BALTIMORE, MD—This is a story of an old-time hotel being repositioned with care taken to conserve its historic roots—via one of the newest sources of financing available to developers.

Baltimore developer Shaffin Jetha is renovating and repositioning his recently-acquired Mount Vernon Hotel at 24 West Franklin into a 170-room Hotel Indigo hotel, a brand franchised by InterContinental Hotels Group.

For the local community, the key aspect of the deal is that the boutique hotel is being redesigned with the local culture and history of the surrounding Mount Vernon neighborhood in mind.

For the development community, and commercial real estate borrowers in general, the $6 million in EB-5 funding is what is intriguing about the $20 million renovation.

Briefly, EB-5 is a government program under which developers can procure project funding from foreign investors in exchange for a green card. There are two types of EB-5 structures: direct (or individual) investment, and regional centers. The latter is vastly more popular, with 90 to 95% of filed EB-5 proposals coming in with this structure.

In both scenarios, investors must provide $1 million—or $500,000 with a "targeted employment area"—and create 10 full-time US-based jobs as a result of that investment.

For the Hotel Indigo project in Baltimore, EB5-investment firm Oriental Dolphins provided the funding, by recruiting 12 Chinese investors for the hotel project, each of whom invested $500,000.

According to Kate Weaver, a CPA and manager of ODI, this is one of the first EB-5 investment funded projects in Baltimore City, but she adds, the company "has plans for several apartments, offices and assisted living projects in Baltimore and the District of Columbia."

The building is a national historic landmark constructed in 1905 as Baltimore's first YMCA. It later became the original home of the University of Maryland's School of Commerce, before it was converted into a 197-key hotel in the mid-eighties. Currently, it is divided between dormitory housing and separately-owned hotel rooms.

Marc Tropp and Barry Dollman of Eastern Union Funding's Bethesda, MD office helped arrange the financing for the transaction, which also included a loan from Virginia Heritage Bank.