copyright the Chronicle April 1, 2015
by Joseph Gresser
NEWPORT — AnC Bio, the biomedical facility being developed with money from the federal EB-5 visa program, is back on track. A press release from Jay Peak late Tuesday afternoon said the state Department of Financial Regulation (DFR) has approved a revised “private placement memorandum.”
The expiration of that document, which serves as a guide that potential investors can use to judge the potential risks and rewards of a project, led the state to ask Jay Peak to suspend its search for investors last year.
Now that the revised memorandum has been approved by the DFR, Jay Peak co-owner Bill Stenger said Jay Peak is again free to sign up new investors and to go forward on construction of the project.
He said in a phone conversation Tuesday that he expects groundbreaking for the project to take place in April or May. The company is expected to provide about 500 jobs, divided between research and manufacturing positions.
The press release was sent out in late afternoon, too late to get comment from state officials.
AnC Bio Vermont will make artificial hearts for coronary surgery as well as dialysis machines for kidney and liver problems. In addition, the company plans to use its clean rooms to do stem cell research and, eventually, medical treatment.
As part of the approval process, Jay Peak commissioned Frost & Sullivan, a Texas-based consulting firm to conduct a marketing study examining the potential for the products that will be made by the AnC Bio plant and the clean rooms, both as research space for the company and rental space for outside scientists.
The results as laid out in the study’s executive summary, which was provided to the Chronicle by Jay Peak, were positive.
The project was originally made public in 2009, just before Mr. Stenger and then Governor James Douglas flew to Seoul, South Korea, to tour a similar building owned by AnC Bio Korea.
Mr. Stenger and his partner, Ariel Quiros, later bought the patent rights for products designed by the Korean company and set up their own firm in the U.S.
The federal EB-5 program, which allows noncitizens to get a Green Card by putting $500,000 into a business that will create at least ten jobs, is being used by Jay Peak to fund the expected $75-million cost of the project. Mr. Stenger has said about 80 percent of the amount has already been subscribed.
The search for investors had already been delayed by the U.S. Customs and Immigration Service (USCIS), which, faced with a huge increase in EB-5 projects around the country, and a number of shady deals, started giving closer scrutiny to each project.
As a result, Mr. Stenger said, approval time for a project, which once ran four to six months, soared to 18 months.
Typically, private placement memoranda have an end date, and developers plan to gather their full complement of investors before it is reached. In the case of the AnC Bio document, the slower processing by Customs and Immigration delayed the start of the project, and the memorandum expired in December 2013, before all the needed investors were on board.
Last year the state asked Jay Peak to submit a revised version of the memorandum and to commission a new marketing study from an independent researcher.
As Pat Moulton, commissioner of the Agency of Commerce and Community Development told the Chronicle last week, the state felt it was important to give the project a thorough review because biotechnology is such a fast moving field. In the past, most Vermont-based EB-5 projects have been for hotels or other facilities for tourism, an industry the state understands well.
Until this summer, regulation of the state’s EB-5 projects has been the sole province of the Commerce and Community Development Agency. Brent Raymond, who works for that department, had both been in charge of promoting Vermont as a place for EB-5 projects, and also regulating those projects.
He said last week that he asked for help from the DFR when he first took over his job, but it took about three years for the two agencies to share oversight of the program.
Secretary Susan Donegan of the DFR said last week that keeping track of the complicated finances of EB-5 programs is “in our wheelhouse.” She likened the program to the state’s captive insurance industry. Vermont has created rules and a regulatory structure that has encouraged many corporations to establish in Vermont the companies through which they insure themselves.
Ms. Donegan said Vermont is the gold standard for the captive insurance industry and can be the same for EB-5 programs.
contact Joseph Gresser at [email protected]
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