Posted by: realtormarkpalace | September 2, 2010

Florida developers look to foreign investors for funds

Florida developers look to foreign investors for funds

HOLLYWOOD, Fla. – Sept. 1, 2010 – Real-estate developer Lon Tabatchnik has ambitious plans for a $131 million, Margaritaville Resort on Hollywood beach that could create thousands of jobs. But with bank financing tight, he’s looking to a nontraditional source of funds: foreign investors who want to live in the United States.

Tabatchnik and his partners are seeking approval to join a federal program that lets foreigners who invest at least $500,000 in certain job-creating ventures to obtain U.S. residency with their families.

The U.S. Employment-Based visas, known as EB-5s, are gaining popularity worldwide, especially among wealthy Chinese who face a backlog to enter other U.S, residency programs and who seek to educate their children in the United States, immigration experts say.

If approved as an EB-5 regional center, Tabatchnik’s group hopes to raise $75 million from 150 investors abroad, working with a Weston-based firm that would market their seaside project in China, South Korea, Venezuela, the United Kingdom and other nations.

If all goes as planned, construction could begin in 2012 on the Jimmy Buffett-inspired resort with its 360 rooms, amphitheatre and other facilities, spurring 3,000 direct and indirect jobs, developers said. “And the cost of financing through an EB-5 raise is much less than traditional funding,” said Tabatchnik.

Across Florida and nationwide, developers are increasingly turning to the EB-5 program to stimulate investment in projects that otherwise might be stalled in today’s slow-moving U.S. economy.

Fourteen EB-5 regional centers had been approved in Florida alone, with more requests like Tabatchnik’s pending. More than 80 are authorized nationwide, said U.S. Citizenship and Immigration Services.

One South Florida center already attracting EB-5 funds is the $10 million build-out of the Marina Blue condominium tower at 888 Biscayne Blvd. in Miami. Developers have raised cash from investors in China, Russia, Colombia and Venezuela to finish a retail section of the building halted during the recession, said attorneys David Hart and Eric Gould of Miami.

“Venezuela is a good market for EB-5 visas, because Venezuelans are leaving their country” amid economic and political turmoil there under socialistic President Hugo Chavez, Gould said.

Marketing also is under way to lure foreign investors to downtown Hollywood for an initial $120 million in projects including a boutique hotel, nearly 400 apartments and retail, said developer Charles “Chip” Abele.

The U.S. government launched the EB-5 program in 1990, but few investors used it at first. Attorneys complained of hefty paperwork and bureaucratic delays in approvals. Requirements for a $1 million investment limited applicants. And at least once case of fraud kept other investors cautious.

But the program has gained momentum, partly because the government let investors qualify for a resident’s “green card” with smaller outlays: $500,000 in an area deemed economically disadvantaged. It also simplified paperwork by pre-approving “regional centers” for EB-5 investment.

The upshot: As developers boost marketing, the number of EB-5 visas approved is swelling. The Department of Homeland Security approved 4,218 of the investor visas in the year ended Sept. 30, roughly triple the 1,443 visas approved in fiscal 2008 and five times the 806 allocated in fiscal 2007.

Some immigration critics, including as the Federation of Immigration Reform, decry the investor visa program. They say foreigners shouldn’t be able to buy their way into U.S. residency and “pay to play.”

But supporters, including the Association to Invest in the USA, call the program is a “win-win,” creating U.S. jobs and aiding foreign investors who are rigorously checked before given temporary US residency in an approval process that often takes six to eight months.

“The United States gets about 1 million immigrants a year. EB-5 is open to 10,000 a year, who are high net-worth individuals, generally well-educated with no criminal record,” said immigration lawyer Larry Behar of Fort Lauderdale. “Is that the kind of immigration we want? You’re darn right.”

Behar has developed a specialized EB-5 unit with a staff of eight who do legal work for proposed regional centers, help market the approved centers and help foreign investors obtain the visas.

He recently returned from a trip to China with the governor of Idaho to tout mining ventures in Idaho approved as an EB-5 regional center. And he’s now seeking approval for what would be the largest EB-5 regional center nationwide: a $250 million cancer treatment hospital in Brooklyn, N.Y.

Not all EB-5 projects succeed, of course. In Palm Beach County, a regional center approved in 2008 has yet to attract foreign investors, partly because a proposed inland port project has stalled and competition for foreign investment soared, said immigration lawyer Al Zucaro of West Palm Beach.

But developer Tabatchnik is optimistic about his Margaritaville resort, thanks to its job potential, brand name and cooperation from the city of Hollywood, which is leasing land for the venture.

“Some EB-5 investors worry if they’ll meet employment requirements, but a hotel creates jobs immediately. And we’ve found,” Tabatchnik added, “some investors are more comfortable when government is involved.”

Copyright © 2010, Sun Sentinel, Fort Lauderdale, Fla., Doreen Hemlock. Distributed by McClatchy-Tribune Information Services.

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