Builder of the Kingdom
Meet Jay Peak's Bill Stenger. He's circling the globe, working to hook foreign investors' wagons to one of the largest economic-development projects in Vermont history.
By DAN D'AMBROSIO for the Burlington Free Press
Bill Stenger, president and chief executive officer of Jay Peak, is surveying his kingdom.
In The Foundry Pub & Grille at the base of Jay Peak, a smiling staff tells him about the latest dessert being made that day, a blueberry ice cream sandwich with ginger snap cookies.
From a balcony overlooking the Pump House Indoor Water Park, Stenger waves to a group of young, laughing lifeguards, hanging out by the "river" that circles the park, waiting for the 11 a.m. opening.
"Friday is a big arrival day for people," Stenger says, looking out over the $25 million complex of water fun. "That family you just saw, they're here for this. The lifeguards are having their early morning meeting. It just is bright and lively, with greenery, a lazy river to float around in, an action pool kiddie area, chutes and slides that go outside and come in, cabanas for people to stay in."
On the way out of the water park, Stenger notices something he doesn't like about the door, and grabs some passing maintenance workers. Could they take a look at the problem and fix it? Yes.
Next up, one of the original buildings at Jay Peak, built in the old faux-Swiss chalet style. Asked about his upbringing, Stenger mentions his grandfather, a glassblower for Steuben Crystal in Corning, N.Y., where Stenger was born and raised, and his father, who worked in the consumer products division for Steuben."Each of them worked there for 45 years," Stenger says. "That's something I am very proud of."
The faux-Swiss chalet is under construction, being renovated into Stenger's version of a Vermont country store, where guests will be able to buy groceries, coffee, toothbrushes.
This is the kingdom that EB-5 money built.
The glass is half full
As nearly everyone in the state knows by now, Stenger is spearheading an effort to bring $600 million of EB-5 money into the Northeast Kingdom. Under the rules of the federal immigration program, the money comes from wealthy foreigners who want green cards for themselves and their families. They can get them by investing $500,000 in rural, economically depressed regions of the United States. Ten direct or indirect jobs must be created as a result, and the green card is theirs.
In addition to the $25 million water park, the $75 million Hotel Jay and Conference Center, and another $150 million or so in restaurants, condos and other amenities, there's another $170 million in EB-5 money already sitting in the bank, Stenger says, ready to go for the next phase of building and development.
Pat Moulton Powden, deputy secretary of commerce, calls Stenger a "glass half-full kind of guy." "He's spent years cultivating EB-5 investors," Powden said. "That's what it takes to get to this level of confidence, and the projects he's developed so far have delivered. They are producing jobs."
As Stenger explains, EB-5 capital must be "patient" capital, meaning the investors' money must be at risk, without a guaranteed payback date. "The federal government does not allow us to guarantee the return on the investment or how you're going to pay them back in the future," Stenger says. "You can have a strategy to share with the investor, but you can't guarantee it."
Stenger tells his EB-5 investors not to expect any return on their money until the third year, and to not expect a strategy to get paid back until at least five years into it.
"We want to get the business up and running and successful before any burden to pay back the investment," Stenger says. "Most investors are not investing their last $500,000."
In late September, surrounded by a phalanx of state officials including Gov. Peter Shumlin, and every member of Vermont's congressional delegation, Stenger announced at the Hotel Jay that he would bring some $600 million of EB-5 money into the Northeast Kingdom, extending his reach beyond the resort to Newport, and closer to home to Burke Mountain Resort, which he and his partner, Ari Quiros, also own.
In Newport, EB-5 money would build a hotel and conference center on Lake Memphremagog, an entire new block of shopping, offices and housing downtown, and a state-of-the-art biomedical research center and manufacturing plant.
As the Burlington Free Press reported last month, Stenger estimates that some 1,500 jobs will be created in Newport alone, with a total of more than 10,000 jobs in the region once all is said and done. There have to be that many jobs. The $600 million represents 1,200 foreign investors, which means 12,000 jobs for the green cards. That's the math.
Those jobs won't all be in the Northeast Kingdom, according to Commerce Secretary Lawrence Miller, but will also include jobs created outside the Kingdom to serve those projects inside the Kingdom.
"The way these econometric models work, it's looking at the projects and saying, 'Hey if a place is going to have this many rooms at an average occupancy of whatever the regional average is, there's that many food prep people and truck drivers and others employed as a result," Miller said.
The thought of finding 1,200 investors around the world is "daunting," Miller says, but Stenger has developed a "very clean process," and is "very good with disclosures," according to Miller. "He provides a lot of information to the investor so they can make an informed decision without a lot of hassle," Miller said.
Canada is doing it, why aren't we?
Stenger first took notice of the EB-5 program when he realized a similar program in Canada was raising lots of money for businesses there. "We started thinking about this in 1997, Howard Dean and I and Bill Shouldice, who was secretary of commerce at the time," Stenger said. "We put together a Vermont regional center in 1997 because I was hearing about all this investment going into Canada. I said, 'We've got to get a piece of this.'"
The State of Vermont Regional Center for the EB-5 program is the only regional center owned, operated and administered directly by state government officials, according to the center's website. That's an advantage, Stenger says. "The Department of Commerce plays an important role on behalf of us, and also the investor," he said. "They come and make sure we're on schedule, getting things done, accomplishing things."
Stenger also take pains to point out that "not a cent of taxpayer money" is involved in financing projects under the EB-5 program, which is often described as a public-private partnership."It's public because it's a federal program," he says.
Stenger has developed a well-oiled machine to bring the EB-5 money in. He does it with a core staff of about 15 engineers, attorneys and marketing people, but he's out front, meeting with investors around the world, and at Jay Peak.
"It's on paper, it's in my head, we've got a very good team of people here," Stenger says.
