A Bright Spot For The U.S. Solar Industry Is In The ‘Sunshine State’

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Frank Cestero is in a sweet spot. The Puerto Rican gets to enjoy the warm, tropical weather of Palm Beach County in the US state of Florida, while the small company he works for is booming thanks to robust growth in the global renewable energy sector.

Cestero is the chief financial officer (CFO) of SolarTech Universal, headquartered in the coastal city of Riviera Beach. Founded in 2012, SolarTech‘s panels are made using advanced robotics and solar cell technology designed by the company’s European partner, Meyer Burger, a Swiss firm operating in Germany and Singapore.

Its cutting-edge equipment allows the green energy company to focus on the premium end of the market. That seems to be working out. SolarTech will be adding a second production line by the end of the year, creating an expected 70 new jobs in the process.

“Demand is robust,” said Cestero. “We’re very bullish over the next 24 months.”

Favorable Business Climate

Governments and businesses have increasingly set their sights on harnessing the power of the sun to meet their energy needs. Furthermore, government policy changes in response to climate change have created incentives and mandates at the local, state and national levels.

Technological improvements, meanwhile, have slashed solar power production costs, making it more accessible to commercial and residential customers. Demand for clean power has also been on the rise over the past several years, with consumers seeing the benefits of shifting to clean sources of energy and decentralized power distribution.

Against this backdrop, companies big and small are optimistic about the future. Market players like CED Greentech, a large US solar panel distributor and SolarTech customer, have increased their investments over the past couple of months.

“The market is pretty dynamic,” said Tristan Tedford, a CED Greentech account manager setting up shop in Pompano Beach, a city just north of Fort Lauderdale. “Module prices have dropped and you have an emerging electric vehicle market coming.”

The Trump Tariffs

The industry’s growth and increasing strategic significance, coupled with complaints from American solar manufacturers about unfair trade competition, were all a part of the reason why US President Donald Trump zeroed in on solar panels, among other products, for tariffs in early 2018.

“The tariff narrowed the price gap between the Chinese product and US product and by highlighting the US product, it has increased awareness of US-made products among end-users and middle-market buyers,” Cestero said.

He claims that by the end of this year SolarTech will be the only domestic manufacturer of exclusively US-made panels, with over 70 percent of its inputs sourced domestically. This is significant because it gives a niche player like SolarTech access to the lucrative public sector, as state and local governments strive to meet CO2-reduction targets by increasing public investment in green energy.

Industry Backlash

But some in the US solar industry have aggressively pushed back against Trump‘s tariffs. One example is SunPower, which is majority-owned by French oil giant Total. The San Jose-based company threatened to curtail its new capital investments and slash jobs if it didn’t receive an exemption from Trump‘s tariffs.

The company builds most of its solar products in Mexico and the Philippines and has argued that the millions of dollars it would pay in import duties threatened its growth plans. After months of lobbying the Trump administration, SunPower received an exemption from the tariffs, boosting the firm’s stock price.

A Solar Slowdown?

The latest industry figures value the US solar sector at $28 billion (€24.13 billion). The industry employs more than 250,000 Americans, with about 40 percent of those working in installation and 20 percent in manufacturing. Five years ago, the sector was installing 3,000 megawatts of solar capacity annually. In 2017, the market grew by as much as 10,000 megawatts.

But experts fear this kind of growth will soon be a thing of the past. Dan Whitten, a spokesman for the US Solar Energy Industries Association, said that since January, more than $2.5 billion in solar projects have been canceled and roughly 9,000 American jobs have either been lost or have not been created as a result of the tariffs.

“If demand drops because products are artificially made too expensive for consumers, nobody wins. It’s unlikely that US manufacturing will expand enough to satisfy burgeoning demand,” Whitten told DW. “While we support new US manufacturing, companies are still going to have a hard time competing with products from overseas in the years ahead.”

Made In Jacksonville

China‘s decision to cut back installed solar capacity this year by reducing subsidies has severely affected the global market for solar panels. While surging capacity had left the country struggling to build sufficient national electrical infrastructure, cuts have forced Chinese panel makers to find new buyers overseas.

In March, Florida‘s largest utility NextEra Energy agreed to buy 7 million solar panels from China‘s leading solar maker JinkoSolar Holding. Alongside that agreement, JinkoSolar is building its first US solar panel factory in Jacksonville — Florida‘s most populous city.

Once the factory reaches full production after November, JinkoSolar expects it to churn out more than 1 million panels a year for the US market.

While JinkoSolar‘s new plant will boost overall US production, modern solar panel factories are increasingly automated, and profits will likely flow offshore.

Still, city officials in Jacksonville see the new Chinese investment as a major win for local businesses, particularly in services and logistics. The adjacent port expects to handle cargo shipments of raw materials and solar panel components needed for the new plant’s operations.

“In addition to creating 250 new jobs, we expect that JinkoSolar will expand its economic impact in the Jacksonville area as the demand for solar panels in the US grows,” said Tia Ford, a city spokeswoman.

 

Source: DW

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Miami Chamber CEO Has Unusual Concern: Too Much Building

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The CEO of the Greater Miami Chamber of Commerce has a worry that many civic leaders in smaller and less prosperous areas would like to share: development is plunging ahead at breakneck speeds.

