Foremost Dairy an open door to investment

DAN VOELPEL; THE NEWS TRIBUNE
Last updated: July 27th, 2008 08:06 AM (PDT)

But the Tacoma gateway to foreigners who want to live permanently in the U.S. won’t stop with the 81-year-old milk and ice cream factory.

The man selling foreign investors on turning the art deco building into retail and office space expects to follow up with more Tacoma redevelopment projects representing millions of dollars in new investment and making U.S. residents of many more folks from around the world.

Henry Liebman has done it before.

As the largest private landowner in Seattle’s SoDo district, Liebman figures his company – American Life Inc. – has brought more than 400 investors to the U.S. from more than 30 countries with more than 40 investment projects, most in Seattle.

Liebman’s Seattle company solicits potential immigrant investors through a federal program created by Congress in 1992. The U.S. Citizenship and Immigration Services – an office in the Department of Homeland Security – oversees the Immigrant Investor Pilot Program.

The program allows up to 10,000 foreigners and their families a year to gain permanent U.S. residency by investing at least $1 million in a commercial venture that directly creates at least 10 jobs. Of those 10,000 slots, the government sets aside 5,000 for investments in one of more than 20 designated regional centers around the country.

Nowhere near that many foreigners have taken advantage of the chance. The most in a full year, 1,361, came in 1997. The fewest, 64, came in 2003.

Regional centers have less stringent job-creation requirements. Foreign investors can earn U.S. residency with as little as $500,000 and don’t have to start a business that creates the jobs directly. Regional centers may rely on indirect employment to satisfy the 10-jobs-per-investor requirement. In some cases, the investment can simply construct or renovate a building – like the Foremost Dairy – to make usable space for at least 10 direct or indirect jobs.

That’s how it will work in Tacoma and Everett, which the Department of Homeland Security approved as regional centers June 25.

The Tacoma designation marked the end of a mostly private and quiet two-year effort by American Life, the City of Tacoma, the Port of Tacoma and the Economic Development Board of Tacoma-Pierce County to open a new door to foreign investment.

In June 2006, following staff discussions with the development board and Liebman, the city’s Community and Economic Development Department created a boundary map for Tacoma’s regional center investment zone. It includes downtown, Nalley Valley, the Dome District, Lower Portland Avenue and a small section of the eastern edge of the Tideflats.

The concept got one general airing at a Tacoma City Council Economic Development Committee meeting but didn’t include any mention of Liebman, his company or specific investments.

Liebman applied for the federal designation in August 2006.

Bruce Kendall, president of the Economic Development Board, first encountered Liebman in Seattle during the mid-1990s when Kendall served as vice president of the Economic Council of Seattle and King County. At the time, Liebman started buying – and selling foreign investors on – properties in Seattle’s SoDo District and Duwamish River corridor.

Kendall called him “a pioneering entrepreneur.”

“Yeah, Henry Liebman. I’m a big fan,” Kendall said. “I like foreign investment.”

Liebman declined to provide a list of countries from which his investors have come. But he said most hail from the United Kingdom, the Netherlands, Japan, South Korea, China and India. Most of them don’t live in the Puget Sound region.

“Arguably,” Kendall said, Liebman’s renovating “areas capitalized by money that otherwise wouldn’t come into the Puget Sound region at all. The free flow of capital, people and ideas is what economic development is all about when it’s working well.”

TACOMA’S TIME HAS COME

Liebman, however, can’t sell new investors on Tacoma just yet. The federal immigrant investment program sunsets in November. Congress must extend it. A bill calling for a five-year extension – expected to pass easily – won House approval and was introduced in the Senate last month. A previous five-year extension passed easily in 2003.

Tacoma’s time has come, Liebman said.

“It’s a key part of the Puget Sound megalopolis,” he said. “I thought it would be kind of neat to retain some of the character of the old building stock and turn it into something modern and beautiful. Tacoma’s old building stock is better than Seattle’s.”

Liebman noted the obvious – real estate is cheaper in Tacoma than in Seattle – but added in salesmanese, “I don’t think you have to sell Tacoma as being cheaper. I’d prefer to say it’s better in some way. There’s less hassle. It’s easier to get around. It’s easier to park.”

Liebman’s $3 million purchase of the Foremost building – which includes most of the block – closed in March. It does not include the mid-block 1912 Hotel Merkle nor the 1927 MacKenzie Pharmacy Building, most recently home to Neener’s Pub, at the corner of South 24th Street and Pacific Avenue.

None of the buildings has historic register protections, although the City of Tacoma designated them as “potentially historic” and recorded their origins and noteworthiness in a 2003 report.

The Foremost property, built in 1927, originally housed the Royal Ice Cream & Milk Co. Later, it housed milk-handling operations for Medosweet Dairies Inc.

PLAN LEAVES OUT ART DECO

Liebman’s renovation won’t have to pass any Landmarks Commission approval. But if it did, he probably would not win it.

In a July 3 building permit application filed with Tacoma’s Public Works Department, proposed plans indicate the remodel would make the existing two upper floors and basement into office and retail space. The design calls for a modernization of the exterior with a glass corner entrance that peaks higher than the building’s roof does now. The art deco flourishes disappear. You might not recognize it.

Liebman offered no timetable for the makeover.

“The market’s going to stink for quite a while. We’re taking a chance by developing it now,” he said. “I think the truth of the matter is, if you build a good product that’s fairly priced, it’ll sell. The Pacific Northwest is not dead.”

Liebman also acknowledged that his Foremost makeover would fare better with investors if he owned the full block or if other property owners invested in makeovers, too.

Steve Pfeifer, who has owned the adjacent 42-room Hotel Merkle since 1981, said he would consider discussing a sale to Liebman.

“You could own the whole … block and build yourself a little city,” Pfeifer said.

Meanwhile, Liebman said he has his eye on other Tacoma properties to renovate and offer to foreign investors, but he didn’t want to identify them, which he said would inflate the price he’d pay. But stay tuned.

Dan Voelpel: 253-597-8785

dan.voelpel@thenewstribune.com">

Originally published: July 27th, 2008 01:28 AM (PDT)