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EB-5 News Archive for December, 2011
Foreign nationals arrive in Southwest Florida for a price, creating jobs
Author: BEN WOLFORD - Naples Daily | 17 Dec 2011
PORT CHARLOTTE — Along a weedy, forgotten waterfront, Allen Heise is investing more than $40 million to build an upscale marina,
complete with a rooftop heliport. Once built, it will be a glamorous and lonely centerpiece in an area he says is “gonna hit.”
His waterfront renaissance, with its promise of 500 jobs, would lift a depressed sliver of Port Charlotte near U.S. 41 and Harbor Boulevard that has 27.8 percent unemployment, the county reports.
And while Heise, 50, of Port Charlotte, said he could pay for the project with domestic means, he has instead tapped into a federal investment visa program, or EB-5, that already has infused $1.5 billion in new foreign cash into the country over two decades.
Heise will rely on 80 Chinese and Western European investors who will each pay $500,000 in exchange for conditional U.S. visas, made permanent after two years if they can prove they created at least 10 jobs.
While others wait years for residence visas, these wealthy foreign nationals will wait about eight months.
Of course, the investment visa program, created as an economy booster by Congress in 1990, has critics. Some, including Heise and others who run “regional centers” that funnel investments into projects, say the risk is too high for investors, who are left utterly without protection. Others attack the notion of selling green cards.
“I think that it’s in bad taste for us to be a great big powerful nation selling access to our country at $500,000 apiece,” said David North, a fellow at the Center for Immigration Studies in Washington, where this month he testified about the weaknesses of the program before a Senate committee.
The regional center component of the program, which enabled the Charlotte Harbor Marina project, will expire in September unless Congress renews it.
U.S. Citizenship and Immigration Services has approved 20 regional centers in Florida and 204 in the United States, all of which serve as public or private economic entities that link investors to projects. Some, like Heise’s Charlotte Harbor Regional Center, directly oversee an undertaking. Others behave like fund managers, channeling money to associated developers.
The Florida Overseas Investment Center, a regional center with offices in Tampa, directs investors’ money into three construction projects in South Florida and a mutual fund that, in turn, routes capital toward grocery-store projects, said its director, Roy Norton. He said it isn’t difficult to track job creation.
“The people that are investing and are moving their families are relying on us,” Norton said.
The regional centers have become the main flash point in the debate. Critics say their projects receive little federal scrutiny.
Once an investor gives $500,000 and undergoes background checks and an investigation into the source of the money, his or her entire family can enter the United States. But the investor may never see a return, and if the regional center cannot help the investor demonstrate that 10 permanent jobs were created, the government can refuse to remove the conditions on their visas at the end of two years.
“If I didn’t think we could create those jobs, I wouldn’t do it,” said Heise, who also said his investors will see their money back.
Heise, known in Naples as a developer behind CocoBay and Grand Bay at Pelican Bay, said his investors are serious about half-a-million dollars and a shot at American immigration. All of them knew Heise’s reputation through previous business dealings, and they all hire lawyers to review the stacks of pages in Heise’s business plan.
He said one reason his investors committed is that they like his idea: fractional boat ownership. Members will pay upward of $30,000 for the partial ownership and occasional use of any of the marina’s dozens of boats.
Some states have raised the banner of investment visas, hailing the potential job gains. Federal immigration officials estimate the program has led to 34,000 jobs.
In Maine, state economic officials have opened the way for a statewide, state-run regional center. They hope to match the success of the Jay Peak Resort, a ski resort in a depressed area of northern Vermont that U.S. Sen. Patrick Leahy, D-Vt., has hoisted as the program’s poster child. More than 500 foreigners have invested $250 million into the company.
One of them is Anthony Korda, a Naples immigration attorney from London.
“The $500,000 investment is the tip of the iceberg,” said Korda, 50.
Finding it increasingly difficult to leave vacations in Naples, he invested in Jay Peak five years ago and moved to Southwest Florida, where he bought a condo, a house, two cars and is putting his children through school. The subsequent consumerism leads to more job creation, he said.
From an office on Immokalee Road, Korda now helps other investors secure EB-5 visas, including through the Jay, Vt., and Charlotte Harbor regional centers.
In 2006, when Korda invested, the U.S. issued 744 EB-5 visas. In the first three quarters of this year, it issued an estimated 3,706 — a spike, but still nowhere near the 10,000 annual cap on the program.
To promote it, U.S. Citizenship and Immigration Services is streamlining its services, including expedited processing and freeing up its immigration experts to meet with investors.
Gov. Rick Scott, for whom creating jobs is a raison d’etre, Democratic U.S. Sen. Bill Nelson and U.S. Rep. Connie Mack, R-Fort Myers, support the program. A spokesman for U.S. Sen. Marco Rubio couldn’t be reached to say whether he will vote to extend the regional center pilot when it comes up for renewal next year.
