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POSTED: Thursday, Jul. 16, 2009

Homestead taps 'immigrant investor' program to sell Ferndale project

Homestead Northwest of Lynden has found a buyer for its Correll Commons retirement condo project in Ferndale, tapping into money raised through a low-profile "immigrant investor" program that gives participants a shot at U.S. residency.

In a deal that closed in late June, Correll Retirement LLC paid Homestead $1 million for vacant property that is ready for construction of 26 attached condo units at a site south of Main Street, just west of downtown Ferndale. A related entity, New WORC Development and Management LLC, also paid Homestead about $220,000 for a completed condo unit.

Thirty-two other Correll units, completed earlier by Homestead, are not part of the deal because they already have been sold, said K. David Andersson, who heads the investment groups.

The deal appears to give the financially strapped Homestead some relief.

For at least 20 years, Homestead Northwest and its related companies have helped to finance a growing roster of real estate projects here and elsewhere by recruiting hundreds of area investors attracted by interest payments of 8 percent or more.

When the global economic slump hit, Homestead founder and CEO James Wynstra acknowledged difficulties in letters to his investors, although up to this point the company has not had to deal with foreclosures or lawsuits by investors.

Lisa Guthrie, Homestead's resort development director, said Homestead has been contracted to build the remaining Correll condo units in the months ahead.

"That's work that will help sustain us," Guthrie said.

Andersson, a Bellingham immigration attorney, said the transaction is a good fit for both Homestead and Whatcom Opportunities Regional Center, the federally sanctioned immigrant investor program that he has headed since it began here in 2006. He said it is one of about 40 such programs around the country.

U.S. immigration law provides that under certain conditions, an investor in another country who is willing to make a $500,000 investment in the U.S. economy can get legal U.S. resident status, although the legal path to the so-called EB-5 visa remains lengthy and far from certain.

Among other things, each "regional center" for immigrant investment must present an economic analysis demonstrating that each $500,000 invested in the center's projects will generate 10 U.S. jobs. The Whatcom regional center invests in retirement living facilities and has an economic analysis from Western Washington University indicating that each $500,000 invested in these facilities generates almost 12 jobs.

"EB-5 is essentially a jobs program," Andersson said.

In 2006, the Whatcom center was ready to participate in the 1010 Morse Square high-rise condo project, but the developer could not get the other financing needed to launch it.

"Then we found Homestead," Andersson said.

Andersson's group invested more than $7 million in Correll Commons beginning in summer 2008, Andersson said.

"Today, when the economy is lagging and nobody is building anything, this (investment) program is going to finish a very nice project," Andersson said. "We're creating employment in Whatcom County. ... That is our mandate."

Andersson acknowledged that this may not be the most opportune time to bring new condos onto the market, with other developers' unsold units facing foreclosure here and elsewhere as lenders remain skittish about financing condo purchases. He said his investment group is ready to rent units if sales are a problem.

"The market will tell us what to do," Andersson said.

John Wynstra, son of James Wynstra, said condo sales will pick up if financing problems can be solved.

"There are buyers out there right now who would buy if they could get loans," John Wynstra said.

Wynstra was Homestead's sales manager until recently. He now works for Andersson's investment group.

The approximately two dozen investors in the local program include natives of China, Switzerland, Canada, India, Iran and Korea.

"We really are a United Nations," Andersson said.

Federal law allows as many as 10,000 immigrant investors to get visas under an annual quota system, but last year just 1,700 actually obtained those visas, Andersson said.