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About DDDB
Our coalition consists of 21 community organizations and there are 51 community organizations formally aligned in opposition to the Ratner plan.

DDDB is a volunteer-run organization. We have over 5,000 subscribers to our email newsletter, and 7,000 petition signers. Over 800 volunteers have registered with DDDB to form our various teams, task-forces and committees and we have over 150 block captains. We have a 20 person volunteer legal team of local lawyers supplementing our retained attorneys.

We are funded entirely by individual donations from the community at large and through various fundraising events we and supporters have organized.

We have the financial support of well over 3,500 individual donors.

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"Why should people get to see plans? This isn't a public project."
Bruce Ratner in Crain's Nov. 8, 2009

Anatomy of a Shady Deal: Norman Oder Takes A Close Look At Ratner's Quest for Money in China

While The New York Times publishes its third article about The Civilians' extraordinary production of "In The Footprint: The Battle Over Atlantic Yards" (and we congratulate The Civilians for this deserved accomplishment and the rave reviews the play has been receiving) Norman Oder has been running an extensive series on Bruce Ratner's shady cash for green cards scheme otherwise known as the EB-5 program. The Times has not once made mention of this highly questionable use of the little-known immigration program.

As Oder writes: "...Instead, in the last month, we've seen two [Times] feature articles and a review regarding The Civilians, as if Atlantic Yards is ovah, history, an arts story. Nah".

(Oder's EB-5 coverage has only been picked up online in the New York Magazine Daily Intel: Bruce Ratner Seducing Atlantic Yards Investors With Green Cards and the New York Daily News I-Team blog: Shady dealings surround Atlantic Yards project. And Oder has condensed some of the series in a Huffington Post column, Anatomy of a Green Card Pitch: In China, Atlantic Yards Backers Rely on the Distraction of Basketball.)

Anyway, Oder has reached part 4 of his ongoing "Anatomy of a Shady Deal" series, which takes a close look at how Bruce Ratner has roped in the more-than-willing Markowitz, Bloomberg and bunch of basketball players to utilize a questionable government program in an excessively questionable manner.

It is a complicated issue which boils down to this: The Ratner crew and its public and private enablers are gaming this federal EB-5 immigration program by making stuff up, deceiving potential Chinese investors, double counting and wildly exaggerating job numbers all to pump up the developer's bottom line rather than benefit the public.

In other words: The usual, only overseas.

Here are the first 4 parts, with opening excerpts, of Oder's series from his Atlantic Yards Report (they are lengthy, but required reading):
Anatomy of a Shady Deal
The effort by the New York City Regional Center (NYCRC), the private investment pool federally authorized to accept immigrant investor funds, and developer Forest City Ratner (FCR) to raise $249 million from 498 Chinese millionaires under the EB-5 immigration program may be legal, but there is ample reason to question whether it will serve the public interest. I called it "the most audacious quest for government assistance" in the Atlantic Yards saga.
Part 1
Arena block could take 19 years, as ESDC grants seven-year extension, enabling FCR's plan to recruit Chinese investors under EB-5 program

The Empire State Development Corporation (ESDC), the state agency with oversight over Atlantic Yards, has again extended the deadlines to get the project built, allowing seven additional years for Phase 1.

Why? Because Forest City Ratner wants a valuable, no-interest loan from immigrant investors looking for green cards.

The beneficiaries? The developer, and the Chinese investors who might end up owning nearly half of the non-arena project site, development rights to seven of 16 towers, as shown in the screenshot below right.

The losers? The public, since expected project benefits such as affordable housing and new tax revenues could be delayed, while burdens like an interim surface parking lot could be extended.

Under the scenario--in a Recognition Agreement for the loan approved by ESDC staff, with no need for board action--the 12-year timetable for Phase 1 would be suspended for seven years.

Thus, the minimum square footage required for Phase 1 could take 19 years, nearly twice as long as the entire project was supposed to take.