“There’s been so much commercial development in Miami and Dade County, that’s one reason why we made the top 20 list for Amazon,” Alfred Sanchez tells Globe.St. com.

He was referring to Miami earlier this year being named in the final 20 cities for Amazon’s new second headquarters in North America, what they’ve dubbed HQ2. The online giant started out with more than 320 locations and whittled it down dramatically.

“What I really worry about is that development is happening so quickly with such a large volume of stuff that’s going to happen that we get ahead of planned development,” Sanchez says.

Traffic is Growing Issue

One particular concern: congested traffic.

“That’s our number one issue, so that when you live here, you’re not stuck in traffic all day long in the downtown area,” Sanchez says.

He cites promising new commercial developments moving the area forward such as the Chinatown project in North Miami. It was recently in the news as requests were made for proposals from architectural firms.

The Chinatown Cultural Arts & Innovation District is to be comprised of 16 blocks of commercially zoned land along Northwest Seventh Avenue between 119th and 135th streets. The area is to be complete with parks, green space, bike lanes and rooftop gardens, along with pagodas, canals and an entrance inspired by the Ming Dynasty.

Many Major Projects Planned

Another promising project he mentioned: Developer Moishe Mana recently secured a $20.13 million construction loan to build Mana Wynwood Americas-Asia Trade Center & International Financial Center. Mana plans to build a center which will feature 10 million SF of commercial space as a trade hub to encourage and facilitate trade between China, Asia, Latin America, North America and the Caribbean. The project will be built in multiple phases with phase 1 including the development of 8.5 acres of Wynwood with 4.68 million SF of Class A office space, showrooms, retail, hotels and other development.

As for infrastructure keeping up with development, Sanchez cites work by the New World Center committee originally formed by the chamber in 1976. Their goal is to “have a catalytic influence on downtown projects in respect of the public and private sectors.”

An area the chamber is looking at as a priority is traffic.

“You need a master plan and the chamber plays a big part in it. We’re trying to develop transit solutions,” Sanchez says.

 

Source: GlobeSt.

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Bjarke Ingels Group (BIG) Weaves Green Roofs Into A Mixed-Use Development On Stilts In Miami

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Bjarke Ingels Group has unveiled designs for a massive mixed-use development that is elevated into the air on thin stilts.

Located in the central Miami neighborhood of Allapattah, an industrial, working-class district mainly comprised of produce suppliers, the major complex will serve as a new landmark destination in the city.

Dubbed Miami Produce, the project will activate the site with urban farming, restaurants, storefronts, co-working offices, co-living apartments and educational programming.

Click here to view inhabitat‘s rendering slideshow of BIG’s Miami Produce project

 

Source: inhabitat

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How Miami Ranks In Sustainability Development

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It’s time America steps up its sustainability measures around the country, and a new report shows which cities are leading the way.

The Sustainable Development Solutions Network released its second annual report on U.S. city sustainability, which looked at 100 of the most populated metro areas and cities around the nation to record how each city meets the United Nations Sustainable Development Goals (SDG).

According to Fast Company, Senior Adviser for Sustainable Development Solutions Jessica Espey noted that the data from this year’s report cannot be directly compared to last year’s. Instead, she said, this year’s data should be seen as evolving data.

“We did change quite a few indicators either due to data quality concerns, or because we found better data. To the extent that we can, we will use replicable data every year so that we can look at comparisons over time,” said Espey to Fast Company.

The report found that 62 cities are less than 50 percent of the way toward making good on 15 of the 17 SDGs that are applicable to urban areas. The No. 1 metro area, San Jose-Sunnyvale-Santa Clara, was only 68 percent of the way toward meeting those SDGs.

While each city varied on good and bad performances for certain indicators, there were common SDG barriers throughout the nation: poverty, racial inequality, climate interaction and failure to provide residents with healthy food.

The Miami-Fort Lauderdale-West Palm Beach metropolitan area ranked 58 with an index score of 46.44. The only indicator where Miami metro area had a good performance was responsible consumption and production.

The Miami metro area category did see moderate performance indicators on hunger, life on land and sustainability. The area also saw a moderate performance in gender equality, which they ranked No. 2 in overall.

However, similar to every other city on the list, the Miami metro area had poor performance on climate action. The area also needs improvement on affordable and clean energy and clean water and sanitation. By highlighting a common problem across the country, the Sustainable Development Solutions Network hopes that officials will begin to make changes to improve.

“It is hoped that the report will also enable cities to identify peers struggling with similar challenges, and help facilitate a national dialogue on how to accelerate progress,” the report states. “It also offers hope by highlighting cities that are tackling these challenges and can offer inspiration to others across the country.”

 

Source: Miami Agent Magazine

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Miami’s Global Reputation As A Global City Growing

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Miami has long been marked as the Gateway to Latin America. But with a revitalized urban core and a hot retail market, Miami is increasingly being seen worldwide as a global city.

Miami hit a tipping point, per se, a couple of years ago and the growth has yet to slow. With nearly 6 million residents and an economic output of more than $300 billion, Greater Miami is one of the largest economic regions in the US and the world. In fact, Miami is comparable to Singapore and Hong Kong, according to a study from the FIU-Miami Creative City Initiative.

