On 5:49 pm on the last Friday before Christmas, the Rochester Post Bulletin published Rail group seeks preliminary study, a major news story about shifts in the planning by the private high speed rail group hoping to a bullet train between the Twin Cities and Rochester.
Political reporter Heather Carlson spends most of her time noting how the North American High Speed Rail Group has dropped its request for "air rights," a form of right-of-way, and now wants the more ordinary 120 day right-of-way permit from the Minnesota Department of Transportation.
But if one believes that money is an important factor in any large development, that's not the lede. The group's abandonment of its plan to raise capital via an EB-5 visa regional center is instead stuffed down at the bottom of the article.
No more EB-5 visas, but we sort of suspected that
At the very bottom of the story--placed where media critics might even say the news was "buried" given the journalistic convention of the inverted pyramid--Carlson reports:
Rail group scraps EB-5 funding plan
One reason the company had been seeking air rights was to help spur investment in the project. Meadley said the rail group has decided to team up with a group of businesses interested in high-speed rail to fund the $2.5 million preliminary study — instead of relying on private investors. She said Mayo Clinic and Destination Medical Center are not helping fund the study. If the rail group decides to move ahead with the project, Meadley said the company could seek highway air rights in the future.
The rail company has also dropped plans to raise money for the rail project from wealthy investors seeking a path to U.S. citizenship. Meadley said the company has decided not to use the federal EB-5 investor program to help pay for the project. Under that program, immigrants who are willing to invest a minimum of $500,000 are eligible to receive a two-year conditional green card. If the project creates at least 10 jobs after two years, the investor is eligible to receive a regular U.S. green card.
Meadley said the EB-5 funding would have helped pay for a very small part of the project's $4.2 billion price tag, and it's not worth the hassle of pursuing it.
"The reality is it's more cumbersome money than is needed," she said.
That's a different story than August's report in the Post Bulletin:
The North American High Speed Rail Group looks to raise $300 million of the project's $4.2 billion cost via the federal EB-5 investor program and "other investments," according to a business plan obtained by the Post-Bulletin from the Minnesota Department of Transportation as part of a data practices act request.
As part of the EB-5 program, immigrants who are willing to invest a minimum of $500,000 are eligible to receive a two-year conditional green card. If the project creates at least 10 jobs after two years, the investor is eligible to receive a regular U.S. green card. Rail group spokeswoman Wendy Meadley confirmed the company is exploring the use of EB-5 to finance part of the project.
"It is a small portion of the financial package, but it allows us to diversify our sources of investment and, of course, this project would create numerous jobs in Minnesota," Meadley said in an emailed response. . . .
It turns out key leaders in the North American High Speed Rail Group are also behind a new EB-5 regional center. Rail group CEO Joe Sperber and Chairman Joseph Wang are co-owners of Liberty Minnesota Regional Center [Bluestem note: this link now redirects to Go Daddy; screenshot at the top of the page] which won approval from the U.S. Citizenship and Immigration Services in April. These centers sponsor economic development projects people can invest in via the EB-5 program.
The Post Bulletin's August 28 report was something of a johnny-come-lately to the EB-5 visa piece of the puzzle. Instead, the news was broken in an August 14, 2015 Watchdog Minnesota report, New EB-5 visa center to help finance proposed high-speed rail line. We took particular interest in this paragraph in Tom Steward's article:
Liberty Minnesota promises “several exceptional projects to offer foreign investors. Our first project through this regional center will be called EdCampus,” a Chaska venture with openings for 296 investors. Applicants pay a $5,000 deposit to hold their place in a specific project, with the balance due within 90 days.
We dug into that, learning that the EdCampus was something of a "ghost project," as we posted in our August 16 post, Roch high speed rail line: Chaska ghost campus already in pipeline for EB-5 visa center financing.
We learned from a Chaska-area reader that the Edcampus site was being developed for a different project and pursued that story, posting Roch high speed rail line: Ghost campus building site on market as Chaska Creek Business Park on August 17.
On October 7, we inquired again in What's up with EB-5 visa center's current project? EdCampus seems dead for years. A staff member of the Chaska planning department noted that the city had not heard from anyone involved in the EdCampus project for many years.
On November 25, we reported Funding the private bullet train: Liberty Minnesota Regional Center website suspended. By December 6, the suspension was over and the URL--still linked on MN DEED's EB-5 page--redirected to Go Daddy; we looked at this in Go, Daddy, hot new high speed rail technology?.
What's disturbing about taking Meadley's cavalier attitude (""The reality is it's more cumbersome money than is needed," she said") is that the rail group's executive management did pursue (and obtain) regional center status from the Department of Homeland Security, then let that business languish, as our posts illustrate.
