PhoenixMart says “business as normal” Friday

The Casa Grande Dispatch is reporting the Federal Bureau of Investigation conducted a search Thursday morning of the PhoenixMart offices in Casa Grande and Scottsdale.

Multiple FBI agents from the bureau’s Phoenix office were seen searching through stacks of binders and folders in the offices adjacent to the PhoenixMart Welcome Center, located on Tanger Drive at the CityGate outlet center.

Phoenix Business Journal is also reporting that federal officials speaking on background because of not being authorized to speak to the media said while they couldn’t comment on specific investors’ status, failure to make the required capital investment or create the required jobs within two years was grounds for deportation on a conditional EB-5 visa. They confirmed that for some investors in this project, the two-year deadline has passed.

The EB-5 visa is designed to help bring foreign money into investments in the U.S. while allowing those who make the investments to stay in the country temporarily.

The agents reportedly were investigating one of the project’s former investors, according to AZ Sourcing Public Relations Senior Vice President Patrick Welch. AZ Sourcing is the parent company overseeing PhoenixMart.

Welch said the FBI did not inform the company of the identity of the former investor or why the person was being investigated. He added that AZ Sourcing was first informed of this investigation the same day the FBI conducted the search.

PhoenixMart initially was to be funded through the EB-5 federal immigrant investor program, which hands out U.S. residency visas to foreign investors who contribute $500,000 to a project that creates at least 10 full-time American jobs.

Welch told Cronkite News earlier this year that AZ Sourcing had secured at least 300 foreign investors from five different continents.

The money generated from the investors has not been delivered as quickly as expected due to a backlog at U.S. Citizenship and Immigration Services. This delay forced AZ Sourcing management to seek alternative funding methods, such as bank loans, to continue construction on PhoenixMart.

Casa Grande officials were not aware of an FBI investigation until Thursday. The city released the following statement:

“The City of Casa Grande has been informed that the Federal Bureau of Investigation (FBI) is conducting an ongoing investigation of PhoenixMart. The City has not been contacted by the federal government regarding this investigation, but is committed to providing its fullest level of cooperation. The City’s top priority is providing the highest quality of service delivery and transparency to its community, and will continue to conduct its business in accordance with the highest standards of integrity.”

The PhoenixMart Welcome Center in CityGate is scheduled to open publicly by mid-December.

This summer AZ Sourcing officials said “vertical” construction was scheduled to begin in October at the site. However, last month officials said construction was delayed while the company obtains proper building permits from the city.

Rob Kobierowski, vice president of construction for Az Sourcing, said at the time there were “several hurdles” with getting the final design plan to fit all the technical requirements mandated by the city’s building codes. The size and multi-use aspect of the PhoenixMart building, Kobierowski said, raised new questions that may take inspectors and designers longer to answer.

However, Casa Grande Planning and Development Director Paul Tice said recommendations given to PhoenixMart mostly pertained to small, technical details of the building’s design. Fire Marshal Barbara Rice said recommendations given to PhoenixMart were standard and similar to those of any other building project.

In the wake of a morning raid by agents of the Federal Bureau of Investigation, PhoenixMart officials say that they will be back in the office tomorrow.

“We’re cooperating fully with the FBI,” said Patrick Welch, vice president of AzSourcing, parent company of the proposed 1.7 million-square-foot Casa Grande expo center. “Originally the FBI said that they were investigating one of our investors.”

The Casa Grande Dispatch is reporting PhoenixMart is getting closer to becoming reality. The model is built, plans are approved and deals have been made. Not much is left on PhoenixMart’s checklist except building PhoenixMart itself.

The 585-acre site near Florence Boulevard and Overfield Road has yet to see any major construction, but that hasn’t curbed the excitement of its future tenants.

“This is real, it’s happening,” said Jason Clark, spokesman for Supply Chain Solutions, one of the almost 2,000 companies expected to occupy PhoenixMart. “It’s going to be happening very soon — sooner than most people around here think it will.”

Parent AZ Sourcing officials say the structure housing 1,740 business suites is scheduled to be completed by mid-2016. A collection of hotels and condominiums built in the surrounding complex is expected to follow by the end of that year.

This is good news for Supply Chain Solutions, a Wisconsin-based logistics provider. In addition to being a tenant, the company was chosen by PhoenixMart to be the on-site logistics provider.

It beat out numerous other companies that put in bids to be a service-provider for PhoenixMart. SCS is to be responsible for monitoring a variety of imports and exports utilized by tenants.

The centrality of having hundreds of companies under one roof will keep SCS busy tracking orders, shipments and invoices. Clark said the PhoenixMart concept should help businesses save time and money finding pieces to build their products.