“We already look at Miami as a major global gateway city,” Peter Muoio, chief economist at Ten-X, tells Globest.com. “It is a nexus for tourism and investment for Latin America owing to its large Hispanic population with cultural and language ties to the region. It also has major attachments to Europe, assisted by its attractive climate and beaches.”

As the study points out, Miami is the hub of the Southern Florida or So-Flo mega-region, extending to Tampa and Orlando, which houses 15 million people and produces more than $750 billion in economic output. That’s roughly the same as the Netherlands, making it one of the 20 largest national economies in the world.

With a coastal location at the southern tip of the eastern seaboard oriented toward Latin America and the Caribbean, Miami is now one of the 25 most important global cities, the report concludes. With its international airport and port, report authors say Miami is the economic and financial hub of Latin America and increasingly a gateway to Europe and the world.

“Southeast Florida’s three major airports have global connectivity, assisting in its gateway status,” Muoio says. “Interestingly, Miami can benefit from economic success in Latin America as wealth creation increases tourism and investment flows, as well as from turmoil in the region, as it offers a safe harbor.”

 

Source: GlobeSt.

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Skyscrapers Face The Apocalypse

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On an ordinary day, George Dotzler may deal with wind speeds equivalent to a Category 5 hurricane, torrential rains akin to a monsoon and seismic shifts that feel like an earthquake. Rounding out the day could involve a heat wave and an arctic blast.

Mr. Dotzler, 58, is the director of operations for the Construction Research Laboratory, where builders, developers and architects go to test the durability and stability of glass building facades, called curtain walls. Located at what looks like an abandoned airfield in Miami, the lab has 38 sealed test chambers and all the equipment to replicate the forces of nature.

“It’s like ‘Mad Max’ here,” Dotzler said, referencing the 1979 movie’s dystopian landscape.

A mock-up of a facade at the testing lab.(Photo Credit: Scott McIntyre for The Wall Street Journal)

With skyscrapers sprouting up around the world, demand for structural testing is strong. Big-name architects are increasingly designing towers with quirky shapes, and developers must go to greater lengths to ensure that the unusual curves and crannies can withstand even the harshest conditions. While some testing is required by municipal law, most developers are going the extra mile, since they can’t afford to start mending ruptures and leaks once their buildings are up. Only three or four facilities in the U.S. have experience testing super-tall structures, Mr. Dotzler estimated.

In recent years, the company has been testing 53W53, a 1,050-foot-tall tower designed by architect Jean Nouvel that is under construction adjacent to the Museum of Modern Art in midtown Manhattan. Scheduled for completion in 2019, the 82-story building will have 145 luxury condominiums. The developers—a partnership between Houston-based Hines, Singapore-based Pontiac Land Group and Goldman Sachs —decided on a tapered structure with criss-cross structural framing on the exterior.

“Everything in this curtain wall is bespoke, custom-made for this building,” said David Penick, managing director at Hines. “Every piece of aluminum. Nothing is off the shelf.”

The developers had 6,000 panels of triple-paned glass custom-made by German manufacturer Interpane. Some were incorporated into two mock-ups, which typically include the trickiest, most vulnerable elements of the building, such as the corners, joints and vents, what Mr. Dotzler calls a “Frankenstein arrangement.”

“It’s like a doctor wanting to test a human being by putting together a mock-up with one ear, one nose and one elbow,” Dotzler said.

The mock-up went through a litany of tests. In one of the chambers, both inward and outward pressure was exerted on the glass as part of a water-infiltration test to see how much the design could sustain without cracking or leaking. The pressure was equivalent to about 77.5 mph winds.

Later, a Pratt & Whitney R-2800 aircraft engine with 13-foot propellers was positioned in front of the mock-up. Mr. Dotzler turned on the water spray rack and cranked up the speed of the generator to simulate a dynamic wind load—an effect that’s similar to a hurricane. Researchers then attached a hydraulics system to the structure of the building and shoved segments right and left in an attempt to determine whether they’d be secure in case of an earthquake or wind drift.

“Some of the pressures exerted on these facades far exceed what is likely to occur naturally,” Dotzler said. “If the facade survives these loads, it’s been well-designed and is sufficiently strong. The testing took several weeks and cost about $150,000. No major changes to the facade were made as a result.”

National Certified Testing Laboratories, based in York, Pa., tested a mock-up of an 88-story luxury condo tower scheduled for completion next year in downtown Manhattan. The building, called 125 Greenwich Street, was designed by Rafael Viñoly and features rounded corners.

Steven Della Salla, a managing partner at Bizzi & Partners Development, said his company paid about $210,000 to create the mock-up of 125 Greenwich Street, and another $163,000 for the tests themselves.

Mr. Dotzler said his company also is popular with Hollywood filmmakers, who like to shoot the facility’s post-apocalyptic aesthetic.

“We’ve hosted a couple of episodes of ‘Graceland’ and ‘Burn Notice,’ ” Dotzler said. “But we try to have them only after hours or on weekends.”

 

Source: Wall Street Journal

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Miami-Dade Beacon Council Announces New Jobs And New Chair At Annual Event

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More than 400 people attended a recent Miami-Dade Beacon Council‘s annual meeting at the InterContinental Miami, where business and civic leaders touted the agency’s recent wins and toasted its new chair.