A spokesman for Mack issued a statement saying: “He supports the spirit of the program, but would need to review any legislative language to extend the program.”
Scott hasn’t promoted investment visas with the same public flair as some elected officials in New England, and foreign investment isn’t expressly identified on his seven-step jobs agenda. But his office said he wasn’t neglecting the EB-5 visa. While Scott was in Israel last week, Enterprise Florida, the state’s economic arm, gave a presentation on investment visas.
“Gov. Scott promotes all types of visa programs that might help create jobs, including the EB-5 visas,” spokesman Lane Wright said.
In Port Charlotte, pylons supporting new decks jut out of a Charlotte Harbor inlet. The dredging is complete, Heise said. A crane and two excavators on site remain some of the only signs of new construction along a sparse commercial strip.
“It’s gonna hit,” Heise said. “There’s no doubt about it. There’s so much waterfront.”
He expects the marina to open for business sometime in 2013. Ultimately, the regional center will expand, taking on new projects and leading to perhaps more than 1,000 jobs, he said.
Re-posted by Exclusive Visas
Author: PATRICK MCGEEHAN and KIRK SEMPLE – The New York Times | 18 Dec 2011
Affluent foreigners are rushing to take advantage of a federal immigration program that offers them the chance to obtain a
green card in return for investing in construction projects in the United States. With credit tight, the program has unexpectedly turned into a mainstay for the financing of these projects in New York, California, Texas and other states.
The number of foreign applicants, each of whom must invest at least $500,000 in a project, has nearly quadrupled in the last two years, to more than 3,800 in the 2011 fiscal year, officials said. Demand has grown so fast that the Obama administration, which is championing the program, is seeking to streamline the application process.
Still, some critics of the program have described it as an improper use of the immigration system to spur economic development — a cash-for-visas scheme. And an examination of the program by The New York Times suggests that in New York, developers and state officials are stretching the rules to qualify projects for this foreign financing.
These developers are often relying on gerrymandering techniques to create development zones that are supposedly in areas of high unemployment — and thus eligible for special concessions — but actually are in prosperous ones, according to federal and state records.
One of the more prominent projects is a 34-story glass tower in Manhattan that is to cost $750 million, one-fifth of which is to come from foreign investors seeking green cards. Called the International Gem Tower, it is rising near Fifth Avenue in the diamond district of Manhattan, one of the wealthiest areas in the country.
Yet through the selective use of census statistics, state officials have classified the area as one plagued by high unemployment, the federal and state records show. As a result, the developer has increased the project’s chances of attracting foreigners who will accept little, if any, return on their investment in the project if it means they can secure American visas for their families.
A senior federal immigration official, Alejandro Mayorkas, acknowledged in an interview on Friday that the program might need more scrutiny. Mr. Mayorkas and other federal officials said they were concerned that some of the maps that New York and other states were approving might not adhere to the spirit and intent of the regulations.
The Times’s review of the program in New York indicates that several other major projects are also based on questionable maps.
For example, the Battery Maritime Building, at the foot of Manhattan near Wall Street, has been classified as being located in an area that needs help attracting jobs. That designation is the result of a development zone whose outlines resemble a gerrymandered political district, project documents show.
The zone snakes up through the Lower East Side, skirting the wealthy enclaves of Battery Park City and TriBeCa, and then jumps across the East River to annex the Farragut Houses project in Vinegar Hill, Brooklyn.
In fact, the small census tract that contains the Farragut Houses has become a go-to area for developers seeking to use the visa program: its unemployed residents have been counted toward three projects already.
The giant Atlantic Yards project in Brooklyn, which abuts well-heeled brownstone neighborhoods, has also qualified for the special concessions using a gerrymandered high-unemployment district: the crescent-shaped zone swings more than two miles to the northeast to include poor sections of Crown Heights and Bedford-Stuyvesant. A local blogger and critic of Atlantic Yards, Norman Oder, has referred to the map as “the Bed-Stuy Boomerang.”
Since 2008, developers have raised or have planned to raise close to $1 billion on these projects in New York City, according to federal and state records. Almost all of that money would come in increments of $500,000 — much of it from residents of China — and pour into wealthy areas.
In interviews, New York State economic-development officials praised the program but were reluctant to accept responsibility for administering it. Indeed, some state officials who certified projects for the program acknowledged that they did not know what was being built. They said they were following guidance from federal regulators.
“This program serves as a valuable tool to support job-creating projects that will put areas of high unemployment on a continued path to economic recovery and growth,” said Austin Shafran, a spokesman for Empire State Development, the state agency that oversees the program in New York.
Urged on by federal and state officials, investors in faraway places like Shanghai and Seoul along with American developers have been flocking to the program, which was created by Congress during the recession of 1990.
Under the program, known as EB-5, investors receive a visa that provides residency for two years and can be converted into a permanent green card if the holders can show the investment produced at least 10 jobs, even if the project has not been completed.
