One newly-approved EB-5 regional center has its first project on indefinite hold and the city of San Diego may be to blame.
Earlier this year, the Wave House California Regional Center was established to help the historic Belmont Park amusement park in San Diego fund infrastructure improvements. According to operator Tom Lochtefeld, the initial idea was to redevelop Belmont's popular Plunge pool hall ? a public recreational facility which has severe structural problems ? as well as enhance restaurants located within the park.
But the city of San Diego raised the rent. Now Lochtefeld can't afford to pay what the city is asking to keep the park open.
And this is no measly rent increase. Whereas Lochtefeld was paying $70,000 annually based on an agreement with the city, he's now being asked to pay $500,000 each year.
"With respect to the city, it's kind of bizarre that they're doing this given the overall economic climate," said Lochtefeld in comments to EB5info.com. "I understand they need money, but on the other hand, it's very shortsighted given that we set up this whole development program that was going to create hundreds of jobs."
Until last fall, the city and Lochtefeld had an agreement under which he would pay minimal rent in exchange for investing in Belmont Park and receiving rent credits for "public improvements" like the historic Plunge structure. Since the city was reducing the cash portion of the rent received, it now claims it's merely ending a subsidy program.
"The city is trying to characterize this as a subsidy, but it was really just pre-payment of rent for public improvements, namely the city?s public swimming pool" Lochtefeld explained. He has offered to spend an additional $100,000 on temporary repairs that would allow the Plunge to re-open, according to the San Diego Union-Tribune, but the city rejected that plan.
Although any effort to use immigrant investor capital to fund improvements at Belmont Park may be little more than a fanciful hope lest Lochtefeld and the city reach an agreement, there are still plans to exploit the newly-attained regional center status.
"Belmont Park is on hold, but I have other projects I'm looking at," said Lochtefeld. "It's still a ways off, though. I haven't, as yet, submitted a Form I-924 to request an amendment to our regional center."
Until then, Lochtefeld still has his hands full with the Belmont Park debacle. His operating company filed for bankruptcy in November due to the rent dispute and will go through formal foreclosure proceedings this summer. According to the Union-Tribune, he has a $25 million claim against the city and is suing for negligence and breach of contract.
Across the top of Belmont Park's website is a red banner beseeching readers to "Save the Plunge."