On Monday, News 4 broke the story that China Hub consultants had pursued the EB-5 immigrant investor visa program during meetings with the staff of then-Senator Kit Bond. Those discussions took place in October 2008. The meetings were buried in a report produced by Hub consultant Jason Van Eaton of Spectrum Consulting. The immigrant visa program is controversial because it provides a fast track for U.S. residency for foreigners if they invest at least $500,000 in depressed areas, or $1 million in other areas. The businesses they invest in need to create or protect at least 10 jobs.
On Tuesday, we confirmed the St. Louis County Economic Council formed a regional center to pursue foreign investors for the proposed China Hub. Sen. Jim Lembke says Chinese investors could qualify for Missouri tax credits. The SLCEC says it formed an EB-5 regional center to market investment opportunities like China Hub. The center will serve St. Louis City, St. Louis County and St. Charles County. The center has been formed, but the federal government still needs to approve the application.
County officials say they formed the EB-5 center in September 2008, adding that they have not identified investors yet. They insist rules are tight about soliciting bids, and that the center hasn't marketed it's services. But 6 months before the center was "formed," this notice was published in Chinese on the internet. The SLCEC did not comment on the Chinese notice.
I learned about the program through the financial problems of Mamtek, a Chinese and American owned business fighting to open a plant in Moberly, Mo. Mamtek promised hundreds of jobs, but now it appears that the company is in trouble, and its possible failure may leave taxpayers on the hook for millions of dollars in bonds. Sen. Lembke told me a legislative committee will begin investigating issues raised by the Mamtek story, and that includes the role of foreign investors through the EB-5 program.
China Hub supporters insist the Mamtek deal is different, and that the Hub has much better checks and balances. There is a long list of regional centers that supporters say have enabled foreign investors to create or protect tens of thousands of jobs, and pump billions of dollars into the U.S. economy.
Mamtek may have nothing to do with the Midwest China Hub, but it will undoubtedly, perhaps unfairly, create more concerns about any legislation that would give millions of dollars in tax credits to companies doing business with Chinese investors.
Timing is everything.
During the current special legislative session, the Missouri Senate approved a bill making $60 million in tax credits available to freight forwarders who would move the cargo through Lambert, but it removed the $300 million for developers. The House leadership wants the $300 million put back in the bill.
Now, the legislature is running out of time.
The Governor has told lawmakers to cut a deal or end the costly special session. In turn, the Aerotropolis bill designed to get the international cargo hub off the ground, and keep it flying, the same bill that was considered a done deal 2 months ago, is now barely alive.