Published: September 5, 2014 – What do the Akron Civic Theatre, Austen BioInnovation Institute and the Bridgestone Americas Technical Center and parking facility project all have in common? Each one received a piece of its funding from the Development Finance Authority (DFA) of Summit County.
Formerly known as the Summit County Port Authority, the DFA works with economic development, legal, financial and business professionals to get projects off the ground in the county and throughout Northeast Ohio.
“The market has not fully come back since the credit meltdown in 2009 and 2010,” said Christopher J. Burnham, president of the Development Finance Authority of Summit County. “Banks did things before this occurred that they will not do today. So it’s important for developers to have other places they can go for capital in addition to traditional lenders.”
He said the DFA provides help to businesses expanding or relocating in or near Summit County, including fixed-rate bond funding, tax credit programs and brownfield reclamation. For example, Burnham said the Akron Civic Theatre project cost $21 million and the DFA issued $14.5 million of the money in fixed rate bonds, with the rest coming from private sources.
Recently the agency formed a cooperative agreement with the Cleveland International Fund, which uses money obtained through EB-5 investments to finance commercial development and construction in Cuyahoga County.
Created by Congress in 1990 and administered by U.S. Citizenship and Immigration Services (USCIS), the EB-5 program allows foreign investors to accelerate the green card process for themselves and their families by investing at least $500,000 in a “Targeted Employment Area,” that is either rural in nature or has a very high unemployment rate. The investment must create or preserve at least 10 full-time jobs for U.S. workers who are not related to the investor.
The pilot program was enacted in 1992, but has since been regularly reauthorized. It sets aside certain EB-5 visas for investors in regional centers designated by USCIS based on proposals for promoting economic growth. A regional center is a third-party managed investment vehicle that assumes responsibility for creating the jobs, such as the Cleveland International Fund. In addition to these centers, investments may also be made directly into the job-generating commercial enterprise.
Licensed by the U.S. government since 2010, the Cleveland International Fund offers EB-5 investment projects primarily in the areas of commercial development, mixed-use construction, and the healthcare sectors.
“We have raised $180 million with 360 investors, the majority are Chinese nationals,” said Stephen Strnisha, chief executive officer of the Cleveland International Fund. “We have made it possible for a lot of projects to happen.”
Among them, he said, phase 1 of the mixed-use Flats East Bank project in downtown Cleveland. Located on the eastern bank of the Cuyahoga River, the project includes the construction of the Ernst & Young office tower, the Aloft Hotel and space for retail and restaurants.
Phase 1 was completed in the second quarter of 2013 and included 90 EB-5 investors who put in a total of $45 million.
“There were over 30 lenders on that project,” said Burnham. “We participated in the Flats East Bank project at the request of the Cleveland Port Authority. We issued $4.7 million in bonds.”
The second phase is now underway. The Cleveland International Fund will be providing part of the financing, but the DFA is not participating in this phase.
“We are hoping to identify projects in Summit County where EB-5 financing would be a good fit,” said Strnisha. “The minimum amount that we would finance would be $10 million.”
“We are stronger when we work together as a region,” said Burnham. “When we collectively leverage our resources, projects can proceed, which is why we are pleased that the Cleveland International Fund is making its financing available in Summit County.”