As Congress mulls future restrictions that would make it harder for foreign investors to obtain U.S. residency via EB-5, Miami developer Jeffrey Berkowitz said during a panel that he would sue the federal government to ensure financial backers of his SkyRise Miami observation tower get their green cards.
EB-5 is a popular immigration program tied to creating jobs and funding projects on American soil.
“We have been through an arduous approval process,” Berkowitz told a crowd at the JW Marriott in Brickell on Wednesday afternoon. “I would not hesitate to litigate with the government if they choose to extend the program, but materially change the requirements where we have to start over again.”
Berkowitz and Birch Capital founder and senior adviser Ben Cummings were the featured speakers of the EB-5 visa panel at the Third Annual ALM-Akerman U.S. Latin America Legal Summit.
Since its inception in 1993, the EB-5 visa program affords foreign investors a path to permanent U.S. residency for themselves and their immediate family members, such as spouses and children. A maximum of 10,000 visas are allotted each year with 87 percent snatched up by people originating from China, according to recent figures provided by U.S. Immigration and Citizenship Services.
To qualify, an investor has to fund $500,000 for domestic projects in a high unemployment area or $1 million for projects in other areas. And each project has to create a minimum of 10 jobs. When the real estate market crashed in 2008, developers turned to the EB-5 visa program to find private capital to finance projects during the downturn.
Cummings said Birch Capital was able to fund $20 million of the $700 million construction costs for the University of Miami Life Science & Technology Park through EB-5 investors from Central and South America. “All the funds provided by EB-5 investors is going to be paid back on Feb. 1,” Cummings said.
Scot Patrick O’Brien, an Akerman partner specializing in EB-5 issues who moderated the panel, said the number of foreign investors seeking the special visas has exploded in the last seven years. For instance, regional centers – nonprofit organizations that sponsor projects before U.S. Immigration and Citizenship Services – grew from 11 in 2007 to 761 in the fourth quarter of 2015, O’Brien said. In the same time period, he said, EB-5 investors have provided $1.4 billion in capital to U.S. projects.
However, the program is at a crossroads. It was set to expire or be renewed on Sept. 30, but Congress temporarily extended the EB-5 law until Dec. 11 as federal legislators continue to work on a package that will reform how the program operates and is administered.
Senators Patrick Leahy, a Vermont Democrat, and Chuck Grassley, an Iowa Republican, who are sponsoring the bill, claim the new regulations are meant to ensure that blighted neighborhoods are the true beneficiaries and impose stricter measures to prevent fraud. The bill raises the minimum investment thresholds from $500,000 to $800,000 and from $1 million to $1.2 million, and restricts EB-5 investors from funding projects in neighborhoods where development is thriving – like downtown Miami, where SkyRise Miami will be located.
However, earlier this year immigration officials qualified SkyRise Miami for “exemplar status,” which means any EB-5 investors recruited by Berkowitz’s group are already pre-approved. Berkowitz told audience members that he wants to raise $270 million, more than half the project’s construction price tag, through 540 EB-5 investors. He said the balance is being financed by an institutional lender and himself.
Even though SkyRise Miami will be grandfathered should the federal bill passed, Berkowitz said he doesn’t trust the politicians in Washington, D.C. “I have been involved with government long enough that you can’t predict what it is going to do, particularly Congress as it is currently constituted,” he said.