In The Observer‘s profile of Atlantic Yards watchdog Norman Oder, the master blogger laments how the mainstream media has ignored his biggest expose to date: plans by the state and developer Forest City Ratner to essentially sell green cards to Chinese investors in exchange for backing the arena-cum-condos project on the edge of brownstone Brooklyn.
If you are generous enough to lump The Observer in with the rest of the MSM, then — full disclosure — we have fallen short, too. But for two brief mentions, the Real Estate Desk has yet to take a serious look at the EB-5 saga. Perhaps it is time to address this “dereliction of duty,” to quote Mr. Oder, and closely consider this latest twist in this most tangled of projects.
The EB-5 program has been around for two decades, and there is nothing particularly pernicious about it. While the idea of “selling” visas sounds sketchy, the program is intended not only to drum up foreign capital for domestic projects but also to employ American workers — which is where the first bit of controversy arises. As Mr. Oder explained in a thorough summation of his work for Huffington Post:
The NYCRC’s agents in China advertise that this “project” would generate 7,696 jobs, far more than the required total of 4,980, or ten per investor. [Each visa is required to create or retain 10 jobs.]
The math doesn’t seem to work. Should 7,696 jobs be produced by $249 million, that suggests that the entire $4.9 billion project would result in some 154,000 jobs. Nor should the 7,696 total be attached to the base $1.448 billion “project,” since the arena’s already funded. Could this investment be seen as saving future jobs? No, because they would depend on other funding streams, like tax-exempt housing bonds.
In other words, the required job levels of the EB-5 program are unlikely to be met by the Atlantic Yards project, at least in Mr. Oder’s estimation. Furthermore, he suspects that the Chinese investors are being misled into thinking they’re funding parts of the project, like the arena and public infrastructure, that are already funded, as opposed to the riskier pieces for which their money is actually needed, namely the apartment towers planned for the post-arena phases of the project.
Bruce Ratner has said he expects to break ground on one tower by early next year with another to follow six months after. Given the newfound uncertainty in the markets, a burst of foreign investment could be just what he needs to realize those goals.
That said — and even Mr. Oder seems to admit this — it is not clear that Forest City Ratner or the state are doing anything illegal here. Just because Mayor Bloomberg, Marty Markowitz, Jay-Z and the Nets are shilling for this project (as hilarious graphics Mr. Oder turned up show) does not mean they are doing anything wrong. In fact, it tends to fit with the behind-the-scenes, bending-the-rules nature that has plagued the project from its inception.
Then again, his frustration with the media for ignoring the story is understandable. Illegal or not, the papers have written about far more minor infractions by developers, politicians and joe sixpacks all over the city. Why they continue to ignore this story is a mystery. Whether they can for much longer remains to be seen.
As Mr. Oder recently told The Observer, he has plenty more bombshells to come. “This story is far from over,” he said.