This being the case, we find ourselves in the uncomfortable position of agreeing once again with Representative Steve Drazkowski on this project. Carlson reports:
Mazeppa Republican Rep. Steve Drazkowski has been among the project's biggest critics. He said the recent changes in strategy by the company only add to his concerns.
"It appears that this effort is not very organized," Drazkowski said. "If their first request was to have that (air rights) authority and now they need to go back and study the underlying fundamentals, it seems that maybe they were bringing the cart before the horse."
This project is managed by the folks who couldn't keep a website going for an EB-5 regional center going (and who solicited inquiries for a different project that seems to have had dead years ago). If they can't keep a website running, we have to wonder if they can make the trains run on time--or at all.
Money available for Duluth high speed rail, but none for Rochester
But there's more. Carlson reports in Friday's article:
Meanwhile, MnDOT officials are considering suspending work on the publicly funded Zip Rail project once an environmental review is done because there is no funding available. Work on a Tier 1 Environmental Impact Statement that analyzes eight potential routes for the proposed high-speed rail line from Rochester to the Twin Cities is expected to be completed early next year. Davis estimates the preliminary engineering work to move ahead with the project would cost $55 million to $65 million. With no federal rail money on the horizon, Davis said it probably makes sense to pause work on the project.
This information contrasts with a report on Wednesday, New MnDOT plan would slash cost of Mpls.-Duluth high-speed rail, by Dan Kraker on Minnesota Public Radio:
Advocates of a proposed high-speed rail line between Duluth and Minneapolis say the cost to build the project has been cut nearly in half.
Previous estimates to build the Northern Lights Express passenger rail service approached $1 billion. Now, the Minnesota Department of Transportation says it will cost between $500 million and $600 million. . . .
. . .The federal government is expected to pick up 80 percent of the eventual price tag to build the line. Annual operating costs are currently estimated at $17.5 million for the first five years. Revenue from fares are expected to cover most of the cost.
We have to wonder why the federal government would have money for the Northern Lights Express high speed rail but not the ZipRail.
Another shaky NAHSR claim: Vegas baby
It's worth noting that Meadley has implied that the NAHSRG was in the running for the Southern California-to-Vegas franchise being offered by the Nevada High Speed Rail Authority, while also disputing the eventual franchise winner's partnership with China's most prominent train company.
In an October press report, this supposed competition between NAHSRG and the eventual winner, XPressWest was thought to signal that the rail promoter might wash their hands of Rochester and join faster company in Vegas instead.
We were skeptical in Roch mayor can probably stop worrying much about high speed rail group jilting city for Vegas.
As we reported in North American High Speed Rail Group was not among four Nevada franchise applicants, the Minnesota company didn't put in a proposal for the franchise; nor did they when the deadline was extended as we noted in Not going to live & die in Vegas: no North American High Speed Rail Group proposal.
Meadley later denied in a November Post Bulletin post that applying for the franchise was ever in the cards, but said instead that her company was in talks with the Nevada company for the right to operate the line. We looked at that claim in Why did the North American High Rail Group delete page about negotiations with XpressWest?.
Just another reason we think Draz might be on to something and it's good for this outfit to go back to a basic study, rather than putting the cart before the horse.
Let's see them pay for a study--prove that they have a horse, a cart, something--rather than secure a free transfer of work already financed by the taxpayers, as we suggested in our December 7 post, Transition: will products of publicly-funded Ziprail development end up in private hands?
Is it right of way or the highway?
Back to the material that the PB article highlights. Carlson highlights the switch from air rights to a much more ordinary permit:
MnDOT Chief of Staff Eric Davis said the rail group recently applied for a right-of-way permit, but it was denied because the request was too general and was for a two-year time period. Davis said he has been talking with the group about submitting a more detailed permit application that would be for approximately 120 days. He said these types of right-of-way permits are very common and often granted to utility companies, wind developers and other entities seeking to do work in a right-of way.
MNDOT Commissioner Charlie Zelle sees this as a good move:
. . .Zelle said he is pleased to see the company moving in this direction instead of continuing to seek exclusive negotiating rights for air space on portions of I-494, Minnesota Highway 55, U.S. 52, U.S. 63 and Interstate-90. He said this preliminary study will help answer key questions about the project's viability.
We agree with Zelle. We can't wait to see the study (if it's ever handed in). Indeed, we wonder if it's possible to pre-order a document request using Minnesota's data practices request process.
Screenshots: The Go Daddy page (above); the inverted pyramid (below).
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Modern journalism is all about burying the lede.
Burying the lede is what enables someone to say that his or her newspaper or network or website "covered" a story when in fact they spun it.
Posted by: Phoenix Woman | Dec 18, 2015 at 10:57 PM