Wednesday, December 09, 2015

Queried by PBS NewsHour, Forest City offers evasive defense of gerrymandering for EB-5 project

PBS NewsHour, in Should Congress rein in this controversial visa program?, covers a lot of ground regarding EB-5 (purportedly job-creating investments for green cards), but focuses significantly on the gerrymandering of Targeted Employment Areas, notably the "Bed-Stuy Boomerang" regarding Atlantic Yards that I identified in 2011.

So I am interviewed at length in the piece, which aired last night.

(It also mentions even more egregious, recent efforts from other developers, including one identified by Eliot Brown of the Wall Street Journal regarding Hudson Yards.)

Forest City's spin

I'll address the piece at greater length, but first let's look at Forest City Ratner's careful, evasive claim that it has “complied with all the required guidelines and laws. We have created thousands of construction and permanent jobs in an area with historically very high unemployment levels."
Well, yes, the required guidelines and laws regarding calculation of job creation are very loose, so Forest City is in compliance with the letter, though not the spirit, of the law. As the pundit Michael Kinsley famously said about Washington, the scandal is what's legal.

Atlantic Yards site in blue. Targeted Employment Area in red
Graphic by Abby Weissman
As to creating "thousands of construction and permanent jobs in an area with historically very high unemployment levels," let's unpack that.

First, and most glaringly, there's zero proof that the jobs were created *within* the "Bed-Stuy Boomerang," the gerrymandered map (including census tracts with high unemployment) used to get the Atlantic Yards EB-5 project past federal regulators.

Second, there's no proof that the EB-5 investment was necessary to create the jobs. For example, in the first (of three) rounds of EB-5 fundraising for the Atlantic Yards/Pacific Park project, the project was pitched to investors as an investment into the Barclays Center, which New York State officials said was already funded.

In other words, while a low-interest EB-5 loan (which a developer can get by deploying a public asset, green cards) seems most justifiable as seed money for projects that otherwise would not get off the ground, when it's simply used to substitute for higher-cost capital is represents margin for the developer.

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