With the surge in EB-5 projects, many lawyers and consultants, in the United States and overseas, are getting involved. In China alone, more than 500 agents are jockeying to connect wealthy Chinese people to American developers, experts said.
Investors throng EB-5 conferences. Many, successful in their own countries, said they wanted to secure American residency for their children. But the competition has given rise to unsavory practices, EB-5 lawyers and consultants said, like agents who falsely promise guaranteed returns.
The minimum investment in the program was set at $1 million and has not changed in more than 20 years. But if the project is in a rural area or a place where the unemployment rate is 50 percent above the national average, the threshold for investing is $500,000, not $1 million.
By creating development zones that are ruled eligible for $500,000 investments, urban developers are at an advantage in luring contributions.
The zone drawn up for the Gem Tower consists of two census tracts in Midtown Manhattan. According to census figures, the tract that contains the project had an unemployment rate of zero for the last five years.
But the State Labor Department calculated that there were enough unemployed people in an adjoining census tract — one that includes Times Square — to justify calling the small zone an area of high unemployment.
Lela Goren, director general of Extell New York Regional Center, which is helping to raise the EB-5 investments for the Gem Tower, said she could not explain how the tower’s zone qualified as needy. “It qualifies, whatever the numbers, and it got approved,” Ms. Goren said.
The consultants arranging the EB-5 financing for the Battery Maritime and Atlantic Yards projects declined to comment.
Officials in other states expressed dismay over how New York developers were using the program. They said New York was unfairly siphoning off investments from less-developed areas.
“A lot of projects are in areas that are head-scratchers,” said James Candido, an official with Vermont’s Department of Economic Development.
Other states have sometimes not allowed such questionable development zones. California told a developer to relocate a manufacturing plant for a surgical-products company from a more prosperous part of San Jose to a poorer one, said Brook J. Taylor, a spokesman for the Governor’s Office of Business and Economic Development in California.
Federal regulators said states determined whether projects were located in areas of “greatest need.”
“The question is, are the state authorities adhering to the spirit of the law?” said Mr. Mayorkas, the federal immigration official who is the director of United States Citizenship and Immigration Services. “Where is the project being developed, and where are the jobs being created? Are the people from the areas of high unemployment being employed? Because that’s really the purpose. If they’re not being hired from those areas, then the question is justified.”
Mr. Mayorkas, whose staff has been scrambling to keep up with the boom in the program, said in the interview on Friday that he was concerned about allegations of gerrymandering.
If some project designations were not achieving “legislative intent,” he said, “then I think that is something that we need to consider as the laws are reviewed.”
Re-posted by Exclusive Visas
Joe Sloboda, an expert EB-5 consultant and co-founder of Exclusive Visas, will be traveling to Monterrey, Mexico to participate in the last business event of 2011 held by “The Investment Tour” on Thursday, December 1st. The Investment Tour is an investment trade show for business people from Latin America who are interested in expanding business and exploring investment opportunities in the USA.
Starting December 2nd Mr. Sloboda will be engaging in a 4 cities education tour in Mexico this upcoming week. The primary focus of the tour will be to promote the benefits of the American EB-5 visa program, which provides a road to permanent residency for foreign nationals seeking to immigrate to the United States.
To qualify as an Immigrant Investor under the EB-5 Investment Program, a foreign citizen must invest between U.S. $500,000 and $1,000,000, depending on the unemployment rate in the geographical area. The investment must be made into a commercial enterprise (business) in the United States which creates at least 10 new full-time jobs for U.S. citizens, permanent residents, or other lawful immigrants.
One of the USCIS approved Regional Centers, Florida Regional Center, is joining Joe Sloboda on his tour to introduce one of this Regional Center’s current development projects called Harbourside Place. The Harbourside Place project is a commercial retail, restaurant, and hotel development which, when completed in 2013, will be the new “Town Center” of Jupiter, Florida. Mayor, Karen J. Golonka, of Jupiter, Florida has called the Harbouside Place development “ the most important project currently under development in Northern Palm Beach County” and is considered the key to the success of the Jupiter Riverwalk project.
The following are the cities where the EB-5 Seminars will be hosted:
Monterrey – 2 seminars on December 3rd (Crowne Plaza Hotel)
Tuxtla Gutierrez, Chiapas – December 4th & December 5th (Crowne Plaza Hotel)
Veracruz – December 6th & December 7th (Crowne Plaza Hotel)
Mexico City – December 8th (Marriott Hotel)
Following the seminars, Joe Sloboda will host one-on-one meetings to further engage investors and allow them an opportunity to ask any personal questions or concerns they may have.
If you are interested in learning more about the EB-5 Visa program or in attending one of the available meetings in Mexico, please contact Joe Sloboda of Exclusive Visas at +1-954-727-9800 or via email at info@exclusivevisas.com