This Friday, when Nixs Hartford opens its first Connecticut restaurant and lounge on Front Street, it will be partly thanks to foreign investors from China and Vietnam who jointly anteed up at least $1 million to finance the project.
The craft cocktail and seafood eatery’s parent company, Bostonian Hospitality Group, registered the project with the federal EB-5 visa program, which gave two foreign nationals a path to U.S. permanent residency in exchange for their equity investment in the new job-creating venture.
It’s Hartford’s first EB-5 project but likely not the last: City officials say they are looking to attract foreign capital for the proposed $60 million Rock Cats stadium in Downtown North.
EB-5 is an attractive proposition for wealthy foreigners who want to live in the United States but don’t qualify for other types of permanent visas, according to Hartford immigration attorney Taras Bokshan.
“For businessmen and entrepreneurs, there’s usually no other way,” said Bokshan, noting that a number of other types of visas are often based on having a U.S.-based employer.
For developers, the program offers access to capital at often lower-than-market interest rates, according to Todd Ford, who is playing point on Bostonian Hospitality’s EB-5 efforts.
“A domestic investor will be far more concerned with the kind of return they’re going to get,” Ford said. “But there is a lot of work that has to be done to make sure that each project is compliant with all the regulations.”
EB-5 requires investors to find a geographic area that qualifies for the program, create a requisite number of jobs, and satisfy all U.S. Customs and Immigration Services’ (USCIS) criteria.
Front Street is Bostonian’s first EB-5-backed restaurant, but the company wants to open another eatery in Greater Hartford using the same financing tool. The company is in lease talks and hopes to announce a deal in the near future, said Abner Kurtin, Bostonian’s managing partner.
Kurtin wasn’t exactly thinking of Connecticut when he was scouting locations for his fourth Nixs restaurant.
But when a broker showed him Front Street, a number of factors piqued his interest: The mix of restaurants and entertainment, proximity to the Connecticut Convention Center, and UConn’s plans to build a downtown campus nearby.
“It was just a very unique opportunity,” Kurtin said.
The fact that Hartford’s high unemployment rate easily qualifies the city for EB-5 investment made the site more attractive. Front Street developer HB Nitkin also provided funds to defray construction costs, but the makeup of the burgeoning district was vital.
“The economic incentives are nice, but for a restaurant, if you can’t get people in the door, then we aren’t interested,” Kurtin said.
The EB-5 program can’t be used just anywhere. The simplest avenue is for a foreign investor to inject $1 million in a stand-alone or troubled business, or $500,000 if the company is located in a region that has an unemployment rate at least 1.5 times larger than the national average.
Hartford’s high unemployment rate — currently at 12.3 percent — qualifies the entire city for EB-5 investment.
“Being a poor community works for us in this regard,” said Stephen Cole, a senior project manager in the city’s Department of Development Services.
Ford said Nixs Hartford has secured two foreign investors, a number that might increase this week as the opening approaches.
Bostonian didn’t identify the investors (other than saying they were from China and Vietnam) or the structure of their investment deals, but Kurtin is personally guaranteeing the first four years of the Front Street lease, and Ford said each investor has children planning to attend U.S. universities — a common trait among EB-5 financiers. One investor has already invested in residential real estate in the country, he added.
The investors are limited equity partners who will have a vote in governance matters, but will not be involved in the day-to-day operation of the restaurant, which will feature upscale craft cocktails, shareable appetizers, a raw bar and weekend entertainment.
Around the country, there are more than 530 EB-5 “regional centers,” which must be certified by federal overseer USCIS. The centers help match investors with developers.
Though EB-5 was created in 1992, Connecticut housed no such centers until early 2013, when the first one cropped up in Fairfield.
Over the past year, that number has tripled, with Stamford and Norwalk centers emerging.
While the majority of EB-5 investments are bundled and then distributed through regional centers, Nixs Hartford is taking a “direct” investment route. That requires the creation of 10 full-time jobs per foreign investor, whereas investments routed through regional centers allow for indirect jobs to be factored into the equation.
With plans to employ approximately 50 people, Nixs will have plenty of jobs to cover several foreign investors, Ford said.
There are also varying fees involved. In addition to $500,000 in capital, Nixs’ investors must also put up a one-time, $50,000 fee.
Ford said he expects to see more EB-5 projects in Connecticut in the coming year.
Cole, the city project manager, said Hartford officials have discussed a larger EB-5 effort to help finance a baseball stadium and related mixed-use development in Downtown North.
“My hope is [Nixs] will expose the program,” Cole said. “The hardest part is getting word out to investors that the program is here now.”