Former Governor Paterson signs up to promote an EB-5 project

Former New York State Governor (2008-10) David Paterson, whose post-office roles include hosting a drive-time radio show and teaching at New York University, has also signed on to promote an EB-5 investment immigration program, helping recruit investors seeking green cards for purportedly job-creating investments in the Times Square Hotel.

On 5/27/11, the New York Immigration Fund (NYIF), a federally approved regional center--a private investment pool formed to recruit investors--announced a partnership with Paterson, suggesting in a press release (also at bottom) that it was part of "his long-standing agenda of expanding and improving economic development in New York."

EB-5 money, in this case, saves the developers from having to put up more equity or borrow more from banks at higher rates. Times Square Hotel, located at 42nd Street and Ninth Avenue, "will be a 38-story, 217,519 gross square foot hotel consisting of 440 micro luxury guestrooms and 38 extended stay apartments."

In June, Paterson led a group of regional center executives in promotion seminars in Beijing and Guangzhou, according to the EB-5 News Blog. The NYIF operates offices in China, Korea, and India, and is seeking 150 investors for this first project.

The partners and the project

The New York Immigration Fund shares corporate offices with the Roe Corporation, a development company. The NYIF CEO is Buhm Jung Roe, while two sons are Vice Presidents. Paterson serves as one of two Executive Managing Directors. Listed as "Immigration Attorney & Partner" is Mona Shah, who formerly worked with the New York City Regional Center.

The principals in the hotel project are Robert and Bernard Friedman, described as being active in the real estate business since 1960 and former owners of Penmark Realty Corporation.  According to an interview with Arun Nanda on India's HYBIZ.TV, the project financing includes $75 million from the Friedmans, $75 million from 150 EB-5 investors, and $100 million in "financing by financial institutions."

Nanda said that the required economic study--each investor must create ten jobs, but they can be indirect--concludes that the project would be create 1943 jobs, but there's a safe margin, since "we are inviting" only 150 investors.

Regional centers typically lend the money to projects at a below-market interest rate, while providing little or no interest rate to the investors. In this case, the regional center promises an annual return of 1%, paid monthly. The Atlantic Yards EB-5 project promised no return to Chinese investors, and .25% to Korean ones.

The TEA


EB-5 investors, who invest in a job-creating project in exchange for green cards for themselves, must put up $1 million or only $500,000 if the project's located in a Targeted Employment Area (TEA), with 150% of the national unemployment rate.

Almost all investors seek projects that are in TEAs, so to draw such a TEA--a string of census tracts that includes the project site --likely will require some gerrymandering, as with the Atlantic Yards TEA.

The Paterson video

A video introducing Paterson to potential investors melds news footage of his governorship with clips from a current interview, filed at the Roe Corporation offices.

The news clips include a Paterson speech, an introduction of Senator Kirsten Gillibrand, a mention of Paterson by President Barack Obama.

"I am proud to partner with the New York Immigration Fund in the hope that programs such as this will put more people to work and make America strong again," Paterson declares.

The patina of government

The video leans heavily on Paterson's governmental history; investors in China especially are drawn to projects that seem to have government endorsement or involvement.

Can we expect one of the regional centers signing up Brooklyn Borough President Marty Markowitz after he leaves office? Not unlikely, especially since Markowitz has already proven himself adept at such promotions.

The press release