CHARLOTTE – GoodSports Enterprises Chief Executive Jerald Good says it’s “unfortunate” that a potential deal with the city to build an amateur sports complex near Bojangles’ Coliseum fell through, saying the partnership was a victim of poor timing. But, he says he hasn’t ruled out a return engagement with the Queen City next year that could include financial backing from foreign investors seeking a green card.
Last month, GoodSports notified the city of its plans to suspend for one year the $76.7 million private-public partnership the same morning it was slated to update the city on its plans for the project. The Florida-based company, which had been negotiating with the city since late 2013 to build an athletic field house and hotel on East Independence Boulevard, said in a short fax it wanted to “focus” on a similar development underway in Wichita, Kansas.
But in a recent telephone interview, Good said comparisons to Charlotte’s recent bailout of the underperforming, publicly funded NASCAR Hall of Fame threw a wrench in the deal. The city promised $5 million in taxpayer funds to Bank of America and Well Fargo in exchange for the two banks writing off $18 million in principal and interest on construction loans owed by the city.
“We were moving on a great path with the community,” Good said. “But the timing was not good with everything that was happening with the NASCAR Hall of Fame. Our project got hit in the final stages with that.” Good said the proposed deal got “caught up in negative press. We couldn’t control that.”
But the two projects differ in that the city footed the entire $195 million bill for the hall’s construction, mostly through an increase in the hotel-motel occupancy tax.
Under the GoodSports deal, Charlotte would pay a portion of the project’s cost, specifically $25 million from the 2013 capital-improvement plan to redevelop the 20-acre site and $12 million from the city’s hospitality tax.
The rest would be paid by GoodSports, which said investors would back its $39.7 million share of the deal. The money would go toward building a field house and hotel catering to traveling sports competitions and young athletes in training. Breaking ground on the complex was optimistically slated to have begun last fall.
Foreign investors sought
But progress was delayed by GoodSports’ assertion that cutting a deal with financiers was problematic. The company tossed a bone to city officials in January when GoodSports Vice President for Development Anthony Homer told them the company had found debt and equity investors “having $3.1 billion in loans.” He declined to publicly identify them.
The company remains mum. “I can’t disclose” the financiers’ names, Good said in a phone interview this week. He said investors have balked at signing on for projects lacking a profitable track record.
“It’s like any new venture when it first gets started,” Good said. The lender “has no idea about demand.” Without comparable statistics or appraisals, Good said, there is no benchmark for an investor to say the market would support the project.
So far, GoodSports hasn’t built any of the 25 sports complexes it wants to develop nationally over the next four years.
So the company has taken an alternate, and little-known, route to secure funding – the federal EB-5 visa program that provides foreigners access to permanent U.S. residency in exchange for investing $1 million in a U.S. business that creates 10 full-time jobs for at least two years. The expenditure is reduced to $500,000 if the outlay is spent in a rural or a high-unemployment area.
Applications for EB-5 visas have grown exponentially over the last several years. The U.S. Department of Homeland Security received 1,258 immigrant petitions for the program in 2008, a number that swelled to 10,923 last year. Of the 10,692 EB-5 visas issued in fiscal 2014, nearly 9,130 went to mainland Chinese, according to the U.S. Department of State’s Bureau of Visa Affairs.
Another organization, Carolina States Regional Center, has opened an office in SouthPark to facilitate the granting of resident visas for immigrants investing locally through the EB-5 program. It has submitted two rezoning requests for projects it intends to fund through such investments, one for a mixed-use development on 22 acres in the University Area and the other a 350-unit apartment complex on more than 15 vacant acres near North Tryon Street and Interstate 85.
GoodSports has also been targeting such investors. The company has advertised for EB-5 investments in both English and Chinese, seeking 34 investors to raise $17 million in EB-5 funds to augment the $22 million required for the first phase of a sports campus, hotel and waterpark in Lakewood Ranch, Florida.
“GoodSports LWR Sports Campus, LLC offers a collateralized investment, satisfies job creation requirements, provides a safe investment vehicle and path to citizenship. Additionally, GoodSports can provide access to immigration attorneys who are experienced with the EB-5 program to assist our investors through the application process,” the company said when it marketed the project in 2012.
EB-5 improvements sought
The Office of the Inspector General issued a report in late 2013 criticizing the EB-5 program, which was created by Congress in 2000 to boost the nation’s economy through job creation and capital investment. The audit found the program, run by the U.S. Department of Homeland Security’s division of U.S. Citizenship and Immigration Services, was not managed effectively, stating “USCIS is limited in its ability to prevent fraud or national security threats that could harm the United States; and it cannot demonstrate that the program is improving the U.S. economy and creating jobs for U.S. citizens as intended by Congress.”
Legislation to improve EB-5 transparency and visa backlogs has been introduced in Congress. In addition, the USCIS says it has made several improvements to the program since the report was issued, including providing staff training on money laundering and the identification of fraudulent documents, developing regulatory changes to enhance program integrity, and entering an agreement with the U.S. Department of Commerce to study the impact of the EB-5 program.
“We’ve spent a lot of time looking at EB-5,” Good said. “Charlotte could be a market it could work in. There’s no question it (the project) would qualify for the jobs impact.”
Although Good would not disclose the names of the investors in the project GoodSports proposed for Charlotte, he said EB-5 investors were not yet involved.
Like GoodSports, Charlotte officials are remaining silent on the issue.
Todd DeLong, commercial redevelopment manager for the city of Charlotte, also declined to identify who the financiers were, saying the information was confidential because GoodSports had requested it remain so.
“The city has established a reputation of working well with the private sector to create strong and successful public private partnerships for the Charlotte community,” he wrote in an e-mail. Asked if the city knew that GoodSports had been soliciting funds from wealthy investors seeking green cards for themselves, their spouses and minor children, DeLong responded, “The city was aware GoodSports was seeking funds and financing from multiple sources.”
Other projects delayed
Charlotte is the latest city that has experienced GoodSports’ backing out of a proposed deal. In November, the company halted projects indefinitely in suburban Indianapolis and Dayton, Ohio. It cited a lack of funding.
Prospects for the Wichita sports complex, meanwhile, remain unclear. Good denied media reports that the company was in default for not submitting the proper paperwork to the city in order to begin construction.
The Wichita Eagle reported last month that GoodSports submitted the deficient paperwork on February 23, the second of two extended deadlines the company had before master developer Wichita Destination Developers began the default process.
“Everybody has been so quick to jump on this default thing,” Good said, adding that reading something does not make it true.
According to Mark Elder, development analyst for the City of Wichita, GoodSports is now in a 14-day “cure” period to resolve outstanding issues that began Feb. 23.
“They must commence due diligence to cure the default by March 11,” Elder said. “The city continues to work with the developer in reviewing materials as they are submitted and with periodic conference calls with updates.”
Elder said GoodSports failed to submit a building permit by the second deadline. “The name of financiers is one of the items we are waiting to have provided,” he said.
Good says he’s hopeful about picking up where he left off in Charlotte. The company decided to “sit back to let some other projects move forward,” Good said, so that everyone involved would see a project “up and running.” He said he hopes to break ground on the Wichita field house within 45 days.
“All of the people (in Charlotte) we dealt with were very professional,” he said. “We will get (a deal) back on the table and have an opportunity to present it to the city.”
As for Charlotte’s take on GoodSports’ intentions? The possibilities appear endless.
“The city is free to pursue other partnerships or approaches that could leverage the existing community assets in the area and catalyze additional redevelopment opportunities along the Independence Boulevard and Monroe Road corridors,” DeLong wrote.