Following a 10-month application process, Miami has received a federal designation as a special investment conduit for deep-pocketed foreign investors, which could help lure additional cash into an economy buttressed by foreign capital inflows.
The development is particularly likely to attract Chinese investors to South Florida.
In a statement, Mayor Tomas Regalado said the approval Friday by the U.S. Customs and Immigration Service declaring the city an EB-5 Regional Center for Foreign Investment was a “tremendous vote of confidence” and would help position Miami as a hub of investment beyond South America.
The designation essentially allows the city to assist foreign nationals who want to participate in the EB-5 visa program, which provides special immigration status to foreigners who inject a certain amount of funds into the U.S. economy. To be accepted into the bucks-for-visas program, investors must generally put at least $500,000 into projects and prove in two years that after at least 10 jobs were created.
The job requirement has proved difficult for some investors and in effect shepherded a vast portion of the EB-5 inflow into low-wage restaurant and retail venues. Under the new designation, investors can hand over the funds to an investment vehicle handled by the city, which in turn would be responsible for making sure investments yield the requisite employment bump—vastly simplifying the process.
An attorney who helped the city secure the regional center designation said in a statement the move could help steer funds into ambitious projects.
“This increasingly popular program will provide additional financing opportunities for real estate development and infrastructure projects, therefore serving as a catalyst for economic development and job creation within the city of Miami and throughout South Florida,” Greenberg Traurig’s immigration practice co-chair Laura Reiff said.
Kate Kalmykov, a shareholder at the firm, said even though nearly 500 approved EB-5 regional centers have been approved only a handful are run by municipalities. Miami’s will be overseen by city-appointed advisory councils, which will choose projects for funding.
“When you have a city involved, there’s an added level of oversight that aids investor comfort,” Kalmykov said. “They’re really doing this to benefit the city of Miami while also encouraging the best and brightest to settle” in the city.
Greenberg Traurig attorneys in Miami, Philadelphia, Virginia, California and New Jersey helped coordinate the process for the city. The managing director of the new EB-5 regional center will be Mikki Canton, a longtime adviser to the city who has been working on the EB-5 center designation process since 2013. She was the Miami managing partner for Gunster until 2007.
Canton told the DBR the new approach makes it likely some money would funneled to projects run by nonprofit institutions. Now that the regional center designation is a reality, she said she’d turn her attention to helping the city evaluate potential projects for investment.
“The most important thing now in terms of going forward is not so much attracting the investors,” Canton said. “The investors will come. It’s the quality of the projects that we put out that are key.”
Canton has been closely linked to developer Tibor Hollo in recent years. In the city’s application last year, Canton noted a theoretical first action for the city-managed investment center would be to invest in Hollo’s 724-unit Panorama Tower at 1101 Brickell Ave.
EB-5 financing has proven less than a panacea for developers, with many projects that planned on using the green-card-for-greenbacks program later deciding to use traditional financing. There are some success stories: the University of Miami’s bioscience research park raised $20 million from 40 foreign investors under the EB-5 program.
Developer Jeff Berkowitz has said he plans to use EB-5 financing to raise a 1,000-foot SkyRise waterfront tower next to downtown Miami’s Bayside Marketplace.
Most EB-5 investors in the programs, or about 80 percent of the approved visas, came from China. Canton said Miami’s program would focus on attracting investment from Spain and Latin America
One of the main effects of the program would be to drive more investment from China into Miami, a commercial real estate expert told the DBR.
“Asian investors are going to take this as something good that’s interesting to them,” said Fabio Faerman, a top Miami commercial broker who has helped usher Chinese investment into multimillion-dollar projects in South Florida. “$500,000 for a green card is very cheap to them.”
“Many people in Latin America will follow along, too. It’s much easier than opening a new business or expanding a branch of a business here.”