For the first time, the county’s economic development group combined its annual meeting with its key ceremony, providing insights into the companies it helped expand or move to Miami-Dade.

The Beacon Council reported that 46 companies relocated or expanded in Miami-Dade County in the 2016-2017 fiscal year, bringing in more than 2,100 new jobs to the region and generating $209.7 million in new capital investment.

The event marked the first annual meeting attended by the organization’s new CEO and President Michael Finney, who previously served as the president and CEO of the Michigan Economic Development Corporation.

“I’ve been impressed with… the warm Miami welcome,” Finney said. “There is really commonality here and a desire to work with one another that’s in full display.”

One of the key accomplishments highlighted at the event was Amazon breaking ground on an 855,000-square-foot fulfillment center in Opa-Locka in June. The project is expected to open by the end of 2018, and Amazon said the warehouse will bring at least 1,000 jobs to the local economy.

While Amazon was not in attendance at the event, other companies present included online boat marketplace Boats Group, which brought in 80 new jobs to the county and a capital commitment of $1.05 million; and Dunham Bush, a Malaysian manufacturer, which added 51 new jobs and $12.5 million in capital.

The economic development agency also touted its new programs and task forces. Specifically, it mentioned its “Connect and Grow” program, which works to connect entrepreneurs and innovators and their new products and technologies to established businesses.

The Beacon Council‘s new Chair Nelson Lazo, CEO of Doctors Hospital, addressed the audience. Lazo takes over for Jaret Davis, co-managing shareholder of Greenberg Traurig’s Miami office, as the agency marks the start of its new fiscal year.

“It is time we told the new story of Miami instead of letting old narratives define who we are to the world,” said Lazo, after thanking Davis for his service.

Davis received video tributes from the economic development group and the University of Miami, which will honor him for contributions to his alma mater on Nov. 4 during its homecoming game at Hard Rock Stadium. Miami-Dade County Mayor Carlos A. Gimenez was one of many to laud Davis‘ contributions to the county’s economic landscape.

“You’re outstanding and a great treasure…. for everything you have done for this community,” said Gimenez, who then handed Davis a a plaque commemorating Thursday, Oct. 26 as Jaret Davis Day.

Since 1985, the Miami-Dade Beacon Council has assisted more than 1,000 businesses that have created nearly 70,000 direct jobs and generated more than $4.6 billion in capital investments, it said.

 

Source: SFBJ

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Important Commercial Real Estate Lessons From Hurricane Irma

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Insurance coverage is top of mind for Florida’s commercial property owners following the damage left from Hurricane Irma.

Building owners had rushed to review their policies to determine whether they had adequate insurance coverage in place in preparation for the storm.

GlobeSt.com caught up with Tom Kersting, president of the insurance services division of Franklin Street, and Nancy Sheinberg, vice president of insurance services, to discuss how insurance providers are helping property owners navigate their Irma policy claims.

GlobeSt.com: What pre-hurricane steps did your team take to help expedite the claims process?

Kersting: We spent several days on the front end of Irma communicating with our clients, pushing out proactive risk management tips, encouraging them to review coverages and make sure they had their policies readily available post-storm. This information is provided when our clients bind policies, but it becomes important to “refresh” as a major storm approaches. This year we also developed a variety of digital tools so clients can easily get in touch with us and report claims if they have one.

Sheinberg: What we did before the storm really made a big difference. An emergency claims phone system was set up so clients were getting a call back within minutes of submitting a claim. Franklin Street has also developed a proprietary master policy layered program that can save property owners thousands of dollars both regionally and nationally, while meeting all lender requirements. Hurricane Irma is showing that our insurance coverages are solid, so it gives credence to the program.

GlobeSt.com: What type of insurance claims are you getting most frequently?

Sheinberg: What we’re seeing most are trees down and roof damage from fallen trees or water leakage. But we still have many clients in South Florida who haven’t been able to get to their properties to inspect the damage.

Kersting: Much of the damage that has been reported to us has been to our multifamily properties.  Often multifamily assets are wood-framed buildings that are generally not as protected as office buildings.

The majority of our claims are coming from the east side of the state. We still expect more claims to come in, at this point some owners haven’t been able to visit their properties yet.

This is especially the case with out-of-town owners who may have difficulty getting access for a few more days. In other cases, it’s common for owners to be aware of damage but they haven’t decided yet if they want to report a claim or go about funding repairs themselves.

GlobeSt.com: What are some important lessons learned from Hurricane Irma?

Kersting: From an insurance stand point, there haven’t been major insurance claims incidents in Florida for over 10 years. An event like Hurricane Irma makes policy holders reevaluate their insurance coverage and take a hard look at their deductible levels.

These are conversations that need to be had, we don’t want our clients to be surprised in a time that they turn to their insurance carrier for help.  We continuously push to educate our clients about their coverage options and show them how their insurance policy will be a valuable tool to protect their balance sheet, not simply an expense burden that appeases a lender.

(There are legal issues involved in filing insurance claims of which you may not be aware. Find out what you must know now to avoid felonies.)

 

Source: GlobeSt.

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Feds Widen Their Hunt For ‘Dirty Money’ In Miami Real Estate

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Wake up and smell the dirty money.

