October 8, 2010
The fundamental lie at the heart of the "green cards for investors" scheme (and why the Chinese investors face a higher risk than acknowledged)
Atlantic Yards Report
There's a fundamental lie at the heart of the attempt by Forest City Ratner and its partner, the New York City Regional Center (NYCRC), to raise $249 million in no-interest (or low-interest) financing under the EB-5 visa program from Chinese millionaires seeking green cards.
They've redefined the "project" as a $1.448 billion project that includes the Barclays Center arena, related infrastructure, and a new railyard that Forest City Ratner is required to build.
And only by defining the "project" anew, and thus tacking the railyard on to already funded components, does the risk to investors seem diminished.
Rather, investors likely face a much higher risk than acknowledged. And the collateral offered would not be easily convertible into cash but would require a sophisticated development partner.
(Why is New York State's Empire State Development Corporation playing along, accepting the claim of a $1.448 billion project and sending Executive Director Peter Davidson to China next week? He is the only government official on the trip.)
Posted by eric at October 8, 2010 11:07 AM