A visa program that offers foreign investors the chance to get a green card for a $500,000 investment in a U.S. development is potentially helping fuel a new apartment project on West Tyvola Road.
Sycamore at Tyvola, located on 30 acres near West Tyvola Road and South Tryon Street, pulled grading permits this week which will allow it to start clearing the vacant land soon. Philadelphia-based Switzenbaum & Associates is developing the project, which will total 288 new units in six four-story buildings with elevators. The project is expected to be complete in winter 2017, according to Switzenbaum’s website.
There’s an interesting twist on these new apartments, however, according to Switzenbaum’s website: $10 million of the $52 million project is financed through the EB-5 visa program, under which foreign investors can secure a path to permanent residency and even citizenship in the U.S. in exchange for a $500,000 investment. The program has exploded in popularity in recent years, with Chinese investors flocking to get U.S. green cards by investing in new projects. Up to 10,000 such visas are available each year.
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“The $52 million capital stack (for the Sycamore at Tyvola apartments) was funded by a $10 million secondary mortgage in the form of an EB-5 loan provided by RSR, a $34 million HUD insured 221(d)(4) construction loan, and $8 million in developer equity,” Switzenbaum’s website reads.
When contacted by the Observer, Switzenbaum declined to comment on the development, but said the company is still raising EB-5 money and may or may not use it to fund the project.
The EB-5 program is administered by private entities called “regional centers,” which solicit foreign investors, collect the cash and process the paperwork. In Switzenbaum’s case, an entity called RSR EB-5 Regional Centers provides foreign investor financing. Sam Switzenbaum and the same executive team are in charge of both companies, which are partners, according to their websites.
For developers, EB-5 investments offer a chance to get capital more cheaply than through a bank or other traditional lenders. And EB-5 investors get the chance to bring their families to the U.S.
The program has been called out for lax oversight, however; a government watchdog found in a 2013 report that it’s tough to track the impact of investments and whether job creation goals are being met. And some EB-5 developments have been exposed as frauds, such as an alleged scheme in Chicago to defraud Chinese investors of $160 million for a project that was never built. Congress renewed the EB-5 visa program for one year in September.
In Charlotte, another apartment developer is using EB-5 money to build 300 new units on North Tryon Street adjacent to the Blue Line light rail extension. Jane Wu, head of Carolina States Regional Center, broke ground on her EB-5-financed project last month.
Switzenbaum & Associates isn’t new to Charlotte. The company bought the Tyvola Centre Apartments in 2009 for $35 million, next to the site where they are planning Sycamore at Tyvola.
If you’re curious, you can check out how RSR EB-5 Regional Centers marketed the Sycamore at Tyvola apartments to Chinese investors online here. Here’s the description:
“This 30.3-acre project is ideally located to take advantage of all the amenities of modern American life. It is just two miles from the South Boulevard retail corridor, and a 10-minute drive from SouthPark Mall, one of the leading luxury malls in America featuring global and luxury brands such at Apple, Armani, Hermès, Burberry, Louis Vuitton, Tiffany and many more. The area along Tyvola Road between I-77 and South Boulevard is rich with restaurants and a variety of retail services. And downtown Charlotte is just 7 miles away. There are also 1 office parks in the vicinity, so commuting can be easy.”