A post-mortem of Menck Windows’ Northeast Kingdom EB-5 Project

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Todd Bachelder will have to recalibrate his family’s vision for a new future — one closer to Springfield, Mass., than Newport, Vt.

The former site of Bogner skiwear and sporting goods in Newport, Vt., was planned to house the North American headquarters of the German window manufacturing company Menck. Plans for the immigrant-funded project fell through in September. Photo by Hilary Niles/ VTDigger

The CEO of Menck Windows said he and his wife were looking forward to moving from Maine to the shores of “beautiful Lake Memphremagog” in the Northeast Kingdom. Bachelder had been working with Jay Peak co-owners Bill Stenger and Ariel Quiros to establish the German window manufacturing company’s North American headquarters in Newport.

Stenger announced Sept. 13 that plans to bring Menck to Newport had fallen through because the parent company’s new equipment requirements would cut into the plant’s job creation projections. It turns out slow sales projections and facility constraints also played a role.

Menck still is moving forward to establish itself in North America: but not in Vermont, and not with EB-5 immigrant funding.

The EB-5 Immigrant Investor program, championed in Congress by Sen. Patrick Leahy, provides a two-year conditional visa to would-be immigrants who invest between $500,000 and $1 million in an American business. As long as 10 jobs are created directly or indirectly by that investment within two years — or, as long as 10 jobs’ worth of economic activity can be attributed to the investment — the visa turns into a green card.

Job creation and generally boosting economic activity is the program’s stated goal — and also, in Menck’s case, the hitch.

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Unemployment Trust Fund tapped for fraction of potential relief

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Vermont legislators agreed in May to offer up to $8.67 million in refunds and discounts to businesses that laid off workers in the wake of 2011′s disastrous floods.

But only 75 employers, among the untold eligible businesses hailing from every county in the state, applied for the unemployment insurance relief. Instead of giving breaks for a “worst-case” scenario of 11,247 layoffs, the state forgave at least partial charges on just 299.

On their July 1 unemployment insurance bills, 54 businesses accepted $264,178.53 in refunds.

“Really, that’s all? Wow,” said Steve Moyer, CFO of Woodstock Farmers’ Market.

20130830_Woodstock-Farmers-MarketThe retail business benefited from the program almost two years after temporarily laying off all of its 50 employees.

Like other businesses, the company’s unemployment insurance charges — the money that feeds the trust fund from which unemployment benefits are paid — presumably had gone up because they’re based partly on employers’ history of layoffs: the more layoffs, the bigger the bill.

But on top of other flood-related repairs, the insurance hike hindered their recovery, employers argued. Lawmakers agreed to cut them some slack.

After a partial refund and with a discount on its current unemployment insurance charges, Moyer estimates the market’s costs will increase by $90,000 over the course of three years.

“We got hit very hard with that cost,” he said. Had more relief been offered, he wonders if his business would have taken such a hit.

Moyer’s reaction embodies the conundrum policymakers wrestled with when they struck a deal in May to create the state’s Unemployment Insurance Disaster Relief program. Some legislators were reluctant to give employers any relief, while others wanted to offer more.

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Leahy proposal would alter EB-5 job creation formula

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In a bid to shore up the controversial EB-5 Immigrant Investor Program, Sen. Patrick Leahy, D-Vt., has proposed a roster of improvements: stronger oversight, better reporting and streamlined reviews of business plans and visa applications, among them.

Jay Peak Resort co-owner Bill Stenger said that careful timing of their EB-5 funded construction projects creates full-time employment for the workers. Here, an empty ski slope in the background highlights Stenger’s goal to turn the ski resort into a year-round destination. Photo by Hilary Niles/ VTDigger

His revisions also would tweak the job creation requirement to define full-time employment not as someone working at least 35 hours per week, but by the equivalent of a full-time job, “regardless of how many employees fill the position.”

The changes would be written into a new statute that codifies and makes permanent what is now a pilot program. So-called regional centers help private businesses pool investments from would-be immigrants, at either $1 million or $500,000 apiece, depending on the regional center’s location.

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Aviation and aerospace industries land in Vermont

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When Adam Truso returned to Vermont after flying Black Hawk helicopters in Iraq, he wanted to transition to civilian employment.

But most of what he found in the want ads were jobs as nurses and Walmart greeters, Truso said. Wasn’t he surprised when a contact from the Vermont Department of Labor introduced him to Liquid Measurement Systems in Georgia.

Donna Chizmar heads up the cleaning department and manages inventory for Metal Flex. Components are counted by hand and using automated technology. Photo by Hilary Niles/VTDigger
Donna Chizmar heads up the cleaning department and manages inventory for Metal Flex. Components are counted by hand and using automated technology. Photo by Hilary Niles/VTDigger

The manufacturing company is the sole supplier of carbon-fiber fuel gauges for Black Hawks, plus Boeing’s CH-47 Fox model Army helicopters, an entire line of auxiliary fuel tanks by Robertson Fuel Systems, and the experimental Sikorsky X-2 helicopter that holds a helicopter speed record of 259 mph.

Truso now works in the sales and marketing division for LMS — a company considered an anchor in Vermont’s $2 billion aviation and aeronautics industry.

Air prowess was on display Thursday at the Burlington International Airport for the state’s first Aerospace and Aviation Trade Show, hosted by the Vermont Chamber of Commerce.

“We’ve never had a trade show just for the aerospace and aviation industries,” said Chris Carrigan, the chamber’s vice president of business development.

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Capitol Hill controversy puts EB-5 Immigrant Investor Program in national spotlight

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Controversy on Capitol Hill this week shined a national spotlight on one of Vermont Sen. Patrick Leahy’s signature economic development initiatives — a program that plays a key role in Vermont’s business strategy.

Sen. Patrick Leahy (D-Vermont)

Monday, the Department of Homeland Security Office of the Inspector General revealed to a lawmaker an ongoing investigation into Alejandro Mayorkas. The director of U.S. Citizenship and Immigration Services is President Barack Obama’s nominee to fill the No. 2 position at the Department of Homeland Security.

Mayorkas, a tip from an FBI analyst alleged, had helped secure approval for a visa for someone whose application had previously been denied once, then again on appeal. The visa application was filed through the federal Immigrant Investor Program, also called “EB-5” for the type of visa it affords.

Further allegations implicated Mayorkas in mismanagement of the EB-5 program, and extended to other USCIS officials suspected of obstructing a program audit by the Securities and Exchange Commission.

In a letter to a staffer for Sen. Chuck Grassley (R-Iowa), the Inspector General’s Office indicated that the preliminary investigation had found no criminal activity, but it also referenced a separate, ongoing audit of the EB-5 program that was in its “final stages.”

Leahy is in the process of pushing Congress to make EB-5 permanent after 20 years in a pilot stage. The program — until Monday — had remained fairly obscure by national standards, despite a recent spike in use. But in Vermont, EB-5 plays a prominent role.

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