Mayor Larry Morrissey, developer Gary Gorman head to China to again pitch Rockford hotel
Mayor Larry Morrissey and developer Gary Gorman left for China this morning, their third sales trip to convince Far East investors that their ticket to a life in the United States is a decrepit, abandoned Midwestern factory.
Gorman & Company's plan to turn the 13-story Amerock building into a $67 million Embassy Suites hotel depends in part on at least 50 investors, who can sink $500,000 into the historic renovation project. Their return on investment promises to be more than compounding interest: It's a visa to live in America.
"I hope this is my last trip, but I'm committed to do what it takes to get this deal to the finish line," Morrissey wrote in an email from O'Hare International Airport as he waited for his flight. "This is a major game changer for (the) Rockford region, not just our downtown."
Gorman hopes to raise at least $25 million through EB-5, a federal immigration program that provides foreigners with a green card for their investment in projects in disadvantaged areas that create at least 10 jobs. It has applied with the government to increase that amount to $46 million, but processing forms to get the increase may take a year or more.
As of Wednesday, Gorman had $3.5 million in escrow from seven investors for the project, said Rachel M. Snethen, director of Gorman's EB-5 Regional Center in Oregon, Wisconsin. Snethen, who also went to China, said four more investors are finishing paperwork before depositing money. And an additional five potential investors have committed verbally to the project, she said.
That's 16 investors worth $8 million.
Elected officials are revered in China. Gorman says Morrissey's mayoral celebrity is valuable in meetings with potential investors, so valuable that Gorman agreed to pay Morrissey's travel costs for two of the trips. The city paid for the first trip, which Morrissey estimated cost less than $10,000 and was paid for through tax increment finance district monies.
But during trips to China last July and October, the presence of a local politician couldn't offset what was happening in Washington, D.C. Gorman EB-5 investment slowed last year after congressional rumblings that the program needed changes. Potential investors sat on their money, Gorman said, waiting to see how the program would change. It didn't. In December, the existing program was extended until Sept. 30.
Four investors came forward this month, she said.
"From my chair, things have picked up at incredible pace since Chinese New Year," Snethen said. The month-long holiday ended in February.
"We have several individual investor and agent meetings set up on this trip which our partners overseas have said they also expect will also become committed to the project," Snethen said Wednesday.
Gorman said he and Morrissey will meet with investors in Beijing, Shanghai and Shenzen over three days in China. Snethen will meet with investors in Guangzhou.
"We'll split up to cover more ground," said Gorman.
China's economy has been in turmoil for months. Since June, the Shanghai Composite Stock Market Index is down 50 percent, and its double-digit growth in gross domestic product is expected to rise about 7 percent in 2016 compared with a 14.2 percent increase in 2007, according to The World Bank.
Gorman, who has been steady in his commitment to the project, said that may make the stability of the U.S. a selling point for a project that he hopes is under construction this summer.
"We hope to, but the money has got to be in place," said Gorman. "I'm convinced it will happen.
"Hopefully, we'll stir up some more interest on this trip."
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