That’s the message federal regulators are sending to the real estate industry in Miami and other high-priced housing markets,

The U.S. Treasury Department announced it would extend and expand a temporary initiative designed to uncover criminals laundering money through real estate. The decree targets secretive shell companies — corporations that don’t have to reveal their true owners — buying luxury homes. The feds have already renewed the rules twice since announcing them in January 2016,

But this time, there’s a big difference — and it’s putting Miami’s struggling condo market under even more scrutiny.

The rules, previously so limited in scope that they applied only to a few hundred deals, will now cover every big-ticket cash transaction by shell companies in seven major markets. They are the South Florida counties of Miami-Dade, Broward, and Palm Beach; all five boroughs of New York City; San Antonio, Texas; Honolulu (included in the order for the first time); and Los Angeles, San Diego and San Francisco.

“This is going to gather much more information,” said Andrew Ittleman, a South Florida attorney who specializes in anti-money-laundering laws.

There’s been speculation about whether the administration of President Donald Trump, a former real estate developer, would double down on an initiative pushed by Obama-era officials. But the new policy shows Trump’s Treasury digging even deeper into the murky world of luxury real estate.

The end result: It’s going to get a lot harder for everyone from drug dealers to Latin American politicians to foreign royalty to shield purchases of U.S. condos and mansions from law enforcement.

The federal decree comes at a bad time for Miami real estate. Overbuilding and a slump in foreign buyers are hurting sales. The average sales price for luxury condo units in Miami Beach fell 21 percent year-over-year in the second quarter of 2017, according to a report from brokerage Douglas Elliman. Two-thirds of those sales were cash.

The rules kick in at different price points depending on the market. In South Florida, they apply to shell companies buying homes for $1 million or more with cash.

“This will help a market that has long neglected the amount of criminal activity taking place in the condo sector,” said Jack McCabe, a South Florida real estate analyst.

But Peter Zalewski, founder of the real estate advisory company Cranespotters, thinks the government is moving too slowly — and not going far enough.

“If you’re closing a $10 million sale and you stand to make $1 million on the deal, that’s a pretty big carrot,” Zalewski said. “And there’s no fear of a government stick, because there isn’t one in place.”

Bark Or Bite?

Critics dismissed Treasury’s original anti-money laundering rules — first deployed in Miami-Dade and Manhattan last year — as so narrow that they were practically toothless.

That’s because only less common methods of cash payments such as money orders, personal checks and hard currency had to be reported. But the latest order includes wire transfers, which are electronic exchanges of money between banks. In most home sales that don’t involve bank loans, money is sent from buyers to sellers through wire transfers. Regulators were missing out on a huge swath of transactions.

“It exempted most people from disclosure,” said Alan Lips, a partner at Miami accounting firm Gerson Preston. “In today’s world, people wire money.”

Until an act of Congress earlier this summer, the Treasury agency behind the initiative, the Financial Crimes Enforcement Network (FinCEN), did not have the authority to monitor wire transfers.

John Tobon, who leads a team of Department of Homeland Security investigators in South Florida, said the move is a crucial first step in allowing law enforcement to monitor funds moving electronically. After the first order, his agents observed home buyers immediately come up with “countermeasures” to avoid the disclosure requirements, including the use of wire transfers, Tobon said.

“Wire transfers were wide open” for abuse by criminals, “and no one was looking at them,” Toban said. “Now, we’re going to be able to identify companies and individuals that we had no idea about in the past.”

FinCEN is targeting cash home deals because it says they are most susceptible to money laundering. Cash transactions generally don’t involve heavy bank vetting. When banks give out mortgages, they are required to background their customers; professionals in the real estate industry are exempt from those responsibilities, although that could be changing.

Naughty Or Nice

As part of FinCEN’s latest push, the agency has told real estate industry professionals they should be on the lookout for suspicious activity from their clients.

“The misuse of shell companies to launder money is a systemic concern for law enforcement and regulatory agencies,” the agency wrote in an advisory to real estate agents, brokers, lawyers and other industry players.

It also encouraged them to report suspicious activity involving clients. Warning signs of bad behavior include clients willing to blindly overpay or lose money on a deal; the purchase of properties with “no regard” for their condition or location; funding that far exceeds a client’s known wealth; and clients asking for unwarranted secrecy or for records to be altered.

David Weinstein, a former federal prosecutor in South Florida who now practices white collar criminal defense, called the advisory “heavy-handed.”

“FinCEN is asking people who are not financial institutions and have no outright obligations to become an arm of the government, to become informants for them,” Weinsten said, “They’re sending a not-so-subtle message: We want you to tell us what’s going on. The implication is that if you don’t do this, we’re going to come after you and start squeezing you and say in our eyes you should have known what was going on. You should have vetted this money.”

Although real estate professionals aren’t required to set up compliance programs, no one is allowed to “willfully” turn a blind eye to money laundering, according to federal law. Weinstein recommended that realty firms consider implementing basic compliance programs.

Ron Shuffield, CEO of EWM Realty International, says the new requirement means closing agents must confirm the name and address of beneficial owners with a 25 percent stake in a corporation or limited liability company via a legal form of ID, such as a passport or driver’s license.

“There’s no legitimate buyer who’s going to feel uncomfortable with this,” Shuffield said.

