Philly Inquirer reports Chinese investors in low-interest rate Penn Pike interchange lending get US preference as settlers
The Pennsylvania Turnpike Commission is set to borrow $200m toward the long awaited Turnpike/I-95 interchange from Chinese investors who get expedited immigration visas in return. The Philadelphia Inquirer's transportation reporter Paul Nussbaum broke the story in a piece published this morning. He reports the deal was suggested to the Turnpike by one of the four commissioners Pasquale 'Pat' Deon, a Republican appointee and secretary-treasurer of the Turnpike.
The Turnpike signed a financing agreement April 26 with a special purpose company DVRC Pennsylvania Turnpike LP. Its principals are Paula Mandle and Joseph P Manheim two senior officers of the Swarthmore Group, investment and financial advisers in Philadelphia. They have also formed a companion special purpose business Delaware Valley Regional Center (DVRC) which has applied for recognition from the US Citizenship and Immigration Services to operate a federally designated "regional center" to recruit foreign investors and provide the turnpike loan.
These regional centers are brokers for EB-5 investor-visas for would-be immigrants to the US in a program that goes back to 1990 but which has been greatly expanded since the financial crisis of 2008. The investors are required to make investments of at least $500,000 each in high unemployment areas and demonstrate they have created at last ten jobs. In return they get US residence.
A third of the interchange financing
The deal will provide about a third of the money needed for the I-95 interchange, a project that the Turnpike has been advancing at glacial speed for about 15 years. It's an approximate $550m project that will add direct connector ramps to a rampless crossing of I-95 at the far eastern end of the Turnpike, just 3 miles, 5km short of the Delaware River and the border with New Jersey. (see map at bottom)
The project also involves upgrades to both highways for a distance on either side of the interchange, new toll points, and at a later stage, a new bridge over the Delaware to replace the present old one linking with the New Jersey Turnpike's Pearl Harbor spur.
Once the ramps are built the last 3 miles of the Pennsylvania Turnpike and the New Jersey Turnpike will be re-signed as I-95 which will then be deemed a continuous interstate from Maine to Miami. (It presently fades out near Trenton NJ and DRJTBC's Scudder Falls Bridge.)
2% interest vs 4%
The Inquirer quotes Turnpike chief financial officer Nikolaus Grieshaber as saying that the financial brokers are committed to providing the $200m at about 2 percent interest, half the rate at which the Turnpike can do conventional municipal borrowing. That would save the Turnpike some $35m over five years.
Grieshaber says he'd never even heard of EB-5 financing until turnpike commissioner Deon suggested the deal with the Swarthmore Group people.
He calls it a "test case" for the Turnpike. If successful they may do more.
Deon is quoted saying lightheartedly: "Hey, Chinese money should come back to us once in a while."
The Swarthmore Group is headed by James E Nevels a longtime Republican supporter and fundraiser in Philadelphia.
Nevels is not directly involved in the EB-5 deal.
New York infrastructure finance adviser says unusual use of investor visa program
Brian P Chase principal at midtown Manhattan-based Campbell Lutyens & Co infrastructure finance advisers told us he's quite familiar with the EB-5 investor visa program.
But he's never heard of it being used for financing of state owned infrastructure like the Pennsylvania Turnpike.
"It sounds like another way for the Turnpike Commission to become even more heavily indebted than they already are in the wake of Act 44," he told us today.
He says the EB-5 visa program is intended to encourage investment in private business ventures.
He says he wonders what happens if the investors don't come through with the money. Are the broker fees returned that were paid by the Turnpike on signing the deal?
And what if the Feds (USCIS) don't approve the brokers' arrangements for a so-called Delaware Valley Regional Center and DVRC Pennsylvania Turnpike LP.
Chase suspects the state's auditor general may have grounds for a new investigation of the Pennsylvania Turnpike.
"Investigators may soon be all over the Turnpike once again."
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