Thursday, September 23, 2010

Forest City Ratner's green-cards-for-investments scheme is part of a pattern (MTA, Beekman), but job-saving claims demand scrutiny

Forest City Ratner's green-cards-for-investments scheme is still pretty baffling. How exactly can they claim that using Chinese millionaires' money to pay off their land loan counts as creating or preserving jobs?

Sure, there has to be a document that makes that claim--and Forest City Ratner and partner the New York City Regional Center should make it public.

I suspect it essentially will say that by allowing the project to go forward it preserves jobs.

But that suggests that only this infusion of capital keeps the developer from moving ahead.

That can't be true. It's a business decision.

Parent Forest City Enterprises has more than $467 million in cash and credit capacity, according to its 9/8/10 earnings release. If it had to spend the money, it would.

It would rather not. That's understandable. Corporations are supposed to maximize value to their shareholders.

But the goal of the EB-5 program is economic development, not developer bailouts. So the press and the United States Citizenship and Immigration Services (USCIS) should take a close look.

Part of a pattern: MTA & Beekman

The EB-5 visa plan should be seen as part of a pattern in which Forest City Ratner seeks to drive a very hard bargain.

Last year, the developer renegotiated the deal for the Vanderbilt Yard with the Metropolitan Transportation Authority (MTA).

The MTA likely had the developer over a barrel rather than vice versa, because FCR had a very tight deadline to get tax-exempt bonds issued by the end of the year. But the board members, following the lead of their political patrons (the mayor and the governor) went along with it.

And Forest City Ratner put the Beekman Tower on hold so it could renegotiate with the unions.

"We have put additional vertical development on hold while we assess overall costs," Forest City Enterprises CEO Chuck Ratner said 3/31/09. "Given falling construction costs, we have an opportunity to achieve savings on construction."

Now they have an opportunity to achieve savings on financing. But they're not negotiating with the MTA or the unions. They're claiming they're saving jobs that wouldn't be saved without the new money, the money lured by green cards.

That claim should be tested.

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