LEWISTON, Maine — The state of Maine is looking to start its own program to help attract more direct foreign investment, according to Maine Department of Economic and Community Development Commissioner George Gervais.

“The state is interested in establishing a state-run EB-5 regional center in the absence of activity within existing EB-5 regional centers in Maine,” Gervais said in a message to the Sun Journal. “We are currently exploring options and are not prepared to comment further at this time.”

The announcement, however brief, comes just days after news that a group of Chinese investors purchased a property in Auburn and is looking to invest some $40 million in a medical tourism facility there.

Lack of activity in Maine’s privately run EB-5 programs seems to be prompting Gervais and the Department of Economic and Community Development to move forward with a state program in hopes of capitalizing on federal immigration laws that allow those who invest $500,000 to $1 million in the United States, and creating or retaining at least 10 jobs, to gain a fast-track path to citizenship.

There are three private EB-5 regional centers that cover Maine but only one, USA Lifestyles Inc., which is operated by the owners and executives of the Saddleback ski resort and targeted to help Franklin County and Livermore Falls, is wholly within Maine.

Gervais has previously said the state has been watching the centers closely but, “in all three cases there’s been no activity [within Maine].”

He also said the first project for any regional center has to be a strong one.

“For a regional center, your first project that you come out of the gates with needs to be something solid and have a very high probability of success,” Gervais said. “If it were to fail, then your ability to attract further investments to your regional center would be almost impossible.”

It’s a sentiment that one of Saddleback’s owners, Mark Berry, echoed Wednesday saying the resort, which is working to secure some $3 million in financing for a new chairlift — at the risk of closing for the next ski season without it — has been unable to attract foreign investors.

“You need a really solid project to get it off the ground,” Berry said of the EB-5 program. “If the first one isn’t stellar, you’re going to get killed.”

Chris Farmer, Saddleback’s general manager and who travelled to China in 2013 as part of a state trade mission with Gov. Paul LePage, said during the trip he met specifically with recruiting companies there that focus only on recruiting EB-5 investors.

Farmer said growth in the EB-5 program overall has created much more competition, and investors, who once were largely looking to preserve their capital along with a pathway to citizenship in the U.S., are now more interested in also assuring a return on their investments.

He said the scope of the project ultimately serves as the key to drawing investors, but any EB-5 development that also appears to have the backing of state government can gain a slight advantage, especially with Chinese investors. He said recruiters also prefer projects that are not wholly dependent on their client’s money but also involved between 20 and 30 percent funding from investors in the U.S.

“You have to make your project the most attractive,” Farmer said. “The other piece that we found is the reputation of the regional center is very key to these people who are placing people in play, these recruiting companies.”

Farmer said other regional centers in the U.S. have been fraught with problems.

“There have been regional centers that have failed, there have been regional centers that have absconded with money, all these things,” Farmer said. “We felt, as a group, that we wanted to make sure that the first project that we did was clearly going to be successful, both financially and to fruition for the project.”

He said while USA Lifestyles has had offers for projects, none has risen to that standard. Farmer also said the company has been talking to state officials about variations of the proposal since before LePage took office, but the negotiations never yielded any deal.

News that the state may move to set up its own EB-5 program was not surprising considering the Legislature in 2011 provided the funds and directed the Department of Economic and Community Development to set up a state-run regional center.

Vermont, which has one of the few state-run EB-5 programs in the nation, has been held up as a success story as the Green Mountain State has drawn down hundreds of millions of dollars to upgrade ski resorts with new hotels, condominiums, chair lifts and even an indoor water park.

But in recent weeks, Vermont’s program has come under fire after the resignation of its EB-5 Center director, who is leaving state government to work for Mount Snow, which received a $52 million EB-5 project that director helped coordinate.

Vermont’s Democratic Gov. Pete Shumlin has questioned whether the employee violated any of the state’s ethics code, but the former director denies any ethical breach.

Federal changes

Meanwhile, federal lawmakers, including U.S. Sens. Patrick Leahy, D-Vermont, and Chuck Grassley, R-Iowa, are looking to reform the federal laws the EB-5 program falls under.

“The EB-5 Regional Center program faces some challenges, but I have not seen any flaw inherent to the program that could not be remedied,” Leahy said in a news release issued in June. “And I have seen over the last two decades how the EB-5 program creates jobs and provides access to capital in communities in Vermont and throughout the country, all at no cost to American taxpayers. While our immigration system as a whole is broken, and only comprehensive reform will remedy its many injustices, reforming and reauthorizing the EB-5 Regional Center program warrants our immediate attention because the program is set to expire in a matter of months.”

The law authorizing the program expires in September, and the legislation by Leahy and Grassley would reauthorize the program and change some of the rules, including increasing the minimum investment amount to $800,000.

The measure also tightens the guidelines in an attempt to direct most of the investment from the program to rural parts of the country with downtrodden economies. The bill also would tighten oversight of the program by the Department of Homeland Security in a move meant to protect against terrorists using the program to gain access to the U.S.

A spokesman for Leahy said Wednesday that Leahy has tried for more than 10 years to have the program permanently authorized by Congress, but failing to pass his new bill, he would work to have authorization of the program extended again in the short-term.

Possible changes for the program both within Maine and at the federal level could have implications for the Auburn project, but what those are remain unclear.

U.S. Sens. Susan Collins and Angus King said they were studying up on the Leahy-Grassley bill and would keep a close eye on it to ensure any changes are not detrimental to efforts to use the EB-5 program in Maine.

“The EB-5 program can be a valuable tool in helping attract foreign investors who can be a vital source of capital to spur economic growth and create good-paying jobs,” King, an independent, and Collins, a Republican, said in a joint statement issued by Collins’ office this week.

“We will continue to monitor the bill’s progress as it proceeds through the Judiciary Committee and urge our colleagues to implement reforms that don’t discourage investment in rural states like Maine, but rather ensure the visas are not used fraudulently or to open the door to those who could be a security risk to the United States.”

Lindsay Tice, a Sun Journal staff writer, contributed to this report.

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Scott Thistle

Scott Thistle is the State Politics Editor for the Lewiston Sun Journal. He has covered federal, state and local politics in Maine for nearly two decades.