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A proposed bill in Florida that would dramatically restrict investment in real estate from Chinese buyers and those from other communist countries could have ripple effects on the rest of the foreign buyer market, experts say.

Florida lawmakers are advancing controversial House Bill 1355, which would ban Chinese nationals from purchasing real estate anywhere in the state. Chinese businesses and people who live in China and aren’t U.S. citizens or residents and who currently own real estate in Florida would not be able to buy additional property after July 1, if the bill becomes law as it is currently written.

They would also have to register their existing ownership of such properties with the state, which some critics have compared to Hitler’s 1938 decree requiring all Jews in Germany and Austria to register their properties.

The amount of Chinese investment in South Florida real estate has dwindled since before the pandemic. But Chinese investors still invest in commercial real estate, such as shopping centers and office buildings, and parents continue to buy condos for their children who attend colleges and universities in South Florida, brokers say.

“As it stands, the Florida bills could make it difficult for families to purchase homes for students studying in Florida,” said Ana Bozovic, founder of real estate data firm and brokerage Analytics Miami. “Is that something we really want to restrict?”

Rep. Katherine Waldron, a Democrat who co-sponsored the bill, said it would likely be changed to carve out Chinese students, the Miami Herald reported.

Waldron said, “We’re not trying to cause anybody harm who lives here.” 

The bill would also ban foreign nationals from Russia, Iran, North Korea, Cuba, Venezuela and Syria from purchasing agricultural land in the state. And it would ban foreigners from those countries from buying land within 20 miles of a U.S. military installation or critical infrastructure facility.

“I understand restricting farmland for purposes of national security, but I think we are on a potentially slippery slope of defining anything and anyone Chinese as potentially insidious,” Bozovic said. 

Lawmakers across the country have sounded the alarm on foreign influence over agricultural production and national security in the U.S., but a Forbes article published in March states that 18 other countries own more agricultural land nationwide than China.

In Florida, foreign nationals own about 6 percent of all private agricultural land, according to the state’s analysis of HB 1355. The analysis, published on Wednesday evening, said that the bill could have a major impact on property ownership because it would allow the state to “seize and sell illegally owned property.”

It’s important to note that the proposed law would likely not have an effect on foreign investors participating in the federal EB-5 real estate investment program, unlike what other publications have reported.

“The proposed bill should not have any effect on the EB-5 program, since the EB-5 investor invests in an entity that usually makes a loan to a business or project, which may or may not be real estate,” said attorney Ronnie Fieldstone, a partner at Saul Ewing in Miami. 

Craig Studnicky, CEO of the brokerages ISG World and Related ISG, agrees with the restrictions on land purchases near military installations and infrastructure facilities, but said the ban on all real estate deals for Chinese investors is going “too far” and “highly discriminatory.”

Several years ago, brokers were known to send real estate agents to China to sell South Florida condo developments — Studnicky’s ISG included. The brokerage partnered with a Chinese group in 2015 to court Chinese buyers, even adding a Mandarin-speaking member to its staff.

But that effort from South Florida brokers died down, and even major development sites purchased by China City Construction in Brickell and Miami Beach have since been sold.

Only seven properties in Miami-Dade County are owned by people or entities with Chinese mailing addresses, according to The Real Deal’s analysis of property appraiser information. That’s just a small fraction of the properties entirely or partially owned by Chinese investors. Many foreign investors will typically create a company in the U.S. and use that company to buy real estate, with a U.S. mailing address.

Chinese buyers accounted for 6 percent of all foreign U.S. residential real estate purchases from April 2021 to March 2022, according to the National Association of Realtors. Buyers from China, Hong Kong and Taiwan spent $6.1 billion on those deals.

Jason Damm, an assistant professor at the University of Miami’s business school, doesn’t think the restrictions would affect the real estate market. Latin Americans make up the majority of foreign investors in Miami real estate.

“It would be difficult to imagine it’s going to make a huge dent in our market,” Damm said. “It’s more of a political statement than anything.” 

