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A controversial developer wants to build a Chinese Disneyland in the Catskills. Will Washington and Beijing oblige?

MONTICELLO, N.Y. -- The cause of death, according to the scuttlebutt at the Miss Monticello Diner, was drugs, and the mournful mood that snowy spring morning in Sullivan County, New York, befit the affair at the funeral home next door. As the funeral procession for 30-year-old Courtney Price formed along Broadway in downtown Monticello, it was difficult to disregard the many boarded-up buildings and for-sale signs lining this once bustling village in the foothills of the Catskill Mountains.

Once the jewel of the so-called borscht belt, the string of summertime resorts and bungalow colonies that stretched across the Catskills for the better part of a century, this community located about a hundred miles north of Manhattan for years catered to a predominantly Jewish clientele. The resorts served as the early stomping grounds for numerous artists, musicians, and comedians, and each summer drew millions of vacationers and tourists.

From the farmers who first flocked here in the early 20th century grew household names like Kutsher and Grossinger, founding fathers of the many hundreds of hotels and resorts that sprouted up and sustained an economy for decades. Entertainers like Sid Caesar and Buddy Hackett made their bones in the belt, as did Mel Brooks and Jerry Seinfeld, and it was here where Fyvush Finkel and Danny Kaye honed their skills and tummled their way to notoriety.

Athletes worked, rested, and played at the resorts during the summertime. High school basketball star Wilt Chamberlain worked as a bellboy at Kutsher's Country Club and played for the resort's basketball team, coached by none other than Red Auerbach. Boxing greats Rocky Marciano and Muhammad Ali trained here, and baseball legend and avid golfer Mickey Mantle enjoyed hitting the local greens.

American appetites changed over time, however, and the construction of the national highway system, followed later by more affordable air travel, slowly bled the Catskills of its economy and its charm. One by one the resorts fell into disuse and disrepair, left to await the wrecking ball.

What followed for the Catskills isn’t exactly the kind of American decline story we’ve become accustomed to hearing in recent months, especially since Donald Trump’s election as president. Sullivan County is home to some of the most beautiful woodlands and wetlands in New York state, and each summer the tourist population surges from 70,000 to approximately 300,000. The nearby hamlet of Roscoe -- “Trout Town USA” -- draws more than just anglers these days, boasting its own distillery and craft beer brewery. In Bethel, the site of the original Woodstock festival -- no, it wasn’t actually in Woodstock -- stands the Bethel Woods Center for the Arts, a state-of-the-art music venue that showcases the likes of John Mellencamp and Carlos Santana.

Indeed, this sparsely populated expanse of southern New York, roughly the size of Rhode Island and book-ended by the Upper Delaware River and the Catskill Mountains, has adopted in recent years a noticeable farm-to-table vibe. Yet behind the beauty lies a vastness, and a quiet that shields years of struggle and stagnation.

The Catskills can be seen as a microcosm of a very American crisis: Its aging population has few job opportunities, is in declining health, and wrestles with an escalating heroin and opioid epidemic. This is the same epidemic that ensnared Courtney Price and ruined her life. It will do the same to others here if the promise of employment and opportunity is not restored.

A cottage industry of sorts has developed in recent months around this section of declining -- and largely white -- America, particularly since Trump’s upset win last fall. But what if the Catskills has a different story to tell? While there is no sense of tragedy or failure in the old borscht belt, there is of course a dilemma: How does a place that once had a thing find another thing?

A Chinese Disneyland

One answer emerged in 2013. Utilizing a controversial federal visa program that allows wealthy immigrants to pool money into development projects in needy parts of the United States, Long Island developer Sherry Li proposed an epic and possibly radical idea for the region: China City of America.

Initially, China City of America was to be an expansive $6 billion proposal -- a planned community designed along the principles of feng shui and featuring hundreds of new homes, a casino, a college, shopping, and a year-round amusement park. A “Chinese Disneyland,” so to speak.

Local reaction was, well, mixed. National news outlets performing a chyron drive-by on the story snickered, and soon tales of nefarious Chinese money infiltrating sleepy Sullivan County began to circulate around the Internet. The bad press -- coupled with more serious concerns about the size and scope of the scheme, and the effects it might have on the area’s pristine wetlands -- forced Li and her investors to scale back their ambitions.

Later rebranded as the Thompson Education Center, after the town encompassing Monticello and several other communities, the revised vision for the development now constitutes a higher-education center geared toward wealthy Chinese investors looking to send their children to a freer environment overseas. Such a campus would require housing for instructors and dormitories for students, and would, so the elevator pitch goes, lead to further investment in the region. The jobs pegged to the education center -- including the construction and engineering opportunities that would imaginably open up -- have piqued interest from development and business circles in the area, and have left many hopeful that a toned-down rendition of China City will help spark a regional resurgence.

