Pennsylvania Turnpike project to get foreign cash
|EB-5 VISA INVESTORS : Chinese investors finance turnpike link in exchange for green cards|
PHILADELPHIA — Agents for the Pennsylvania Turnpike Commission have begun signing up Chinese investors who are promised permanent residency under a U.S. law in exchange for loaning money to help finance a major project to connect between the turnpike and Interstate 95 in suburban Philadelphia.
The Philadelphia Inquirer reported Sunday that agents for the turnpike commission began pitching the proposal in China in September. More than 100 investors have applied so far.
The firm created to make the deal, the Delaware Valley Regional Center, has a first installment deadline to provide $50 million to the turnpike commission by April. It expects to meet that deadline, the firm's managing director, Joseph P. Manheim, told the Inquirer.
Construction began in October.
Overall, the heavily indebted turnpike commission is hoping to net 400 wealthy foreign investors at $500,000 per contribution to provide $200 million for the $420 million project.
The foreign investor deal offers financing at about a 2 percent annual interest rate, about half that of municipal bonds.
As a result, the turnpike commission hopes to save about $35 million over traditional borrowing costs over five years. Meanwhile, brokers and lawyers will collect millions in commissions and fees. Each investor must pay $50,000 to the dealmakers and $15,000 to the lawyers.
Similar foreign-investor deals that give out EB-5 immigration visas have provided funding for the Pennsylvania Convention Center, the Temple University Health System, and the Comcast Center in Philadelphia, the Inquirer reported.
The deal was suggested to agency officials by Turnpike Commissioner Pasquale T. "Pat" Deon Sr., a Bucks County restaurateur and beer distributor who is also chairman of the Southeastern Pennsylvania Transportation Authority.
Under Deon, SEPTA executed a similar deal in 2011 when the transit agency borrowed $175 million for a new smart-card fare-collection system.
The turnpike deal was created by Manheim and other officials of the Swarthmore Group, a Philadelphia investment-management firm headed by James E. Nevels. Nevels is chairman of The Hershey Co. and the Federal Reserve Bank of Philadelphia.
Last year, state Auditor General Eugene DePasquale told the Inquirer that the plan "raises alarms" and might prompt his office to investigate. DePasquale said he wanted to know why a new entity, the Delaware Valley Regional Center, was created to broker the deal.
Turnpike officials have said they did not consider a deal with already-established brokers, like one operated by the Philadelphia Industrial Development Corp., because the new business offered better terms and financing.
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