EMPLOYMENT: Murrieta hopes to trade jobs for green cards

Murrieta plays matchmaker under federal immigration program

By PAT MAIO - pmaio@nctimes.com
North County Times - Californian
December 11, 2010 10:00 pm

Murrieta thinks it knows the price of a "green card."

As part of a little-known immigration program managed by the Department of Homeland Security, foreigners can invest $500,000 in a strip center, office building, food market or whatever that creates 10 jobs.

In return, they win a conditional green card and a ticket to America.

In immigration parlance, a green card is the federal identification card (it's no longer green) that designates permanent permission to live and work in the United States.

Even though Murrieta has single-digit unemployment, it's taking advantage of being in Riverside County and the county's high unemployment, which has hovered in the 14 percent range.

This means Murrieta can ask foreign investors to cough up $500,000, not the $1 million required in less recession-ravaged areas, to invest in a real estate project.

Even though the program has been around for 20 years, it hadn't garnered much interest until the Great Recession.

Bruce Coleman, Murrieta's economic development director, uncovered this financial carrot.

"It's an interesting perspective in how to get financing in an era when it's difficult to get traditional financing from a bank," said Coleman, who said the city is acting as a matchmaker between local developers and a third party in Orange County working to recruit immigrant investors.

He recently struck pay dirt.

The city now boasts of becoming what is believed to be the first city in the San Diego-Riverside county area to embrace the program, called EB-5, which is a foreign investment visa offered by the Immigration Act of 1990.

Already, the city's proposed $12 million Olivewood project has attracted 15 foreign investors ---- all of whom will get a conditional green card to live in the U.S. once immigration officials check to make sure they aren't drug lords, terrorists, or deriving their money from illicit activities.
10 jobs per investment

The $12 million equates to 240 jobs to be created permanently in the U.S. ---- Murrieta, specifically.

Overall, Murrieta hopes to line up 24 investors.

They can move to digs anywhere in America. No strings attached.

Some have plans to take posh apartments in New York City, others in Washington, D.C., and Los Angeles, officials said.

One unidentified investor in the Olivewood project is packing her bags, scoping out living arrangements in Los Angeles, said Ron Darling, a consultant with Irvine-based American Redevelopment Solutions LLC who is working with Murrieta on its 50,000-square-foot, mixed-use project.

The other 14 investors are still being checked out by immigration officials, Darling said.

"We have investors from China, Japan and Peru," he said of the Olivewood project's backers.

Darling also has investor bites from Taiwan, Korea and Vietnam to round out the list of 24.

"They must complete the paperwork and wire the funds here before they can come to this country," he said.

The marriage between the city of Murrieta and local developers on Olivewood came about because of economic hard times.

On one hand, Murrieta was trying to scratch its way out from under the dark cloud of double-digit unemployment in the Riverside County region.

On the other hand, a pair of developers couldn't find a bank willing to lend money on a project begging to be built.

Five years ago, the developers, Rick Neugebauer and Craig Schleuniger, both with Oak Grove Equities Inc. of Murrieta, bought land to develop at the southwest corner of Jefferson Avenue and California Oaks Road, just across the street from Murrieta's City Hall.

They jumped through all of the land-planning hoops to get the project started, except they couldn't find a lender.

When the Great Recession was in full swing in 2008, credit dried up, and the project very nearly did, as well.

Lot eyed for revival

The lot today is vacant, with the exception of a handful of olive trees and a gutted building formerly used for medical offices and as an equine surgery center years ago, once considered the largest in the western U.S.

Under the EB-5 program, the building will be converted to a "lifestyle" market called The Farmstead Market, selling mostly vegetables and organic food from local farmers.

Five other buildings in the Olivewood complex will include a two-story Class A commercial office building, retailers, restaurants and a drive-through bank.

"You need that mix for EB-5 to work because you need to create 10 jobs for every $500,000 invested," Schleuniger said.

The timing was right for Oak Grove Equities and city officials.

While Oak Grove Equities had trouble finding a lender, Murrieta officials were stumbling onto EB-5.

Earlier this year, Riverside County's Economic Development Agency had uncovered the program and began to search overseas for immigrant investors for projects.

Murrieta's EB-5 deal may become the first in Riverside and San Diego counties, according to Darling, an immigration law expert who teaches seminars on the EB-5 program in California.

He said roughly 95 percent of EB-5 programs are offered through sanctioned "regional centers," which is what Murrieta is using with Darling's American Redevelopment Solutions.

The centers are sanctioned by the U.S. Citizenship and Immigration Service, an arm of the Department of Homeland Security.

"This used to be a very small industry, and we'd all fit in one room. Now, it's much bigger than that," Darling said.

The industry has grown from about 30 centers a few years ago to several hundred.

U.S. offers better deal

Darling said that EB-5 didn't get much attention until the Great Recession, when local communities in the U.S. saw foreclosed homes litter subdivisions in their backyards.

The program also languished since the late 1990s because of fraud and scandals, he said.

The program found new life once U.S. officials realized its jobs-creation importance, and after a similar program in Canada doubled the price of a similar green card to $800,000 ---- making the U.S. the better deal.

Technically, if the center determines that the jobs were created, then the investor receives permanent legal residency in the U.S.

However, the monetary return on the investment for the immigrants isn't anything to write home about.

Darling, who has worked the EB-5 program since its inception, said the average immigrant investor receives a 3 percent return on the investment annually, and eventually recoups the $500,000 in a five-year period once they're bought out by other investors ---- such as Oak Grove Equities, for example.

"The statistics on where people come from is driven by the economy, and the political desire to get out of their country," Darling said in observing tensions throughout parts of Asia.

Ultimately, he said, "It's a jobs bill."

Call staff writer Pat Maio at 760-740-3527.

http://www.nctimes.com/business/article ... 82845.html