From 2007 to 2012, Stenger worked with a company in Florida called Rapid USA Visas, an EB-5 broker that helped with promoting Stenger's projects and "administrative follow-through," Stenger said. The relationship came to an unpleasant end in February, however, when Rapid USA sent a letter out to immigration attorneys saying it no longer had faith in Jay Peak's projects. The spat was picked up by a blogger and blew up into something "way beyond what it should have been," according to Stenger.
Stenger won't comment on what motivated Rapid USA to do what they did, but he says both organizations have moved on. A call and email to Rapid USA Visas for comment were not returned. "We're still cordial," he said last week from the Montreal airport, on his way back from Korea. "We're doing our work in-house. With the numerous projects we've got it's imperative we have a seamless relationship with investors, because in the next 18 months we'll be identifying and welcoming over a thousand investors to Jay Peak."
Go where the market is
Stenger said in another month or two he would be raising $30 million to $50 million a month, "because I know where the market is."
"People are reaching out to us, they know what we've done, they know the relationship we have with local and state government in terms of support," he said.
Stenger said he's getting four to five emails daily from potential EB-5 investors. Pulling out his smart phone, he brings up a recent email. "Here's an inquiry that came a couple of days ago," he says. "We sent them the information, and now they want to talk to me about the particulars of the program and they may make a decision to invest on the phone." Stenger pages down through the email. "She is currently in South Florida. I take that back," he says. "She's Lebanese. There's her coordinates, but her attorney is in South Florida. I know her attorney."
Stenger knows a lot of attorneys. The next day, an attorney representing 30 investors from South America, mostly in Brazil, was visiting Jay Peak, along with four Chinese investors.
"I'm going to China and Korea starting the 9th of November, and I will meet between 300 and 400 investors or representatives," Stenger says.
And that's not the end of it. Stenger returned to his office Saturday from the Far East trip, spending most of his time in Seoul and Shanghai, but in January he's off to Dubai and India, Delhi and possibly Bangalore.
"It's a tech and financial center," Stenger said of Bangalore. "Then in March, we'll be in South Florida, Miami, where there's enormous numbers of EB-5 Latin American folks who already have second homes in Florida, and would like to become permanent residents."
In April, Stenger is off to Brazil, after Carnival, to visit Rio de Janeiro and Sao Paulo.
"That's the outreach," he said. "That's dealing with Central and South America, the subcontinent of India and Pakistan, and Dubai, a crossroads for commerce in that part of the world." Stenger says there's no need to visit Europe. "They come to us," he said.
What's your business case?
Win Smith, owner of Sugarbush resort in Warren, completed an EB-5 project of his own — $20 million on an upgrade of the base area started in 2006 and completed in 2010. Smith said he's in the process of trying to repay the 40 investors who made the work possible. "They're looking to get a return on investment and we're doing our darnedest to pay them back," Smith said.
Smith said he went about his EB-5 project differently than Stenger. In Smith's case, a law firm in Washington, D.C., named VisaLaw, and its principal David Morris, created a partnership of EB-5 investors and approached him about investing in Sugarbush. "He actually called me out of the blue and asked me, 'Do you know anything about EB-5? We think your project is something we'd be interested in,'" Smith said.
Smith credits Stenger with raising the awareness of the EB-5 program for everybody in Vermont, and outside of Vermont. "Bill was a real pioneer," Smith said. "I give him a lot of credit. It took him years to get going. He was persistent. Because of his efforts, we were able to take advantage of EB-5."
Smith said he paid VisaLaw "good money" for their services to raise the money and take care of all of the filings and processing required. The payback was that he didn't have to spend much of his own time on EB-5 related matters, and could focus on turning around Sugarbush, which he bought in 2002 in rough financial shape.
"What a lot of people don't understand about EB-5 is this is a source of capital, just a different source of capital," Smith said. "Like any other business, you got to have a business case and tell the investors it's worthwhile investing. The difference here is in the investors' eyes, a good deal of the return is getting a green card on an accelerated basis."
'We're a horse'
Stenger said 95 percent of the investors he's able to close the deal with — and that works out to about one in three he talks to — actually come to Jay Peak and Newport to see for themselves what is being done, and what is planned.
"We build, sell, manage, maintain and operate," Stenger says, sitting in the lobby of the Hotel Jay. "I'm sitting with the investor in a seat like this. They're dealing with the general partner, not some third party promoter. That is very meaningful to the investor."
That's why Stenger believes that by March, he'll have identified the 1,200 investors he needs and that by six months after that, the fall of 2013, he'll have nailed them down.
"When you demonstrate it's a win-win situation, people want to hook their wagon to your horse, and we're a horse," Stenger says.
Contact Dan D'Ambrosio at 660-1841 or firstname.lastname@example.org
Follow him on Twitter at www.twitter.com/biz_bfp.
NAME: Bill Stenger
AGE: 63, married to Mary Jane
HOME: Newport, has lived in Vermont for more than 30 years
TITLE: President and Chief Executive Officer of Jay Peak. Co-owner with partner Ari Quiros of the resort.
EDUCATION: Graduated from Syracuse University in 1971, studied to be a priest at one point.
EXPERIENCE: Worked as an insurance salesman before taking a job as on-hill manager at Jack Frost ski area in the Poconos in Pennsylvania. Has been in the ski business for 30 years.
FAMILY: Sons Andy and Jamie work for him, returning to Vermont after attending Colorado State University, and living as ski bums. Andy is on the construction team. Jamie runs the retail and golf operation.
The Kingdom to come
This is the second in an occasional series of reports by Burlington Free Press reporter Dan D'Ambrosio about the planned revitalization of the Northeast Kingdom area at and around Jay Peak. These stories are examining the plan, the players and the people affected.
Read the first installment online HERE.