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.
In a New York Times Magazine cover story October 31, The N.B.A.’s Oligarch and His Power Games, writer Chip Brown misread the Nets' recent trip to China, suggesting it was an unhelpful detour, part of the rocky road facing new owner Mikhail Prokhorov:
The brand-building preseason games in China were arranged when the team had a seven-foot Chinese forward named Yi Jianlian as well as a Mandarin speaker in the marketing department. But with Proky’s arrival, the Nets were suddenly covered with Russian dressing: a new Russian-language Web site, an office in Moscow, a five-year deal with Stolichnaya vodka. Worse, they were bound for China without Yi, who had been packed off to the Washington Wizards in June, or the Mandarin whiz, who’d been globalized out of a job. Ni hao? Nyet!True, the game was announced in April, when Yi was still a Net. Still, the trip was much more than what the National Basketball Association (NBA) billed as "the homecoming of Houston Rockets All-Star Yao Ming and the debut of the state-of-the-art Guangzhou International Sports Arena."
And it was more that what the Nets, on their Flickr page, called an opportunity "to participate in the NBA China Games 2010, where they played a pair of games against the Rockets and were active alongside NBA Cares."
Nets help sell project
The Nets were there to help Forest City Ratner, via the New York City Regional Center (NYCRC), market green cards to immigrant investors who would invest $500,000 each in the "Brooklyn Arena and Infrastructure Project."
The teams played October 13 in Beijing and October 16 in Guangzhou.
Before each game, the NYCRC held seminars for potential investors, featuring NBA iconography, photos of current Nets players, retired NBA players as guests, and raffles for autographed basketballs and tickets to the upcoming games.
(At left, potential investors gather at the conference registration desk for a mid-October session in Beijing, presented by the Kunpeng consultancy. On the banner, New Jersey Nets players Brook Lopez and Devin Harris flank a rendering of the arena. Photo from Kunpeng web site.)
From the local press
A 10/11/10 article in the Guangzhou Daily, headlined With the help of the NBA Nets, the largest EB-5 Immigrant Investor Project is about to visit China, was billed as an exclusive.
It reads more like a press release, but it does offer information that was, indeed, exclusive.
Here's the translation I commissioned (vs. the machine translation via Google):
On October 13 and 16, 2010, the NBA Nets and Rockets will play two games respectively at the Beijing Wukesong Arena and the Guangzhou International Sports Performing Arts Center. Though the two games are yet to begin, they have already attracted tremendous attention of our compatriots.(Emphasis added)
But what most people don’t know is that the Nets that are playing in China on this visit also have a special mission – to promote the New York Government NBA Arena and Public Infrastructure Project. This project includes the construction of a stadium that will be home to the Nets in New York in 2012.
The New York Government NBA Arena and Public Infrastructure Project is the largest EB-5 Immigrant Investor Project in 2010. Great attention has been brought to the [immigrant investor] market with the help and appearance of the Nets [in China]. As the pioneer of U.S. Immigrant Investor Program and the leading consultancy in the immigration industry, Qiao Wai Group is now fully accepting consultation of and subscription to this project.
Clients who make their reservations and sign their contracts in advance will have the chance to win the NBA basketball tickets in China as well as souvenirs with celebrities’ autographs. From October 11, 2010 onwards, Qiao Wai Group, which is supported by the New York State Government and the New York City Government, will hold a series of large-scale project seminars in Beijing, Guangzhou, Shanghai, Chengdu and other cities.
The rest of the article reflects the promotional material for the project. It also promises that Brooklyn Borough President Marty Markowitz would be participating in the trip.
However, while it was Markowitz's plan to join the promotional effort, he canceled the trip after some critical coverage in this blog and in the New York Post. (It may be that he was more concerned about criticism over a free trip than over the project at hand.)
He still appeared on video, shilling that "Brooklyn is 1000% behind Atlantic Yards."