The degree to which suspect money fuels Miami’s luxe real estate market is debated. But real estate crops up in case after case involving illicit funds. The release of the massive trove of offshore files known as the Panama Papers showed how easily offshore money moves into Miami real estate. The flood of cash has helped raise home prices far beyond what most locals can afford.

In FinCEN’s advisory, the agency highlighted several cases showing the threat posed by money laundering. One example cited was Venezuela’s vice president, Tareck El Aissami, and his associate, Samark López Bello. Both were sanctioned by U.S. authorities for their alleged involvement in narco-trafficking. López Bello owns three Brickell condos valued at nearly $7 million.

Tobon, of Homeland Security, said roughly 50 percent of his investigations involve money laundering through real estate.

The new order takes effect on Sept. 22 and expires on March 20, 2018. It could eventually be made permanent and expanded nationwide. The Washington, D.C., bureau of the Herald’s parent company, McClatchy, broke the news that the order would be extended Tuesday.

Achilles’ Heel

The FinCEN initiative — called a geographic targeting order — was designed to target the Achilles’ heel of American anti-money-laundering laws: weak transparency rules for limited liability corporations.

In many states, including Florida, it’s possible to set up an anonymous company and use it to buy a pricey mansion or condo. Offshore companies can be used for the same purpose. That’s catnip to criminals who don’t want anyone asking where they got the cash.

FinCEN changed the game by requiring title insurers — which are involved in almost all real estate transactions — to pierce the veil of shell companies and determine who really owns them. The information is not made public.

Because of the limitations of the original rules, roughly 240 transactions in the target markets were reported to regulators over 12 months, according to FinCEN data. But 30 percent of those sales were linked to people who’d been separately reported for suspicious activity by financial institutions.

In Miami-Dade, 16 of 32 reported deals were linked to suspicious buyers.

“They’re going to capture a lot more activity now,” said Jason Chorlins, a risk advisor at Miami accounting firm Kaufman Rossin. “The majority of this activity is done via wire transfer.”

 

Source: Bradenton Herald

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They’ve Paid For Lots Of Miami Buildings But These Visas May Vanish

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A federal program that has help fund dozens of big new South Florida business projects over the past decade by swapping U.S. visas and green cards for foreign investment dollars is teetering on the brink of political extinction, according to its supporters.

The EB-5 visa program, which by the estimate of the investment community has funneled more than $18 billion in overseas cash into U.S. business development since 2008 — including hundreds of millions of dollars in Florida — will expire on Sept. 30 unless Congress renews it.

Some of the ongoing high-profile projects that are using EB-5 funds include Florida East Coast Industries’ eagerly awaited Brightline MiamiCentral, the mixed-use downtown Miami station for the upcoming All Aboard Florida passenger rail service. A deal for $130 million in EB-5 funds will go toward the plaza’s 180,000 square feet of retail space.

SkyRise Miami, the ambitious 1,000-foot skyscraper/tourist attraction planned by developer Jeff Berkowitz to launch in 2020, would also include EB-5 funds as part of its $430 million budget.

But the EB-5 faces congressional critics who want to amend the program into oblivion or even it kill it outright. And even to get a fair hearing, it must compete for attention with the always-contentious federal budget, President Trump’s tax-reform proposal and a score of other high-priority items with upcoming deadlines.

“I think Sept. 30 is the drop-dead for renewal,” said Miami immigration attorney Tammy Fox-Issicoff, who frequently works with EB-5 investors. “And I mean that’s the drop-dead date for a full renewal. We’ve had a number of short extensions. That’s killing the program’s credibility with foreign investors who might like to join. Nobody wants to put half a million bucks into something that might be gone in three months.”

What is EB-5?

EB-5 visas were first created in 1990 as part of a larger congressional reform of immigration policy. They allow a foreigner who invests $1 million in a project that will generate at least 10 long-term jobs to get a visa and a green card if the project is completed. The required investment drops to $500,000 if it’s directed at a high-unemployment area.

But EB-5s didn’t really take off until 2009, when the Great Recession dried up commercial lending around the United States. As banks and other traditional credit sources retrenched, businesses started using EB-5 investment to patch the holes they left.

“As a result of those absences, you had to look for alternative sources of financing,” said Michael Conaghan, chief operating officer at Fort Partners, the developer of the Four Seasons Hotel and Private Residences at the Surf Club in Surfside. Conaghan is raising up to $200 million in EB-5 money to build a Four Seasons hotel-residence in Fort Lauderdale. “Since then, EB-5 has proven to be a good source of financing for projects. It also brings new people and new capital and new jobs to the country. A lot of other visa programs focus on people who are already here.”

EB-5 critics say it’s an inefficient investment tool, a needless subsidy to wealthy developers, and an easy target for manipulation and corruption.

“What it mostly does is it saves money for a lot of folks who are already rich and are just getting richer,” said David North, a senior fellow at the Center for Immigration Studies, a Washington think-tank that’s harshly critical of immigration.

But what nobody disputes is that from beer joints to giant train lines, EB-5 funds are fueling economic development and local businesses in South Florida at an increasing rate. According to the latest figures available from the industry trade organization Invest in the USA, EB-5 investment throughout the state shot up from $10,500,000 in 2011 to $150,500,000 in the fiscal year 2013.