Is such a delay likely? We can't be sure, but considering the extensive provisions documented in case Forest City Ratner defaults on the loan, the state and the developer seem to take a default scenario seriously.

Indeed, the scenario casts huge doubts on FCR's public rhetoric, via executive MaryAnne Gilmartin (video below) that it is "100 percent committed to delivering the Atlantic Yards project and all of its benefits to the borough of Brooklyn."

And it suggests that the ESDC, rather than protecting the public interest, is more concerned with saving the developer money.
...
Continue reading.


Part 2

The savings on the $249 million no-interest loan sought by Forest City Ratner? Likely $191 million (at least) to $314 million over seven years

October 11, I did some very imprecise math, trying to estimate the savings on a $249 million no-interest loan that Forest City Ratner seeks from immigrant investors under the EB-5 program, which trades green cards for supposedly job-creating investments.

I estimated the developer would save nearly $100 million over five years. Actually, the savings would likely be double that, at least, so it's no wonder the developer is pushing very hard to get this deal done.

My estimate needs an update because the loan could last seven years, not five, according to a Recognition Agreement signed by the state; the impact of compounding was not calculated; and a wider range of interest rates should be considered.

Savings: likely $191 million (at least)

A reader more versed in finance has produced the charts below. (Click to enlarge.) The bottom line: over seven years, at a conservative 8.3% interest rate, Forest City Ratner could save nearly $191 million.

At a somewhat more likely 10% interest rate, FCR could save $244 million--nearly the value of the loan.
At the plausible interest rate of 12%, the developer could save $314 million.

And even at the gentle interest rate of 6.5%, the rate granted in 2009 by the Metropolitan Transportation Authority in the deal to pay off the Vanderbilt Yard over 22 years, FCR could save nearly $141 million.

Of course, should the economy change miraculously, Forest City Ratner might pay back the loan early. But who wouldn't want free money for seven years?
...
Continue reading.


Part 3
As FCR pitches Chinese investors seeking green cards, ESDC admits EB-5 arena funds not needed; is this legit if money's supposed to create jobs?

Nearly 500 Chinese millionaires, hoping for green cards and starry-eyed at the thought of pro basketball, may hold the key to developer Forest City Ratner's (FCR) progress with the Atlantic Yards project. Potential investors have been attending investment seminars in China like the one October 19 (promoted below); such sessions continue through December 19.

However, as detailed below, the effort to raise $249 million tests the spirit and perhaps the letter of an obscure but newly popular federal law that grants fast-track green cards in exchange for job-creating investments.

Rather than use investors' money as seed money or matching funds, as in some other EB-5 projects, it seems that Forest City Ratner would in large part simply be trading higher-cost financing for a no-interest loan.

Thus, it wouldn't create new jobs, even if it may fit within the loose strictures of the federal law, in which the total sum of money must generate 4980 jobs, ten per investor.

Should such tactics-- essentially endorsed by the state, city, and Borough President, who have joined in project promotion--pass muster, they invite an absurd process: any developer might save hundreds of millions of dollars, substituting cheaper capital for existing capital, claiming it creates jobs because it's tied to a project with existing, committed investment.

That would help monopolize a limited federal resource--visas for job creation--while skirting the goals of the immigration program.

The "Brooklyn Arena and Infrastructure Project," a $1.448 billion subset--the arena, plus infrastructure and a new railyard--of the $4.9 billion Atlantic Yards project, has never been approved by any official body nor previously announced before the effort to solicit immigrant investors.

It is apparently formulated to generate--at least on paper--the necessary number of jobs.

It prominently features the Barclays Center arena, as in the graphics above and below, but the pitch involves some dodges:

  • the arena, though the prime attraction, is already funded
  • the role of government is exaggerated
  • the chance of not getting green cards is dismissed
  • the risk regarding the investment is downplayed

And the public officials promoting the effort may be helping Forest City Ratner above all else.

