Skip to main content

The mysterious case of China City of America, now Thompson Education Center, an EB-5 project upstate

I'm catching up on a lot of news related to the EB-5 program, which has helped the developers of Atlantic Yards/Pacific Park raise $477 million in cheap capital, with another $100 million to go. Perhaps the clearest summary of the lure and sketchiness of the program came in a February 2012 quote from an EB-5 fundraiser to The Daily:“It’s just a way of being able to get free money, basically, to build all sorts of projects.”

Why might Long Island businesswoman Sherry Li put $55,000 into Gov. Andrew Cuomo's re-election campaign?

I can only speculate that it's because she's trying to build a controversial, maybe fantastical project upstate called "China City of America," using EB-5 funds from immigrant investors.

Surfacing in 2013

The outline of Li's ambitious, extravagant idea first got wide play in the 12/4/13 New York Post, which, in Mysterious plans to build upstate NY ‘China City of America’, reported:
A Long Island businesswoman wants to build a massive “Chinese Disneyland” in the Catskills — which would include an amusement park, huge mansions and a “Forbidden City” laid out according to the principles of Feng Shui.
The China City of America scheme could bring thousands of wealthy Chinese immigrants to the tiny Sullivan County town of Thompson, under a federal program that lets foreigners get visas by investing $500,000 in the US.
The mastermind behind the plan, Sherry Li, says the development would eventually draw $6 billion in foreign investment.
From previous China City website
Li's lawyer, Larry Behar, in a 3/2/12 news release, described attending an EB-5 Convention in Shanghai. He reported: "China City of America began its first soft marketing to a huge audience where Mr. Behar was guest speaker along with President Sherry Li."

A critical report

The Post reported how the project generated opposition, and quoted analyst David North of the Center for Immigration Studies (CIS), who had dissected the proposal.

In his report, China City: A perfect storm EB-5 proposal in upstate New York, North noted that, beyond "the usual critical comments about the shaky financial prospects and dubious job-creation claims of the promoters," this project had a "budget bordering on the bizarre," a potential major ecological impact, the controversial record of local allies, and even a charge from "within the Chinese community"--actually Falun Gong--"that China City is a stalking horse for the Chinese communist government in Beijing."

North noted how the promoters published a "Notice of Action," which could give an impression of official approvals but merely meant the federal government had received an application from China City Regional Center LLC, to gain authorization to collect investments. The form, North noted, had been already redesigned to look less misleading.

China City’s local allies, North noted, were a fracking enthusiast, Thomas J. Shepstone, and Simon Gelb, who currently owns the 2,000-plus acres allegedly destined for China City and previously built the Hasidic village Kiryas Joel in adjacent Orange County

A response

In response, Li issued a press release 12/12/13 on the China City of America web site, headlined "China City of America Becoming Reality in Catskills":
Monticello, NY, December 12, 2013 --- China City of America, a conceptual plan that encompasses multi-use commercial, residential, business, education, amusement and entertainment components, will be built in Sullivan County, NY over multiple years, according to Sherry Li, CCOA's Chief Executive Officer. We appreciate the public's interest in this project, Li said.
...Larry Behar of the Behar Law Group, who serves as CCOA's EB-5 immigration attorney, said that CCOA has complied with USCIS regulations and timely responded to two USCIS RFE (Request for Evidence) of the regional center designation originally filed on December 13th, 2011. The CCOA professional team also consists of top EB-5 economists, business plan writers, SEC attorneys, EB-5 immigration attorneys and feasibility study evaluators. 
The press release quoted Behar as charging North with slander for suggesting that the project is a stalking horse for the Chinese government. (There's been no further indication of Chinese government involvement.)

Behar also pointed to the Center's "long history of anti-immigrant positions."

(CIS says it has a "low-immigration, pro-immigrant" vision of an America that admits fewer immigrants but affords a warmer welcome for those who are admitted." The Southern Poverty Law Center and others call it nativist and anti-immigrant. Without evaluating the rest of their work, I'd say North's work on EB-5 is a generally incisive counterweight to the enormous propaganda in favor of the program.)

Li and Lianbo Wang, also associated with China City of America, each gave $2000 in 2013 to the re-election campaign of EB-5 supporter Rep. Robert Goodlatte (R-VA), as I learned.

An AP follow-up

The Associated Press followed up with an article published 1/19/14 in the Washington Post, Skepticism surrounds China City plan for upstate New York:
The people behind China City have since dialed back the pace of their plans, now proposing to start with a college, dorms and faculty housing on 575 acres solely in Thompson after strong opposition surfaced in Mamakating. And the original Web site touting the project appears to have been taken down.... Li said the school, known as the Thompson Education Center, would be a tax-paying, for-profit college enrolling 900 students at first, with a curriculum concentrated on business, art and entertainment majors..
The article quoted North: “It doesn’t matter to me if this is all Chinese or all Swedish. This is a bad project." Li said there was no Chinese government money in the project.

A project in limbo

Only later last year did a follow-up emerge. The Commercial Observer did some tough reporting--anomalous for the local press regarding EB-5--on 9/8/14, EB-5: Ambitious China City Project Sits in Limbo:
The original plan was submitted to U.S. Citizenship and Immigration Services in December of 2011, with 39 percent of the capital stack for its first of three phases of construction set to come from foreign investors through EB-5.
Alas, the application is still pending and the scope of the project seems to continuously, and mysteriously, shrink. The notorious project has come to represent the pitfalls of using EB-5 in the New York development world, sources told Mortgage Observer.
The project, now cut to 570 acres, omits the amusement park and focuses on the Thompson Learning Center.

The Observer pointed out that "the $65,000 non-refundable deposit each investor must contribute has raised some eyebrows." Neither Li, Behar, nor the project's local counsel would answer questions.

Since then, the project has issued numerous feel-good press releases, such as China City of America Can Assist the Struggling Upstate New York Economy and Thompson Education Center Hosts a Project Information & Job Opportunity Event in Sullivan County.

But there's little evidence the project has made concrete progress. A 1/24/15 op-ed in the Times Herald-Record, Paula Medley wrote My View: Thompson group's credibility, plausibility must be questioned:
A flawed paid advertisement (Dec. 26, 2014) by Thompson Education Center (TEC), formerly Thompson Learning Center and China City of America, compels this response by the Basha Kill Area Association (BKAA), a Sullivan County-based environmental group whose mission since 1972 "has been to protect the Basha Kill wetlands and surrounding area from ecological degradation, to promote education and respect for the environment in general and to promote the area's beauty."
...Significantly, this ad not only ignores the Basha Kill connection, but omits referencing the Harlen Swamp Wetland Complex, a unique ecosystem encompassing 148 acres of TEC's 573 acre property and listed as a conservation priority in the 2009 Plan for providing important habitat for varied wetland species.
...Further eroding TEC's credibility is the sponsor's determination to seemingly build on every available square inch of land that is not wetland or a wetland buffer, yielding a proposed development totaling 4.5 million square feet in the Town of Thompson's most restrictive zoning district - rural residential - where such high density construction is prohibited.
Medley noted that "TEC currently has not been approved as an EB-5 Regional Center" and argued that it manipulated local employment statistics.


  1. Anonymous7:12 AM

    Keep digging on these scams like the EB5!
    Rich people pay to play and lower income people are demonized and deported and separated from their families.


Post a Comment

Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…