EB-5 investments in SoFla hanging in balance
The future of the EB-5 visa program remains unclear as a Dec. 11 deadline for it to expire draws closer.
Congress simply cannot reach a consensus on a host of reforms that would severely limit developers in urban areas from recruiting foreign investors seeking U.S. permanent residency, according to a pair of south Florida lawyers who specialize in the EB-5 lending market.
Roger Bernstein, an immigration lawyer who owns American Life Investments, and Ron Klein, a partner with the law firm Holland & Knight, told The Real Deal they expect Congress to extend the life of the EB-5 program in its current form for a third time in the past year.
“From what I am hearing, we will see an extension,” Bernstein told TRD. “There is not a consensus among senators and house members on what targeted employment areas should be and the employment methodology.”
The EB-5 visa program was set to expire or be renewed on Sept. 30, but a stopgap bill signed that day is keeping it afloat through Dec. 11, when Congress plans to discuss amendments to the program.
“For those of us representing EB-5 interests, we are letting Congress know it is better to do an extension for another year rather than pass a bad bill,” Klein added.
The EB-5 program offers foreign investors and their families the opportunity to qualify for green cards if they invest at least $500,000 in the U.S. and create at least 10 permanent jobs. While supporters claim EB-5 visas help projects get off the ground and obtain financing through an unconventional source, detractors say the program has been poorly regulated and is susceptible to fraud.
Bernstein, whose company is a regional center — a government sanctioned entity that sponsors EB-5 applications to the U.S. Immigration and Citizenship Service on behalf of projects and their foreign investors — said the proposed reform bill would be bad for south Florida and New York real estate projects because only projects in rural parts of the country would qualify for EB-5 investments.
“It would effectively pull urban centers out of the program,” Bernstein said. “It would limit the ability of major U.S. cities to obtain much needed capital. We don’t want that to happen.”
Bernstein has assisted several EB-5 projects in South Florida, including Design 41, a seven-story mixed-used building in Miami’s Design District that will include class A office space, a restaurant, and luxury retail, and the Las Olas Ocean Resort hotel in Fort Lauderdale.
“For Design 41, we raised $14.5 million from 29 EB-5 investors,” he said. “We raised $30 million from 60 EB-5 investors for Las Olas Ocean Resort.”
His company is currently sponsoring the $1 billion project in Miami’s Brickell neighborhood being developed by China City Construction Holding Group and American Da Tang Group, Bernstein said. “It’s the first EB-5 project in South Florida devoted to Chinese investors,” he said. “For EB-5 projects, we typically draw investors from Europe and South America.”
Klein, who has been lobbying Congress on behalf of U.S. Immigration Fund, a regional center with three EB-5 projects in South Florida, said pro-EB-5 groups have been pushing legislators to include provisions in the reform bill that will continue to allow urban areas to attract foreign investors.
However, one pro-EB-5 group claims congressional leaders have heard the industry’s concerns and are supporting the passage of the reform bill. The Invest in the USA group is pushing its members to lobby congressional leaders to enact the legislation by Dec. 11.
“These reforms are important to the program reauthorization and should be enacted now,” said Invest in the USA Executive Director Peter Joseph. “These reforms are urgently needed and the time is now to enact this important bipartisan agreement.”