The game of hoops and glitz

While all's quiet on American shores, the game in China is glitz, with basketball players and public officials serving as lures. At left, potential investors gather at the conference registration desk for a mid-October session in Beijing, presented by the Kunpeng consultancy. On the banner, New Jersey Nets players Brook Lopez and Devin Harris flank a rendering of the arena. (Photo from Kunpeng web site.)

In China, in promotional videos (excerpted below) and webcasts produced by immigration consultants working with the privately-run New York City Regional Center (NYCRC), the game features FCR officials, retired players, upscale signifiers like cascading champagne, and basketball-related raffles.

As with some other shady deals, this takes place on a frontier, involving a little-scrutinized program, a language barrier, and a minimum of transparency.

It's a magical moment of international arbitrage, as slick marketing and basketball fever aim to sell investors on their green card dreams, perhaps distracting them from due diligence.

(At left, former Net Darryl "Chocolate Thunder" Dawkins signs autographs at Guangzhou investor event; photo from consultancy Qioawai's promotional page.)

...Continue reading.



Part 4

Pitching potential EB-5 investors, Markowitz shills on video ("BK is 1000% behind AY"); ESDC's Davidson stretches jobs claim; Bloomberg misleads

The New York City Regional Center's (NYCRC) misleading effort, in partnership with developer Forest City Ratner, to market the "Brooklyn Arena and Infrastructure Project" to Chinese investors seeking green cards, relies significantly on statements from public officials aimed at bolstering investor confidence.

Thus, Brooklyn Borough President Marty Markowitz, Empire State Development Corporation President Peter Davidson, and New York City Mayor Mike Bloomberg, on video and in person, have promoted the project to potential investors in misleading and even ridiculously dishonest ways.

(Audio clips of their statements are below.)

The statements, which praise the overall Atlantic Yards project rather than the Brooklyn Arena and Infrastructure Project at hand, may distract potential investors from due diligence, despite reasons to question the job creation claims and the solidity of the investment.

Thus, the three officials help convince potential investors to commit their $500,000 to the project, benefiting Forest City Ratner and the New York City Regional Center but not necessarily the public: the loan process could delay the Atlantic Yards arena block another seven years and otherwise reduce public benefits.

Misleading the audience

Markowitz claimed that Brooklyn is "1000 percent" behind Atlantic Yards.

No way.

Davidson asserted that Atlantic Yards "will be the largest job-creating project in New York City in the last 20 years.”

Unbelievable.

Markowitz, Davidson, and Bloomberg all conflated the $1,448 billion "Brooklyn Arena and Infrastructure Project" marketed to the investors with the larger $4.9 billion Atlantic Yards project, slated to include 16 towers.

The significant job creation promised for the overall project could have left listeners with the impression that the speakers were endorsing the project in which they could invest.

The fundamental dodge

As explained in Part 3, the deal contains a fundamental dodge: the 498 investors being asked to put up $500,000 each, for a total of $249 million, are being marketed an "NBA project," with the $1.448 billion package consisting of an arena, associated infrastructure, and a new railyard.

But the first two elements are already funded, as the ESDC admits and documents confirm.

Forest City Ratner wants the money for the railyard and, perhaps, to pay off a land loan, it told the Wall Street Journal. I suggested that it would use the funds to substitute for other high-cost financing.

However, the the EB-5 immigration program requires each investor to create or retain, directly or indirectly, ten jobs. Only by yoking the immigrant investor funding to already-committed funding, I argue, can the total sum of money be sufficient to calculate the required number of jobs.

Is this legitimate? Unclear, but the public officials sure don't seem to have vetted it.

Similarly, given their enthusiastic but imprecise rhetoric about the larger Atlantic Yards project, they may not understand the "project" being presented to investors. And that may be the point.

Markowitz: on video, not in person

Markowitz initially aimed to join Davidson on the tour in China in early October, but backed out--despite a go-ahead, according to his office, from the New York City Conflict of Interests Board--after publicity in this blog and the New York Post.

