive with our friends at Pure Michigan.

Interview conducted and condensed by Nick Manes.

Read 3295 times Last modified on Sunday, 25 May 2014 22:05

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