The precise impact of the EB-5 is nearly impossible to measure because the government keeps few statistics on the program. No one knows exactly how many EB-5 projects have succeeded, how many failed, or how many jobs have been created.

But the money definitely ripples through other economic measures. Invest in the USA estimates that the total gross domestic product contributed to Florida by EB-5 projects grew from $15 million to $179 million. State and local tax revenue went from $858,822 to $10,918,299.

Mezzanine Funding

Usually, EB-5 money serves as what developers call “mezzanine funding,” which fills the gap between what banks will finance and a project’s total cost.

“In a typical project, the developer is going to have some of his own money involved, maybe 20 to 25 percent of the total cost,” said Ron Klasko, a Philadelphia lawyer who has worked on 10 EB-5 projects in South Florida and hundreds across the country. Another 40 percent or so will come from a construction loan — what’s called the senior loan. And the other 35 percent is the mezzanine loan.”

Mezzanine loans obtained from a bank or other traditional lender might charge 14 to 18 percent. But because EB-5 investors are interested in getting their green cards, they are willing to accept a tiny fraction of that, often between 1 and 3 percent interest.

Funding for these projects is usually put together by federally designated business enterprises known as EB-5 centers that act as conduits for the program’s investment money. As recently as 2010, there were less than 100 EB-5 centers around the United States; now there are more than 850. Although they finance everything from farms to body shops, most of their money goes into real estate projects. In Florida, that has included everything from small businesses to mammoth developments.

Doug Rudolph, the CEO of Tapco Restaurant Group, says its first two Tap 42 Craft Beer Bar & Kitchen restaurants — the Boca Raton location, which opened in 2015, and the Coral Gables spot, which opened in 2016 — each used $2.25 million in EB-5 money, or 80 percent of their total construction costs.

The group’s other two locations — one in Midtown, which opened in June, and an upcoming spot at the Aventura Mall expansion — used $2.5 million each. Rudolph said the three existing restaurants have created “three to four times” the number of jobs required under EB-5 rules. That number varies depending on the size of the investment.

“People who want to invest in businesses that are creating jobs can touch and feel and meet us,” Rudolph said. “They can come into one of our restaurants and eat there, so they know exactly what they’re investing in. Most EB-5 investors intend to live in the same city as their investment, and they like the idea of being part of a local business. They feel closer to their communities.”

The $200 million mixed-use Hollywood Circle development, currently under construction on a 3.2 acre lot on U.S. 1 and Hollywood Blvd., will be composed of a trio of residential towers that will include a boutique hotel, gourmet restaurant, parking garage and a Publix supermarket. The budget includes $109 million in EB-5 funds.

The project is being developed by the Gold Coast Florida Regional Center, which was created in 2010 as a way to fill the void left by the departure of Lehman Brothers, Morgan Stanley and other big financial players from the real estate scene after the 2008 recession.

“We buy money just like plywood for development,” said Charles Abele, a founding partner of Gold Coast. “It’s one of the commodities needed to do what we do, so we decided to raise our own equity. EB-5 serves as a sweetener for every deal.”

Unexpected Benefit

Developers of the 60-story Paramount condo tower at the Miami Worldcenter mixed-use project under construction in downtown Miami say that EB-5 visas have been not a key element in their financing more than $50 million of it — but they say they have become an unexpected marketing tool for the project.

“Four of the 10 units we sold in June went to someone who came to the sales center intending to buy an EB-5 and bought a condo instead,” said Peggy Fucci, president and CEO of the real estate firm OneWorld Properties, the exclusive broker on the Paramount tower. Potential EB-5 investors have pockets deep enough to buy a condo at the tower, where prices start at $700,000.

Curiously, despite the tumultuous state of the U.S. debate over immigration, very little of the criticism of the EB-5 concerns the visas themselves or the 10,000 foreign investors and their family members (the annual cap on EB-5 immigration set by law) who use them to get into the United States each year.

“Most people don’t realize that a million immigrants come into the country each year,” said North, a strong critic of the EB-5. “In the context of a number like that, 10,000 is nothing, a drop in the bucket.”

A much bigger sticking point is what nearly everybody, including the most enthusiastic backers of the EB-5, admits is the program’s inefficient administration by a lumbering immigration bureaucracy that knows lots about visas but very little about cash flow, capitalization or anything else that goes into real estate development.

“The immigration component of the EB-5 program is trivial,” said Philadelphia attorney Klasko. “The EB-5 program doesn’t belong with the immigration service. Immigration officials don’t normally deal with reviewing securities offerings or economic reports or business plans. It creates problems at several levels. When you’re talking about the pace of business — especially in real estate development — it just doesn’t make any sense for immigration officials to say, ‘File your plan with us today and we’ll review it in a year and half.’ That’s not very realistic. But that’s the reality.”

An Uneasy Mix

The EB-5s uneasy mix of politics, business and immigration can lead to practices that are dubious in all three areas. One of the things most frequently denounced is what EB-5 players call “gerrymandering,” after the legislative practice of creating grotesque-looking districts to give one party or another an election advantage.

In the EB-5 version of gerrymandering, developers use tortuous geographic logic to link luxury developments in upscale metropolitan areas with blighted, poverty-stricken districts miles away. That allows them to get access to EB-5 money that’s intended for high-unemployment areas. Because the high-unemployment EB-5 investments can be smaller ($500,000 instead of $1 million), they are more plentiful.

