I was fortunate to be invited to speak at the City of Miami EB-5 Summit on Affordable Housing a few weeks ago. I was a member of the panel that was comprised of attorneys, economists and other professionals in the EB-5 space. The City of Miami EB-5 Regional Center had sponsored the conference in order to discuss and explore the use of EB-5 capital in developing mixed-use projects that include affordable housing.
Mayor Tomas Regalado gave the key note address. He spoke of the need for affordable housing in the City of Miami and South Florida. According to Mayor Regalado the purpose of the summit was to attract developers and investor capital to projects that include an affordable housing component.
I discussed the use of EB-5 capital in Village Center mixed-use projects. I spoke about how attractive Village Center mixed-use projects are for developers and EB-5 investors. The village center concept includes retail, housing, office space, hotel and a village center. The concept includes substantial green space and pedestrian friendly boulevards. It is meant to be a space for living, working and enjoying life. The Village Center would provide residents with cultural and social activities. That in turn would create the fabric of the community.
Due to a lack of affordable rental housing in Miami the project is one that is financially attractive not only to investors, but also banks that provide construction financing. The abundance of green space in the projects combined with the potential to include health and wellness centers make the space ideal for families and senior citizens.
Currently there are several village center mixed-use projects on the drawing board in the South Florida area. They are slated for municipalities in Coral Gables, Miami and Aventura. All of them provide for rental housing and all include a village center.
During my presentation I stressed that EB-5 projects need to be marketable. Investors are very savvy and look for projects that have the greatest probability of financial success. The concept of the project is important, but so is the capital stack. The most successful EB-5 projects are those where the EB-5 component is less than 30% of the capital stack. Projects that are well capitalized and financed are usually successfully developed. Investors look for an assurance that the project they are investing in will be completed. The completion of the project guarantees the investor their immigrant visa. The return of the investor’s capital is more likely guaranteed in a project that is financially successful. The village center mixed use project is a good option for creating affordable housing in South Florida utilizing EB-5 capital. The City of Miami accomplished it goal of educating real estate developers and others concerning the benefits of EB-5 capital.