Monday, December 13, 2010

In newsletter, NYCRC finally announces Brooklyn Arena and Infrastructure Project, "in conjunction with" city and state governments

Part 10 of a series

The effort by the New York City Regional Center (NYCRC), the private investment pool federally authorized to accept immigrant investor funds, and developer Forest City Ratner (FCR) to raise $249 million from 498 Chinese millionaires under the EB-5 immigration program may be legal, but there is ample reason to question whether it will serve the public interest.

Part 1 of this series concerned the seven-year extension available on Phase 1 of the project should Forest City Ratner not repay the EB-5 loan. Part 2 estimated the developer could save at least $191 million. Part 3 examined the sales effort in China, with the arena front and center, even though it's already funded.

Part 4 reported on claims made in China, on video and in person, by public officials supporting the project. Part 5 concerned the value of the development rights, contrasted with those in last year's deal for the Vanderbilt Yard. Part 6 described reasons to think the development rights are overvalued.

Part 7 explained why China is such a popular target for those seeking EB-5 investors
. Part 8 provided another reason why the Nets played exhibition games in China in October. Part 9 cited the curious avoidance of Mikhail Prokhorov during the pitch in China.

Part 10 noted NYCRC's belated announcement of the project in a newsletter. Part 11
described misleading promotion in the Chinese media and by Chinese firms working with the NYCRC. Part 12 covered the proclamations that are part of the pageantry in China.

Part 13 concerned the role of the NYCRC's preferred law firm. Part 14 linked the land loan to a previous one from Gramercy Capital. Part 15 analyzed the use of weasel words and ambiguous language. Part 16 took another look at a web video pitching the project.

The wrap-up and FAQ is here.

The New York City Regional Center (NYCRC), as noted in Part 3, has not announced the Brooklyn Arena and Infrastructure Project on its current projects page.

However, the NYCRC's November 2010 newsletter, made available on the NYCRC's web site recently and embedded below, finally offers this announcement:
UPCOMING PROJECTS FOR THE NYCRC
Brooklyn Arena and Infrastructure Project
The NYCRC is pleased to announce another project in conjunction with the governments of both the City of New York and State of New York.
Located at the Atlantic Yards development site in Brooklyn, this $1.4 billion Brooklyn Arena and Infrastructure Project is a subset of the $4.9 billion Atlantic Yards Project and is one of the most important development initiatives underway in New York City today and one of the largest job-creating projects in over a decade. EB-5 funding will be combined with significant funding from the City of New York, the State of New York, and the developer of the Project, Forest City. On September 23, 2010, all components and documents of the Brooklyn Arena and Infrastructure Project were fully approved by the United States Citizenship and Immigration Services (“USCIS”).
(Emphases added)

Misleading the reader

As I suggested on Part 3, the phrasing here is misleading.

Despite the statement "in conjunction with," neither the city nor the state are formally involved in the Brooklyn Arena and Infrastructure Project beyond a finder's fee for the New York City Economic Development Corporation and a Recognition Agreement for a first mortgage, signed by the Empire State Development Corporation.

None of the above-mentioned contributors--city, state, developer--made their investments in a project purported to create jobs for immigrant investors at the time.

As described in Part 3, it's questionable to credit the latter for jobs created by funding committed long before.

After all, as state officials admit, the arena would be built with or without this funding.

Beyond that, the NYCRC's reference to "fully approved" does not mean potential investors face no risk their immigration petition would be denied, USCIS officials told me.
NYCRC Newsletter November 2010

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