She said the Hollo project will be crucial for getting Miami’s EB5 designation approved in Washington, but that the program will be open to all local businesses that qualify. She sees the city’s effort as a way to make EB5 funding more affordable to Miami busineses that don’t have the funds to pursue an EB5 designation in the private sector.
Other governments have gotten into the EB5 business, too. Dallas set up an EB5 center in 2009. Vermont’s governor, Pete Shumlin, was in Miami recently to pitch his state’s EB5 program to visiting investors.
Miami will set up a committee of city department heads to screen potential projects EB5 for consideration, followed by approval by a panel of outside experts on the program, Canton said. “We really want to have a strong say in the projects,” she said. “We want to make sure the projects do create jobs and spur economic development. ”
The details remain in flux, but she said business owners like Hollo would pay a fee for using the city’s EB5 “regional center,” which is the entity that can forward projects to Washington for approval. Developers also will bear the expense of finding investors overseas and getting the project approved by immigration officials.
Hollo will initially pay about $25,000 to be the debut EB5 project for Miami, with the city kicking in about $40,000. Future participants would likely pay more, Canton said.
In an interview, Hollo said he would not have trouble obtaining financing without the city’s EB5 program and at a lower interest rate. He said his participation is tied mainly to Miami wanting a big venture to win approval for its EB5 certification in Washington. Once certified as a “regional center,” Miami’s EB5 organization can then raise money overseas for multiple ventures and submit them for approval to Washington.
“This is the poster child for the program,’’ Hollo said.
Critics see the national EB5 program as more about wealthy foreigners jumping to the front of the green-card line, ahead of immigrants chasing visas tied to obtaining and securing employment in the United States. Each visa category has its own cap, so the popularity of one doesn’t affect limits on the other. But EB5 visa holders have much more flexibility when they come to the United States than do the traditional green-card holder. Most immigrants with green cards must maintain employment or risk deportation. But EB5 visa holders can hold a green card indefinitely without the need for work, provided the jobs tied to their projects get certified by Washington. A successful EB5 applicant can obtain a green card, plus visas for a spouse and their children under 21.
The system has no requirements for creating well-paying jobs, though high salaries help developers claim more economic impact. Attorneys like Hart who sell the investment slots can take credit not just for jobs on a business’s payroll, but also for “indirect” job creation from the money a business generates. And the investment dollars that pour in can mean healthy profits for developers, without the normal restrictions and costs associated with traditional financing from a bank or domestic backers.
“Frankly, it’s cheap capital,’’ said David Schubauer, a securities lawyer with Bilzin Sumberg who has worked on local EB5 projects. While most investors expect at least 8 percent back on their initial investment each year, Schubauer said he finds the typical EB5 applicant is happy with earning a return of only 1 or 2 percent.