Program provides critical funding for economic development projects
For Todd Reidbord, the discovery of the EB-5 program was a godsend.
EB-5 helped breathe new life into the former Nabisco property in Pittsburgh’s East Side by providing critical financing to Reidbord’s company to complete the project. That funding was integral in transforming the Brownfield site into Bakery Square, a mixed-use complex encompassing retail, office, hotel, dining and entertainment spaces. The complex is projected to provide up to 1,200 jobs.
It’s one example of how the federally created financing program is playing an integral role in growing Pennsylvania’s economy and providing jobs for Pennsylvanians.
Reidbord, President, Walnut Capital, said he learned about EB-5 at a time when funding sources were nearly non-existent due to the anemic economy. Walnut Capital is a Pittsburgh-based real estate development and management firm.
“We were reluctant, at first, because we knew nothing about it,” Reidbord said. “Once we were educated and the Department of Community and Economic Development (DCED) got behind it, we put our arms around it and embraced it fully.”
EB-5 is a tool DCED has used to fund some fairly significant projects across Pennsylvania, according to Steve Drizos, Executive Director, Center for Private Financing, DCED.
“EB-5 provides much-needed capital for projects that otherwise lack sufficient capital for completion,” said Drizos. “Because of the requirements of the program, these are also projects that must demonstrate strong job creation.”
Some recognizable entities to receive project funding include the convention center and Southeastern Pennsylvania Transportation Authority (SEPTA) in Philadelphia and Lions Gate Production Studios and University of Pittsburgh Medical Center.
J. Mickey Rowley, Development Consultant, The Pennsylvania EB-5 Regional Center, CanAm Enterprises, said his company partners with the state to administer the program in Pennsylvania.
It’s a partnership that has paid huge dividends for Pennsylvania – especially compared to the other 30 states that also participate in EB-5.
“Pennsylvania is at the forefront in securing massive amounts of investments in the EB-5 program,” Rawley said. “The commonwealth has secured billions in funding, far outpacing nearly every other state combined. EB-5 has succeeded by leaps and bounds.”
Rawley added EB-5 benefits economic development efforts in ways other financing sources can’t.
For example, EB-5 is structured to provide low-interest loans ideal for construction projects that, once completed, become viable, long-term projects. The five-year, low-interest rate provided by an EB-5 loan helps enable construction crews to get the job off the ground sooner rather than later.
“What it does is allow an attractive, long-term project – like the Monaco Hotel in Philadelphia – to secure attractive financing with a very low interest rate to get the project up and running,” Rawley said. “EB-5 enables projects that may take a longer period of time to secure permanent financing to get started.”
As the program has proven to be successful in perpetuating economic development across Pennsylvania, it is now also being utilized to provide financial assistance to municipal governments for their infrastructure projects.
“The beauty of working with municipal governments is EB-5 can provide the financing on the front side to get the project done with a payback schedule with bond support in the future,” Rawley said. “Getting a job started sooner rather than later provides employment for people now, which is especially important in our current economic climate with so many people looking for work. This is really a new direction for us.”
Regardless of how the program changes, Reidbord is glad he learned about the program when he did.
“We’ve been pleased with EB-5 and it has been a very positive experience for us,” Reidbord said. “It helped us overcome the credit crunch of 2008 and 2009 when we were struggling to find the right lenders for the project, so it really worked well for us.”