The linkage is possible because the EB-5 law permits the developers to create so-called targeted employment areas, without regard to how large or misshapen they are, as long as the territory consists of adjacent U.S. Census tracts (small areas that are home from 1,200 to 8,000 people).

“We need more regulation on this,” said Rodrigo Azpurua, head of the Riviera Point Development Group, a Broward firm that has raised more than $53 million in EB-5 funds since 2012 to partially fund projects such as the Riviera Point Business Center Doral and the Radisson Red Miami Airport. “Right now, you can pretty easily build a line of Census tracts from Liberty City, where the unemployment rate is 20 percent or so, to Brickell, where it’s zero, and use the Liberty City unemployment to justify a luxury hotel in Brickell.”

Azpurua’s Brickell-to-Liberty City example is, if anything, understated. A 2015 lawsuit in Texas brought to light a targeted employment area that stretched through 190 Census tracts and five counties to link the battered, unemployment-plagued city of Brownsville with a planned upscale hotel in the city of Laredo, 200 miles away.

Not everyone agrees that the Where’s-Waldo? games with Census tracts are a problem. Immigration attorney Fox-Isicoff argues that the location of a project has little connection with where it will create jobs.

“I work on Brickell, but I live in North Miami,” Fox-Isicoff said. “I must drive through 12 or 15 or 20 Census tracts on my way to work each day. Same thing for most of the people in my office.”

And geography becomes even more irrelevant, she says, when the subject is so-called induced jobs — say, the people working in distant factories who manufacture the brick and steel and window glass that go into the construction projects.

“Those are all allowed to count toward the 10 jobs that must be generated by an EB-5 investment,” Fox-Isicoff said. “Does that mean every EB-5 project has to be built next door to a brick factory?”

The Gerrymandering Situation

Others, however, believe that EB-5 gerrymandering is part of a larger problem — that the allure of a potential visa makes investors look past red flags that something is awry. In recent years, EB-5 investors have been victimized in staggering corruption cases in Vermont and South Dakota in which the middlemen packaging their loans ran off well over $100 million of their funds or lost it in unauthorized investments.

The investors not only lost their money (a total of well over $100 million) but their visas, which aren’t awarded unless an investment program is successfully completed.

“It’s true that you can have a Bernie Madoff situation in any investment, with crooks taking your money,” said North. “But the likelihood in an EB-5 investment is greater because the intent of the investment is greater. A bank making a loan is looking for a good investment with solid security. EB-5 investors would like to have their money back eventually, but what they really want is the visas. And they don’t pay much attention to anything else.”

Fox-Isicoff agreed: “Inherent in the EB-5 program is the element of risk. The element of, ‘This may not work. You may not be paid back.’ People lose sight of that fact.”

The bureaucratic delays in the EB-5 program only make matters worse.

“Developers can’t wait two years before they start getting their money from investors, so a lot of times people are making their investment before the government has even reviewed the project,” noted Klasko.

The clumsiness of the EB-5 as an economic tool has led some to suggest that it be replaced with a program that simply sells a certain number of U.S. green cards, just as some two dozen other countries around the world offer citizenship for cash.

The government could use the receipts to create jobs programs wherever they were needed, not just in the high-profile urban areas that developers favor. (A pair of 2016 studies by New York University scholars of the 52 largest EB-5 projects in America since 2009 showed that nearly 40 percent of their money went to a single borough of New York City: Manhattan.)

“If we’re going to prostitute our visa process, let’s get a lot more money for it,” said North. “I’d run an auction. Charge whatever the market would bear. Let the government keep the money instead of giving it to big developers.”

EB-5 Opponents

That’s not one of the proposals on the table in Congress. Those range from killing the EB-5 visa outright to drastically raising its price — which might kill it anyway, many EB-5 supporters say. And although President Trump’s aversion to immigration is well known, the proposals to curtail the EB-5 originated well before his election.

Before President Obama left office, the Department of Homeland Security, which oversees the EB-5 program through its United States Citizenship and Immigration Services office, proposed a series of changes that would raise the minimum EB-5 investment from $500,000 to $1.35 million.

“If the cost goes above $1 million, that’s going to seriously impact the program,” said attorney Randy Sidlosca, a partner in the EB-5 Immigration Investor Program Practice at Cozen O’Connor in Miami. “People just don’t want to part with a million dollars for five or six years, which is how long it usually takes to get your money back from an EB-5.” Sidlosca favors a compromise increase to $850,000, which is gaining support in the EB-5 community. “We can live with that,” he said. “Change is going to come, it’s inevitable, and we need to accept that.”

Compromise is possible, said Ronald Fieldstone, one of the most active EB-5 attorneys in Miami, because the fight about EB-5s is about money rather than ideology, a subject Congress knows how to negotiate.

“This isn’t about Trump and people who don’t like Trump, or Republicans and Democrats, or pro-immigration and anti-immigration,” Fieldstone said. “It’s about rural versus urban. The most combative opponents of EB-5 are people like Iowa’s Republican U.S. Senator Charles Grassley, whose state gets almost none of the EB-5 money because of the way the program has been administered. … I think this can get worked out.”

 

Source: Miami Herald

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