Mar-a-Lago on the Mind

Marc Baez is all in. As president of the Sullivan County Partnership for Economic Development, Baez has the ambition and energy typical of Chamber of Commerce types, in addition to an enthusiasm for development projects -- any kind of projects -- that will bring money and jobs to the community. If it weren’t the Chinese, it would be Legoland; if it weren’t Legoland it would be something else. Money is money, and Sullivan County needs it.

During an interview last month, Baez was confident and excited about the community’s prospects, and the Thompson Education Center was just one of several development possibilities discussed that snowy afternoon. Was I aware of the casino opening up along Route 17 next year? And did I know the micro-distillery scene here is booming? For Baez, China City represents but one card in a better hand for a Catskill region looking to fill a decades-long void.

But for Baez the Thompson Education Center also represents a unique opportunity to tap into a Chinese approach to development that would include building out the sewer system and improving surrounding roads and arteries. The regional hospital is thrilled, he insisted, and the towns and hamlets abutting the education center would likely flourish as a result.

There are NIMBY concerns, of course, but according to Baez these are overwrought and shortsighted. New York City long served as the economic engine for the region. But that engine flipped its turn signal and headed elsewhere long ago.

“For a community that’s been suffering for the last three decades … it’s time to make a decision,” said Baez.

Our conversation eventually drifted to the summit taking place that week between Chinese President Xi Jinping and President Trump. Would Trump’s rhetoric spook potential investors? How might the markets react? On that afternoon in this bucolic slice of southern New York, all geopolitics was local.

It’s really quite beautiful here, I noted.

“It’s gonna be,” he said.

The Golden Visa

From the very beginning China City has been shadowed by the kinds of municipal controversies that building proposals often experience, such as concerns about environmental sustainability and impact on infrastructure and traffic. Looming especially large over the Thompson Education Center, however, is the controversial EB-5 investor visa program.

Often referred to as the “golden visa,” the EB-5 program was established in 1990 to help boost the U.S. economy and offer would-be Americans and their immediate families a speedier path to permanent residence in the United States. Foreign investors who commit a minimum of $500,000 to a development plan in a rural or economically depressed part of the country are then granted conditional residence that must be later reviewed based on certain criteria pegged to job creation and evidence of investment.

Since the Great Recession, EB-5 has been especially popular among local governments and developers looking for creative routes to capital and potential job-generating proposals.

The visa has drawn heavy interest in recent years from Chinese investors looking to move their families and -- a cynic might add -- their assets out of communist China. Each year, thousands of wealthy Chinese flood the EB-5 application rolls. In 2014 alone, Chinese investors accounted for more than 85 percent of EB-5 visas awarded.

The program has also been beset by controversy and scandal. Critics have long been skeptical of EB-5’s supposed economic benefits, and high-profile incidents of fraud and malfeasance have brought a good deal of negative attention to the program.

In 2013, the Securities and Exchange Commission seized the assets of Illinois developer Anshoo Sethi after it was learned he had duped hundreds of Chinese nationals into investing in a failed convention center and hotel scheme near Chicago’s O’Hare International Airport. Sethi was sentenced to three years in prison earlier this year.

In January, Seattle-area developer Lobsang Dargey was charged by the federal government with two counts of fraud after it was revealed that the former Tibetan immigrant had allegedly defrauded tens of millions of dollars from would-be emigres. Moreover, in an effort to persuade potential investors, Dargey even went so far as to hire Washington state Lt. Gov. Brad Owen to pitch his ideas in China.

More recently, President Trump’s son-in-law, Jared Kushner, drew unwanted attention after members of the press were shut out of a Shanghai meeting of potential EB-5 investors for a luxury New Jersey apartment complex linked to Kushner Companies.

At its best, EB-5 helps to provide opportunities in communities desperate for jobs, said Audrey Singer, senior fellow at the Urban Institute. However, with the rapid growth of the program and the sharp increase over the past decade in federally approved regional centers designated for development, it’s easy to see how oversight could fall by the wayside.

This, added Singer, means that there are likely far more regional centers in need of a project across the United States than there are investors to go around, calling into question the true efficacy of the EB-5 visa.

Such concerns, in the case of the Thompson Education Center, are compounded by China City CEO Sherry Li. An immigrant with a thin public resume, Li has worked to ingratiate China City with the county, sponsoring local dinners, fundraisers, and other community events.

Li has also been generous with her campaign contributions, writing checks over the years for a bipartisan collection of state and federal candidates involved in immigration and development policymaking. In 2014, Li contributed more than $50,000 to New York Gov. Andrew Cuomo’s re-election campaign, and in late October 2016, just weeks before Donald Trump’s presidential victory, Li donated $32,000 to the Republican National Committee.

