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Jay Peak bombshell

BenedictGomez

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I guess Newport never heard of requiring a developer to require a bond or some other type of security.

I'm not 100% sure I'd blame the town. I'm guessing the $$$ is just so large, and the project considered so high-risk that they couldn't get a performance bond in place.

Honestly, if you were in charge at the insurance company or bank would you issue one? Were I in charge I'd tell my people to RUN from them.
 
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If you go by what is said in the Free Press back in July, they weren't even planning on submitting the first petition for the Renaissance project to the Vermont Center until this September ... http://www.burlingtonfreepress.com/.../stenger-foreign-investment-vermont/12747335/

The plan would first have to be approved by the Vermont Center before it is then sent on to USCIS. Given that an initial petition's average processing time is somewhere north of 17 months with USCIS, and remembering that most EB-5 investors don't hand over the money until the initial proposal has USCIS approval----- it is going to be some time before the money starts flowing into that project (at least from the EB-5 sources).
 

VTKilarney

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Interesting article, for sure. On the one hand, I have much less sympathy for the investors that claimed that they do not have enough resources by not being paid back their initial investment. However, one has to wonder if Jay Peak obtained verification of assets.

A couple of Stenger's statements made me scratch my head:
1) That the investors are now guaranteed to get their money back in 38 months. My impression is that the IOU is not properly collateralized.
2) He makes no mention of the massive balloon payment, and has certainly not explained how such a payment could ever be made.
3) He doesn't explain why stripping the investors of an ownership interest was good for anyone other than Jay.
4) His argument presumes that there is actual oversight by the state. The state itself has conceded that they were not enforcing at least one major requirement of the MOU.

I agree that the truth is likely somewhere in between. If this was just one or two phase-one investors expressing discontent, I would be much less skeptical of Jay. But it's an extremely large percentage. At best, it's a PR disaster. Maybe Jay should send Burkie to sip cognac with the investors and to flirt with the wives.
 
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BenedictGomez

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Other than Stenger claiming the investors in question will be paid back in full withing 38 months, there's very little new info in his response. Kindof makes me wonder why he even bothered writing it as all it does is put these gnawing issues back into the public eye, even if briefly. PR 101: If the bad news has quieted down, don't bring it back up.

As for his 38 month comment which is new, I really dont understand it or where that comes from. Did they just decide this? How will they be paid (i.e. where does that money come from, as it's significant.....probably about $10M or so)?
 

VTKilarney

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I assumed that the final payment becomes due in 38 months. The final payment is the balloon payment that is in excess of $300,000 per investor.
 

VTKilarney

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Here is the punch line from the "article":
During federal fiscal year 2014, Vermont's 116 I-829 approvals equate to a minimum of 1,160 jobs created, placing the Vermont Regional Center in the top 2 percent nationwide, said Brent Raymond, Vermont EB-5 Regional Center executive director.

There is no author listed, so it looks to be a press release. The award was given by the Association to Invest in the USA. Stenger is a board member of the organization. The organization is an industry trade organization for the EB-5 Regional Center Program. They list their primary mission as the "permanent authorization of the EB-5 Regional Center Program by Congress."
 

BenedictGomez

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The award was given by the Association to Invest in the USA. Stenger is a board member of the organization. The organization is an industry trade organization for the EB-5 Regional Center Program. They list their primary mission as the "permanent authorization of the EB-5 Regional Center Program by Congress."

Seriously? That would be like if I gave myself an award for "World's Greatest Skier".

If that really is true, all it is is nonsense for them to put in forward/future marketing materials.
 

thetrailboss

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Seriously? That would be like if I gave myself an award for "World's Greatest Skier".

If that really is true, all it is is nonsense for them to put in forward/future marketing materials.

Yeah I read VTK's snip and took it for what it is--a self-serving press release that the Center shot out there after some critical news articles and after the Governor barely won an election (in part because Vermonters don't feel that the economy is going well). It is what it is as they say.

So the good: folks are getting money and doing projects that will hopefully help grow business. The meh: the way that they calculate "jobs created" (or kept) renders the real job growth questionable. Some folks obviously got jobs from this...albeit low paying...others probably are doing better....all good. I certainly did not see 100's of people working at Burke when I went up there. And the bad: there are a lot of questions as to what is going on, the jobs that are being made, and if the development is sustainable.
 

VTKilarney

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I'm curious as to how many of the construction jobs at Burke are being performed by people who had previously resided in the Northeast Kingdom? It would be a great statistic from a public relations standpoint if the percentage was a high one.
 

VTKilarney

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Guess who appears to have put out the press release? You will be shocked:
http://vermont.gov/portal/government/article.php?news=5169

I can't find any other center that has issued a press release about this award. (Not saying that they don't exist - just that I didn't find one.) It's odd that the IIUSA, in a separate press release, mentions "spotlighting" 17 EB-5 Regional Centers at an award ceremony, but they don't give a list of who the "award" winners were, nor do they say what the criteria was for the award, other than a vague reference to I-829 approvals. (See: http://www.prweb.com/releases/2014/11/prweb12310062.htm )

One has to wonder if being a board member helped Mr. Stenger at a time when help was needed.
 

thetrailboss

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Guess who appears to have put out the press release? You will be shocked:
http://vermont.gov/portal/government/article.php?news=5169

I can't find any other center that has issued a press release about this award. (Not saying that they don't exist - just that I didn't find one.) It's odd that the IIUSA, in a separate press release, mentions "spotlighting" 17 EB-5 Regional Centers at an award ceremony, but they don't give a list of who the "award" winners were, nor do they say what the criteria was for the award, other than a vague reference to I-829 approvals. (See: http://www.prweb.com/releases/2014/11/prweb12310062.htm )

One has to wonder if being a board member helped Mr. Stenger at a time when help was needed.

Reason to ask questions for sure.
 

BenedictGomez

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The meh: the way that they calculate "jobs created" (or kept) renders the real job growth questionable.

I have actual working experience with the intentionally fraudulent manner in which government economists calculate "jobs created" to make government programs look good. You don't even want to know, but long story short, believing the data takes a similar kind of willing suspension of disbelief as does watching an X-men movie. There's no way EB-5 in Vermont is creating anywhere near the jobs they claim, but if they're creating and sustaining even < 1/2 of the jobs they claim they are, I'd be surprised.
 
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