April 28, 2011
FCR may raise $40M more from immigrant investors; document confirms that EB-5 loans can be used to pay off mortgages, says nothing about job creation
Atlantic Yards Report
We would call this unbelievable, but Atlantic Yards is so crooked that nothing is unbelievable.
An Empire State Development Corporation (ESDC) document reveals that developer Forest City Ratner, which already has signed up 498 immigrant investors to offer a $249 million low-interest loan, may seek another 80 investors for a $40 million loan.
The agreement between the ESDC and a Forest City Ratner affiliate was acquired via a Freedom of Information Law request. Though it offers much detail on how the money might be spent--Forest City has wide latitude--it says nothing about the ostensible purpose of the funding under the federal government's EB-5 immigration program: job creation.
The issue of job creation must be addressed in documents submitted to a federal agency, United States Citizenship and Immigration Services. The investors park their money for perhaps five years, and can get green cards for themselves and their families, assuming the claims of job creation pass muster.
[T]he loan proceeds could be used to reimburse Forest City Ratner for its costs on the Arena, the Subway Entrance, the public plaza, the upgrade railyard, demolition of project structures, utility work, the construction of the Carlton Avenue Bridge, the creation of arena parking, and preparation of development sites.
Essentially it's a piggy bank for whatever Forest City Ratner wants, including the final category, which I highlighted: paying off any liens and encumbrances, such as the existing land loan from Gramercy Warehouse Funding.
Does any of this create or retain jobs? That's what they may say on paper, but it seems clear that the developer is substituting lower-cost capital for higher-cost capital.
Take for example the Carlton Avenue Bridge; the developer is obligated to reconstruct it, whatever the source of the capital. So the use of immigrant investor funds for the bridge doesn't add jobs.
NoLandGrab: As some people are fond of saying, "f**k the bridge." And the jobs, and the investors, and the taxpayers, and....
Posted by eric at April 28, 2011 10:32 AM