In an announcement made last week, Miami City Mayor Tomas Regalado urged housing developers to construct more housing units for groups that have been waylaid to the sidelines in the city's luxury boom. According to a report from wsj.com, the groups the mayor seeks to provide affordable housing to are senior citizens, young professionals, teachers, police officers and other civil servants.
There is an add-on to this call, where the city would be selecting particular projects that would be funded by the federal visa called the EB-5 program. This visa program would grant green cards to foreign nationals who invest at least $500,000 in business and/or construction projects which employ US citizens.
Most of the applicants under the EB-5 visa program are Chinese nationals seeking to obtain US permanent residency. This program has been criticized as it allows foreigners to purchase a line ahead of those that have fallen in line for a green card. Another issue is the difficulty in evaluating whether the projects funded by the foreigners actually meet job creation objectives.
In another report, this time from eb5projects.com, the program which was in place back in the 1990's had only become popular until the last recession had hit the United States, leaving the economy starving for new capital infusions. Now, many cities from San Francisco to Miami have been tapping funds available through the EB-5 visa route.
This is practically a gold mine for developers, as money flows in from China, Europe, Latin America and the Middle East. The real estate developers need not pony up much cash since they obtain the lower proportion of equity in many of the EB-5 visa deals in place. The developer is typically required to provide at most 25 percent of the total project cost.
Not everyone though has acclimatized EB-5 visa funding for affordable housing in the way Miami is planning. Houston, with the lack of a downtown area, does not need the funding for that purpose. All in all, the purpose must justify the means.