That a developer would spread cash around to any politician willing to listen should come as little surprise. And while Li obviously has a personal financial stake in seeing the Thompson Education Center completed, those who have worked alongside her on this and other endeavors vouch for her sincerity and dedication to China City.

“Sherry Li is a hardworking businesswoman, very ambitious and outgoing,” said Sue Googe, an unsuccessful Republican candidate for North Carolina’s 4th Congressional District, to whom Li donated more than $5,000 in 2016.

“She intends to do good for the community and her business, always dreams big and dares to take action, that's my impression of her,” said Googe in an email.

Marc Baez of the Sullivan County Partnership has the same impression. According to him, Li is a serious fundraiser with an equally serious vision for a world-class learning facility intended to provide a global education to international students. “I wouldn’t bet against her,” Baez told me.

Ms. Li declined multiple requests for comment.

The Beijing Belt?

It’s difficult to drive around Thompson and not notice a familiar dynamic that has played out in small and rural towns all across the United States. Main streets and commercial corridors that once boomed with life bear boarded up storefront and for-sale signs, while giant big box retail “centers” situated just on the outskirts of town provide bargain-basement prices for a consumer’s every need.

For most Americans, the familiar “Made in China” label is the extent of their relationship with the Chinese people. And although the outsourcing of U.S. manufacturing jobs has afforded Americans a material lifestyle arguably unmatched, every mug, plate, and power tool consequently serves as a reminder that something about the way Americans work and live has fundamentally, and perhaps irreparably, changed.

But what if this dynamic could be different? The EB-5 program certainly isn’t the cure-all that America’s small, economically depressed areas are looking for -- it accounts for but a drop in the bucket of overall Chinese investment in the United States. However, if used properly, it does offer an avenue for aspiring Americans to invest their cash and culture in places like the Catskills, where people and jobs are both in high demand. And the benefits extend beyond the economic.

“[I]n order to attract [investment] and give more Americans good jobs, the U.S. government needs to ensure that it remains a big market that is culturally in sync with other countries,” writes economist Noah Smith. “The U.S. already gets lots of investment from rich countries, but it needs more from China and India, and the best way to do that is to bring more residents of those countries to the U.S.”

At its height, the borscht belt hosted hundreds of hotels and thousands of summer bungalows, catering to a people who had been discriminated against practically everywhere else. Depending on whom you ask, “the season” ran from Memorial Day through the Jewish holidays in the fall. Kosher kitchens were kept at the resorts, and synagogues were built throughout the county. This tiny place built by people shunned elsewhere became a model for leisure and hospitality everywhere. The Catskill region has long had an outsize influence on American culture and capitalism -- think “Dirty Dancing,” and apologies for the earworm -- so why not again?

Thompson’s borscht belt history shows that the area is no stranger to accommodating outsiders with big ideas, and though questions about the funding for China City will continue to plague the project, its significance transcends county borders.

All Geopolitics Is Local

The location of the proposed Thompson Education Center is easy to miss and is only distinguished by piles of timber stacked aside a long dirt road, and a sign in English and Mandarin detailing the things to come. The site is quiet and relatively remote, but pregnant with possibilities.

For now, the future of the center, and indeed the greater China City dream, remains in doubt. Last month the education center’s supporters went before the Town of Thompson Planning Board to pitch the latest iteration of the project and to seek environmental and zoning approval. The process could take months, possibly years.

Equally unclear is where these Chinese investors will come from. The State Department recently announced that its EB-5 applicant quota for the 2017 fiscal year had already been reached, and that the wait for one of these highly coveted visas could now stretch up to several years. Lawmakers, moreover, have been compelled by recent cases of EB-5 fraud to apply extra scrutiny to the visa, with some calling for raising the investment threshold to nearly $1.5 million. Officially, Chinese citizens are limited by their government to $50,000 per year in foreign investments. To skirt such regulations at home requires using a network of shadowy banks and quota pools in order to move more cash overseas, an effort that would only be made more difficult by a higher investment threshold in the United States.

Supporters of China City are hoping that Trump’s background in real estate, in addition to his family’s own familiarity with EB-5, will result in White House support for the program. It’s something Ms. Li is apparently banking on, judging from her time hobnobbing in Washington at this year’s inauguration festivities.

Beijing has also begun to crack down. Concerns over the country’s murky economic outlook prompted Chinese policymakers in 2016 to institute tighter restrictions on capital outflows and foreign purchases by its citizens, a move that has drastically reduced Chinese investment abroad.

The dream of a Chinese Disneyland in the Catskills will therefore have to wait, as the decisions of planning boards and politburos both near and far take on ever increasing importance.

In conclusion...

Kevin Sullivan is a senior editor for RealClearPolitics. Follow him on Twitter @kevinbsullivan.