bigstock-Two-stylish-beach-chairs-on-id-21204725Miami Trying Something New

The city of Miami, Florida is trying something new and rarely tried before in order to give a boost to its local economy. Using the rules of an immigration program established in the 1990s, the city seeks to attract foreign investors to raise funding for various business developments in the city. In exchange for investing at least $500,000 in a qualifying venture, foreign investors become eligible to receive an EB5 investor visa, granting them right to live and work in the United States.

In addition to funding the projects, the investments are expected to help create several hundred new jobs for Miami citizens. As a stipulation of being awarded an investor visa, the investment made by a foreign investor must create at least ten new jobs for the U.S. economy. In one venture alone, an estimated construction cost of $700 million is expected to be defrayed by about $100 million from foreign investment funds. To date, EB5 investors have already helped build university buildings, restaurants, a limestone mine, and countless other profitable businesses.

Using “Brand Recognition” to Attract Foreign Investors

Traditionally, the business of matching potential foreign investors with U.S. based ventures in need of capital was done by private attorneys and brokers. By stepping into the realm of EB5 investments, the city of Miami is hoping to use its “brand recognition” to attract foreign investors to invest in businesses and ventures that would be good for the city and its citizens.

Miami isn’t the only government entity to set up an EB5 program designed to attract deep pocketed investors; Dallas, Texas has been working with foreign EB5 investors since 2009, while the state of Vermont is currently trying to build up its own EB5 investor program.

In order for a jurisdiction to start its own EB5 investment program, it first has to become designated as a “regional center” – a certification granted by the government. Once approved to serve as a regional center, the jurisdiction can begin collecting investment bids for multiple venture projects at once, and send those bids to Washington for approval.

It’s About More than the Returns

All in all, it appears as if the EB5 investment program is a win/win/win. Foreign investors get their chance at the American dream by being able to live and work in the U.S., American entrepreneurs get the funding they need to get their businesses off the ground, and the U.S. economy gets an infusion of cash and a guarantee of jobs created.

For the foreign investor, a rate of return of about 8% is usually expected, but many are happy earning only about 1 or 2%. In the case of most investors, it isn’t the rate of return that’s important (there are much less expensive ways to earn much higher returns), what is important is the prospect of living and working in the U.S. By becoming eligible for an EB5 visa, a foreign investor can then seek visas for their spouses and children under the age of 21.