“Instead of sending teams of people out to source different parts of your supply chain,” he said, “you can send one person or one team to PhoenixMart and source your whole supply chain.”

Clark and SCS President Kevin O’Reilly toured a life-size replica of their PhoenixMart suite Tuesday at the company’s welcome center, which will open publicly next month, near Interstate 10 and Jimmie Kerr Boulevard.

They had the option to pick from a selection of glass-walled offices where they can showcase their services to other PhoenixMart tenants.

The layout of the suites is broken down into six clusters: industrial, food, electronics, office, fashion and hospitality. Each category has a limited amount of slots, allowing PhoenixMart to be selective and strategic with its leasing.

“Once a company gets in, then a piece of the puzzle is already established, and we have to work around it,” said PhoenixMart Chief Operating Officer Steve Gardner.

The last tenants to sign with PhoenixMart will be chosen to fill a specific need, said Gardner. If a home flooring company is already occupying one suite, then leasing agents make sure not to place another flooring company next door.

Tenants presently have to rely on blueprints and models to visualize where their suites will be located.

The $150 million needed to construct the main hub of PhoenixMart is tied up in escrow with U.S. Citizenship and Immigration Services (USCIS). When the PhoenixMart project was launched, about 300 foreign investors each forwarded $500,000 to the company to qualify for the EB-5 visa program.

In 1990, USCIS started handing out visas to foreign investors who stimulate the U.S. economy through job creation. The program reached its visa cap for the first time in 2014.

AZ Sourcing spokesman Patrick Welch said this has caused a backlog in exchanging capital investments for visas. He said the $150 million should be released at any time and will initiate the construction phase of PhoenixMart.

“Because you never know when the funds are actually going to be funneled in,” Welch said, “it really ties your hands for a while.”

In the meantime, Clark said he’s content with looking at a model of PhoenixMart until the real thing is completed.

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Since first announcing its project, PhoenixMart, in the fourth quarter of 2011, developers AZ Sourcing and Central Arizona Regional Center will break ground and begin construction on Thursday, November 7, right on schedule. Groundbreaking is set to begin at 9:30 a.m.on the new PhoenixMart development, located at Florence Boulevard near Overfield Road, about two miles east of The Promenade in Casa Grande.

PhoenixMart will be a 1.7-million-square-foot wholesale sourcing facility, being built on 585 acres, to be the first global commerce center of its kind in the United States, according to developers. It is expected to create more than 9,000 local jobs and boost U.S. manufacturing by connecting global buyers with sellers, according to project developers.

While the project is heavily financed by Chinese investors, PhoenixMart has nothing to do with bringing in Chinese business and industry. Rather, its focus is to provide a way to bring American industry into the global market like the Chinese have done over the last 20 years.

PhoenixMart is based off of a development that occurred quite by accident in a small rural town called Yiwu in China back in the 1980s. As China began to experience its own industrial revolution in the 1980s, small businesses began to pop up everywhere. But there wasn’t a central location through which these business owners could market their products. So what developed was referred to as a “farmer’s market on steroids,” as these little manufacturers and business owners flocked to a central location, which started with only a couple of hundred square feet and a tin roof overhead. It was a one-stop shop convenience buying opportunity. Nearly 30 years later, that same little farmer’s market has become a 43 million square foot facility and has virtually turned into a city. It is the biggest place of its kind in the world for wholesale sales of small and midsize manufacturers throughout China. If you were a small manufacturer, then suddenly Walmart, Costco and other large retailers could find you.

Former U.S. Labor Secretary Elaine Chao will be among the federal, state and municipal officials on-hand Thursday for the groundbreaking of PhoenixMart, according to a press release from the project developers. U.S. Rep. Ann Kirkpatrick, U.S. Rep. Paul Gosar, Casa Grande mayor Bob Jackson and PhoenixMart president Jeremy Schoenfelder also are expected to speak at the event.

“Even though it was shovel-ready long ago, its investors were stuck waiting for EB-5 visas. I’m glad we could work together and help clear the way for this important economic effort to launch, ” said Kirkpatrick.  PhoenixMart will showcase goods sold wholesale by about 2,000 manufacturers and distributors in various categories. “The complex will also include a commerce hub that, when completed, will be the largest single-level construction in the country, spanning three football fields wide and nine football fields long,” the press release from PhoenixMart developers said. The facility is to have 1,750 showroom suites and is expected by developers to be fully occupied by the time it opens its doors, projected for late next year.

For more information or to keep an eye on the progress of the project, visit their website at https://phoenixmart.com/, or follow them on Facebook, Twitter, Youtube, and Linkedin. Vendors can also lease space on the PhoenixMart’s e-commerce site coming soon, www.ephoenixmart.com