Daniel Ettedgui, owner of Miami Beach-based lender and mortgage brokerage firm Financial Triangle, flew to Tallahassee on Wednesday to speak out against the proposed legislation, drawing parallels to Nazi Germany and calling the bill racist.

Ettedgui, who moved from France more than 30 years ago, expects the proposed law would send a message to people from other Asian countries to avoid investing in Florida real estate, and it could also discourage European investment.

“If you do that today with the Chinese, what’s next?” he said. “History is repeating itself.”

 

Source:  The Real Deal

 

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Less than three weeks after being filed, a bill blocking China and six other “countries of concern” from buying or holding interest in land within range of strategic sites in Florida is heading to the Senate floor.

The Senate Rules Committee voted unanimously to advance the measure (SB 264), a priority of Agriculture Commissioner Wilton Simpson intended to safeguard state security against foreign threats.

Countries named in the legislation — which also includes provisions to protect Floridians’ health information — include China, Cuba, Iran, North Korea, Russia, Syria and Venezuela.

If passed, the bill would ban the governments of those nations and businesses based there from owning real property within 20 miles of “critical infrastructure.” That includes military bases, water treatment facilities, power plants, emergency operation centers, seaports, telecommunication facilities, police stations and other such structures.

Tampa Republican Sen. Jay Collins, a decorated Army Special Forces veteran and the bill’s sponsor, said the measure “does a very good job of protecting our strategic-level interests.”

“We’ve talked about the humanities issues around the world,” he said. “Frankly, there are people who just don’t believe in the American dream and the American way of life.”

As an added layer of protection, Collins’ bill — as well as a House version (HB 1355) by Republican Rep. David Borrero and Democratic Rep. Katherine Waldron — would require documentation from potential buyers attesting their good intent. Any entity purchasing agricultural or real property within 20 miles of a military base or critical infrastructure must provide an affidavit affirming compliance with the proposed law, which would go into effect July 1.

The bill also bars government agencies in Florida from entering into contracts with those seven countries for services that include access to personal information.

Similarly, it would also require health care providers to ensure that the repositories for their patients’ digitally kept records are located within the United States. An amendment the panel approved Wednesday expanded that proviso to also allow storage of that data in U.S. territories and Canada.

Beginning Jan. 1, 2024, any company bidding on government contracts involving access to Floridians’ personal information would have to provide a signed affidavit asserting a foreign country of concern does not own the company or hold a controlling interest in it.

Miami Springs Republican Sen. Bryan Ávila, a lieutenant in the Florida Army National Guard, co-introduced the bill.

According to the U.S. Department of Agriculture, 6.3% of nearly 22 million acres of privately held agricultural land in Florida was foreign-owned in 2021. Senate staff wrote in an analysis that while it is “unclear” how much of that land — roughly 1.4 million acres — belongs to China, “the (federal) department does report that (China) owns 96,975 acres in the ‘South Region,’ which includes Florida.”

SB 264, HB 1355 and a similar but more limited measure (SB 924) Boynton Beach Democratic Sen. Lori Berman filed last month — more than two months after Collins and Borrero announced their legislation — complement an executive order from President Joe Biden. The executive order, which Biden signed Sept. 15, defines additional national security factors the Committee on Foreign Investment in the U.S. must consider when evaluating transactions.

Biden acted in response to growing, bipartisan concern among government officials over protecting Americans’ data, enhancing U.S. supply chain resilience and safeguarding the country’s position as a tech leader.

“The United States’ commitment to open investment is a cornerstone of our economic policy, benefits millions of American workers employed by foreign firms operating in the United States, and helps to maintain our economic and technological edge,” the executive order said.

“However, the United States has long recognized that certain investments in the United States from foreign persons, particularly those from competitor or adversarial nations, can present risks to U.S. national security.”

Isabelle Garbarino, director of legislative affairs for the Florida Department of Agriculture and Consumer Services, signaled support for Collins’ bill Wednesday.

HB 1355 and SB 924 both await a committee hearing.

 

Source:  Florida Politics