PHILADELPHIA (AP) Foreign investors could provide $200 million to help connect the Pennsylvania Turnpike to Interstate 95 in southeastern Pennsylvania in a deal that would provide commissions and fees for the officers of a Philadelphia investment management company and green cards for the investors and their families.
Turnpike officials told the Philadelphia Inquirer that the deal will mean $35 million in savings on interest for the debt-laden agency, which otherwise borrows money in the municipal bond market.
The deal was suggested to agency officials by Turnpike Commissioner Pasquale T. "Pat" Deon Sr., a Bucks County restaurateur and beer distributor who also is chairman of the Southeastern Pennsylvania Transportation Authority.
"Hey, Chinese money should come back to us once in a while," Deon told the Inquirer. Deon said SEPTA executed a similar deal in 2011 when the transit agency borrowed $175 million for a new fare-collection system.
Deon and James E. Nevels, the founder of the Swarthmore Group, the investment management company, are both prominent donors to Republican political campaigns.
Two Swarthmore Group officers and turnpike commission officials signed a $250 million memorandum of understanding late last year. A turnpike spokesman, Carl DeFebo, said the agency is seeking $200 million, rather than the entire $250 million.
Joseph P. Manheim, the managing partner of the Swarthmore Group, and Paula Mandle, its chief executive officer, created the Delaware Valley Regional Center and are seeking approval from U.S. Citizenship and Immigration Services to operate a federally designated "regional center," which are used to recruit foreign investors under a 1990 federal law.
Congress created the Immigrant Investor Program to grant EB-5 immigration visas to wealthy foreign investors who help finance certain U.S. projects.
Nikolaus Grieshaber, the turnpike commission’s chief financial officer, said the foreign investor deal offers financing at a 2 percent annual interest rate, about half the rate on municipal bonds.
The investor money must be used by "new commercial enterprises" that are engaged in a for-profit pursuit. However, the turnpike commission is neither new nor a for-profit operation, so the brokers created a limited partnership called DVRC Pennsylvania Turnpike L.P., in an effort to meet the legal guidelines, the Inquirer reported.
There are other, already-established regional centers, such as one operated by the Philadelphia Industrial Development Corp. But turnpike officials did not consider them as a partner, Grieshaber told the Inquirer.
The $420 million construction project will link the turnpike and I-95 where they cross in Bucks County.
If the deal is approved, the turnpike expects to receive the first $50 million installment in 2014. All of the money is expected to be received by 2016 and the connection project is supposed to be completed by 2017.