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Atlantic Yards/Pacific Park graphic: what's built/what's coming + FAQ (pinned post)

From the Bed-Stuy Boomerang to the Fort Greene Finger: how NY state kept gerrymandering maps of high unemployment to help Atlantic Yards get cheap EB-5 immigrant investor financing

The Fort Greene Finger.
The marked census tracts =
Targeted Employment Area
First, the Bed-Stuy Boomerang. Now, the Fort Greene Finger.

Those are my shorthand descriptions of the oddly shaped maps gerrymandered by New York State to to create zones of high unemployment, thus making it easier for the Atlantic Yards (now Pacific Park) project to attract immigrant investors under the EB-5 program.

While the practice is common, and not yet disallowed, it makes a mockery of the intent of the law: to steer investments into areas of high unemployment.

Officially, immigrant investors are required to park $1 million in a low- or no-interest loan for five or more years, as long as it creates ten jobs, at least according to an economist's estimate.

But few investors actually do that. The requirement is only $500,000 for those investing in Targeted Employment Areas (TEAs), which are either rural areas or zones of high unemployment, 150% of the national average.

Gaming the system

Of course, many EB-5 projects in places like New York City are built in prosperous areas. Since there's no requirement that a TEA resemble an existing jurisdiction or economic impact zone, and since cities and states want to help local developers get cheap financing, it's been common to create oddly-shaped TEAs.

Bed-Stuy Boomerang;
Atlantic Yards site in blue
graphic: Abby Weissman
As I wrote in December 2011, state officials drew an irregular map to qualify Atlantic Yards for its first round of EB-5 funding, which was expected to be $249 million but turned out to be $228 million.

I called it the Bed-Stuy Boomerang, because the map moved east and north into an arc, thus encompassing poor areas in Bedford-Stuyvesant.

Not long afterward, the New York Times cited several other EB-5 projects in the city as taking advantage of gerrymandering. The Battery Maritime Building's TEA, the Times reported, "jumps across the East River to annex the Farragut Houses project in Vinegar Hill, Brooklyn."

In September 2015, the Wall Street Journal's Eliot Brown cited the use of EB-5 for Hudson Yards, connecting that midtown development to housing projects in Harlem, with a particularly stretched map. Reforms at the federal level have been proposed, but not enacted.

Helping the unemployed?

It's a particularly ugly and cynical tactic. The presence of unemployed people in reasonable proximity is what triggers the lower threshold, a necessary feature of EB-5 marketing, given that nearly all competing projects are in TEAs.

But there's no requirement that people be hired from the TEAs, because there's no requirement that the jobs counted be direct jobs. In other words, an economist's report suffices.

And there's no proof that they are hired, despite Sen. Chuck Schumer's February 2016 claim, “Many of the people in the South Bronx work in the office towers in Manhattan,” (No surprise, Schumer gets EB-5 money.) Have a lot of people from poor sections of Brooklyn gotten jobs--not part-time arena jobs--from Atlantic Yards/Pacific Park?

"Because of the anomaly of cities, poor people don’t live right next door to a project," Schumer said in April 2016. "It’s not how cities are structured. Where do you think people in the South Bronx work? Our office towers are our factories."

If so, then, why not limit EB-5 to full cities or metro areas with an overall high unemployment rate, not ones with pockets of high unemployment.

The Fort Greene finger

In 2013, the Atlantic Yards developer, then Forest City Ratner, pursued a second round of EB-5 funding, marketed as "Atlantic Yards II," which led to a low-cost loan of $249 million.

The map, as shown at right, started with Census Tract 129.01, marked in green, said by state officials to contain the address 620 Atlantic Avenue, which is the location of the Barclays Center.

Note: the arena was already built, so I'm not sure why there was any justification for including it.

Had they used any other census tracts containing the project, such as 129.02 (which contains towers around the project), 161, or 163, those areas might have complicated the calculation, because they contain better-off households.

Also note: while 129.01 does include the arena block, the arena--620 Atlantic--is mainly in census tract 129.02.  Please see image at right, from the NYC Zoning and Land Use map.

(Here's the city's map of Brooklyn census tracts.)

Drawing the map

The New York State Department of Labor was extremely helpful to Empire State Development, the state authority steering Atlantic Yards.

"The 2012 average unemployment rate for census tract 129.1 in Kings County that contains the address, 620 Atlantic Avenue, as you requested is 7.2 percent," wrote the DOL's Joseph Nardone to ESD's Kay Alison Wilkie, as detailed in the letter below left.

"The current minimum threshold to qualify as a Targeted Employment Area is 12.2 percent," he added.

So they found a solution: "For your consideration, we developed an alternative area composed of census tracts 29.01, 31, 35, 129.01, 181, and 185.01 in Kings County with an average unemployment rate of 12.7 percent."

That was quite some consideration, since it produced a very odd shape, like a bent finger.

Why the shape? The map has to reach north past Fort Greene Park to census tracts 29.01 and 185.01, pockets of poverty in the Downtown Brooklyn area, including the Fort Greene public housing projects, Ingersoll and Whitman.

Making it official

Wilkie could then write a letter (right) to Michael Evans, a prominent consultant in the EB-5 world, an economist who produces reports that pass official muster with the federal agency overseeing the program, the U.S. Citizenship and Immigration Services, or USCIS.

"Attached is a letter from Mr. Joseph Nardone, of the New York State Department of Labor, identifying an area including census tract 129.01 in Kings County," Wilkie wrote. "Based on 2012 annual average labor force data, the Department of Labor has determined that this area meets the minimum threshold of unemployment to qualify as a Targeted Employment Area."

"Based on the Labor Department's determination, I am able to certify that the area described in the attached letter qualifies as a Targeted Employment Area," she wrote.

And that, folks, is how EB-5 policy is made.

Note: there was a third round of EB-5 financing, "Atlantic Yards III," that also proceeded, surely with a Targeted Employment Area, raising $100 million. I don't yet know the boundaries. But it's a safe bet that that TEA was similarly gerrymandered.

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