(Was he embarrassed about backing a questionable project? Possibly--though Markowitz also may have just wanted to avoid inevitable criticism in the Post about borough presidents accepting free travel.)

Still, Markowitz expressed enormous enthusiasm while appearing in a video shown to prospective investors.

While the video also includes clips from public events, such as Governor David Paterson at the Atlantic Yards groundbreaking, Markowitz's contribution was arranged specifically for the video, which contains subtitles in Chinese.

The audio version below combines all of Markowitz's statements, which were made at different junctures in the video. (Audio recording by Tom Spender; see note on sourcing at bottom.)




Fudging the description of "project"

"Atlantic Yards is the largest development in decades in Brooklyn, USA and one of the largest in the entire city of New York," Markowitz asserted, emphasizing his words like a carnival barker.
...

"I want to say how excited we are that, in two years, the Brooklyn Nets development will be completed and offer a new opportunity and a new way of life in our borough," Markowitz exclaimed.

Note that Markowitz conflated "Atlantic Yards," which is "the largest development," with "the Brooklyn Nets development," which will be completed in 2012.

Unsophisticated listeners might conclude that they are being asked to invest in "the largest development," which will be completed "in two years."

It won't. The three or four towers in Phase 1 could take 19 years, while the Development Agreement for the project as a whole allows 25 years..

The "project" being funded is just a subset of the larger Atlantic Yards project. No one has claimed that an arena, by itself, would offer "a new way of life."

Such a statement, while still hyperbole, might be more plausible attached to the project as a whole--which isn't being funded by these EB-5 investors.

Forest City Ratner "unbelievably reliable"

Later, Markowitz again hyperbolically praised the developer. "The largest company in Brooklyn is Forest City and I can assure you that their reputation is unbelievably reliable," he declared. "They're a great company to work with; they've worked very closely with government. The most important thing: they make a promise, they keep it."

Forest City may be the largest developer, in terms of projects, but isn't so large by other indices. (The health care industry is the largest employer in Brooklyn; Forest City Ratner, according to Hoover's, has 250 employees, which is far fewer than some hospitals.)

As for keeping promises, consider that Forest City once promised starchitect Frank Gehry and 10,000 office jobs. However, both are long gone and, as then-FCR executive Jim Stuckey once said memorably, "Projects change, markets change."

Other reasons to question the developer's reliability: insistence (since contradicted by a judge) that the project would be completed in a decade and the renegotiation in 2009 of the Vanderbilt Yard deal with the Metropolitan Transportation Authority.

Markowitz should know better. The developer, in its initial promotion of the project, promised that the flagship office tower would not block views of the iconic clock of the Williamsburgh Savings Bank building.

When the design, as presented, blocked the clock, Markowitz and others urged changes. The height of the tower was reduced, but it would still block the clock. Markowitz dutifully praised the reduction in height but ignored his earlier request about the clock.

Brooklyn "1000 percent" behind project?

In his final statement for the video, Markowitz declared, with even more schmaltz than usual, "All I can say, Brooklyn is 1000 percent, 1000 percent behind Atlantic Yards, and we invite Chinese investors to join with us, because there's nothing better than China and Brooklyn together."

He could never get away with such a statement on home ground.
...
Continue reading.




Posted: 12.08.10
DDDB.net en español.
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Eminent Domain Case
Goldstein et al v. ESDC
[All case files]

November 24, 2009
Court of Appeals
Ruling

[See ownership map]

EIS Lawsuit

DDDB et al v ESDC et al
Click for a summary of the lawsuit seeking to annul the review and approval the Atlantic Yards project.

Appeal briefs are here.

2/26/09
Appellate Divsion
Rules for ESDC
What would Atlantic Yards Look like?...
Photo Simulations
Before and After views from around the project footprint revealing the massive scale of the proposed luxury apartment and sports complex.

Click for
Screening Schedule
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"Atlantic Yards" documentary
Brooklyn Matters


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