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tag:blogger.com,1999:blog-207434592014-10-24T17:42:34.167-04:00Atlantic Yards (& Pacific Park) ReportThis watchdog blog, by journalist Norman Oder, offers analysis, commentary, and reportage about the $4.9 billion project to build the Barclays Center arena and 16 high-rise buildings at a crucial site in Brooklyn. Dubbed Atlantic Yards by developer Forest City Ratner in 2003, it was rebranded Pacific Park in 2014 after the Chinese government-owned Greenland Group bought a 70% stake in 15 towers. New York State still calls it Atlantic Yards. Contact: AtlanticYardsReport[at]hotmail.comNorman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-72480324980587744562014-10-31T20:00:00.000-04:002014-10-21T08:46:25.695-04:00Atlantic Yards, Pacific Park, and the Culture of Cheating (links)

I offer a framework to analyze and evaluate Atlantic Yards (in August 2014 rebranded as Pacific Park) and the Barclays Center: Atlantic Yards, Pacific Park, and the Culture of Cheating.

Note: this post is post-dated to remain at the top of the page. Please send tips to the email address above, rather than posting a comment here.

A model shown to potential immigrant investors in China in 2014,
though not shown publicly in Brooklyn.

From a deceptive 2006 Forest City Ratner brochure,
suggesting 6 acres of railyard would become a 22-acre project.

Norman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-71012522503142993212014-10-24T08:00:00.000-04:002014-10-24T09:42:06.867-04:00"Accountability and Atlantic Yards": first public meeting next Thursday on settlement that led to new housing deadline, monitoring body Also note Quality of Life meeting on November 12.

The settlement reached in June by representatives and allies of the BrooklynSpeaks coalition set a 2025 date for construction of the affordable housing (with firm penalties), and set up a new Atlantic Yards Community Development Corporation (CDC) in exchange for promises not to sue over discriminatory impacts of delay (and thus jeopardize Forest City Ratner's pending deal with the Greenland Group).

That represented progress--the housing was originally promised in ten years, but then given a 2035 outside date after renegotiation, and affordability becomes even more elusive with time. But it came with some question marks.

Some of the project's closest neighbors, represented by the Dean Street Block Association, warned that the "oversight created is just advisory and insufficiently defined," and that the settlement, negotiated behind closed doors, ran the risk of prioritizing "one category of interest over another."

Indeed, there's a potential tension between meeting deadlines and cutting corners on construction, as the Barclays Center buildout showed. And, as soon became clear, there was significant wiggle room on the affordability issue.

First full public discussion

The first full public discussion of the settlement will be held next Thursday, Oct. 30, at 8 pm at the Soapbox Gallery at 636 Dean Street, across the street from the southeast block of the project, where construction on two towers will begin in December.

The meeting is sponsored by the Prospect Heights Neighborhood Development Council, whose most prominent member, Gib Veconi, was one of the two community signatories of the settlement in June.

Thus the "Accountability and Atlantic Yards" title might also apply to the negotiations themselves.

"Learn more about the settlement reached between the Empire State Development Corporation, Forest City Ratner Companies, and community advocates," the notice (above) states, citing:

Shorter construction duration

New affordable housing commitments

Public oversight with local representation

Potential complications

Those issues all involve potential complications. The shorter construction timetable, while in some ways superior to an elongated buildout, could lead to cutting corners, especially since Greenland Forest City Partners has put aside plans to use modular construction--supposed to reduce the amount of workers and trucks--on the next buildings.

Even now, as noted in incident reports on Atlantic Yards Watch, there are regular violations of protocols by trucks serving the arena.

The new housing commitments contain significant wiggle room regarding the contours of affordability. In the next year, two 100% affordable rental towers will start--which also implies subsequent 100% market-rate rental buildings, rather than all 50/50 buildings, as promised--but the configuration of affordability does not match that long promised.

Instead, half the subsidized units in those towers would go to households earning 165% of area median income, or about $140,000 for a family of four (and commensurately less for smaller households). That means a two-bedroom unit would push $3,000--below market but hardly "affordable" to many who put their hopes in the project.

BrooklynSpeaks has said continued advocacy is necessary regarding the housing, which is surely true. But the change in affordability was obscured when the settlement was announced.

Also, the contours of public oversight have not fully emerged. The governor and ESDC said the CDC would "provide input on development, housing, and community impact throughout the completion of the project." BrooklynSpeaks said the CDC was "charged with overseeing compliance with all project commitments."

The official letter from the state indicated that the CDC would be "monitoring the delivery of public commitments by making policy recommendations to the ESD Board of Directors."

To "monitor" may mean to "oversee," but oversight in other contexts--as BrooklynSpeaks had long advocated--meant the project would be governed by a new dedicated board.

The distinction between what was advocated and what may result remains under debate--in both cases, the governor holds the cards--so I'll write more about it.

Empire State Development Atlantic Yards Letter by AYReport
Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-6907588002297815792014-10-24T06:30:00.002-04:002014-10-24T09:42:48.220-04:00Next Quality of Life meeting set for November 12; two towers set to begin in DecemberAlso note October 30 meeting on the recent settlement regarding Atlantic Yards.

550 Vanderbilt, kinda skewed

A message from Empire State Development:

Dear Community,
Forest City Ratner Companies, along with Empire State Development Corporation will host the next Quality of Life meeting on
Wednesday, November 12, 2014
@ 6:00 PM
Brooklyn Borough Hall, Community Room
209 Joralemon Street, Brooklyn NY 11201

We will present an overview of the upcoming construction activities surrounding the project. Please plan to arrive promptly in order to provide time for presentations and questions and answers from the community members. If you have any questions please contact Nicole Jordan at firstname.lastname@example.com. Thank you for your continued commitment to the overall success of this project.
Presumably the discussion will regard the two towers Greenland Forest City Partners plans to start in December, at the corner of Dean Street and Carlton Avenue (535 Carlton) and the corner of Dean Street and Vanderbilt Avenue (550 Vanderbilt).

The discussion likely also will cover plans for the green roof on the Barclays Center as well as the stalled B2 modular tower. It's unclear if, as in September, a presentation will be circulated before the meeting.

As I wrote in August, what was once a Quality of Life Committee, nominally involving community members as equal players, has become a meeting hosted by the developer.

It's not clear how the Quality of Life meetings will be incorporated in the new plans for an Atlantic Yards Community Development Corporation, set to launch in December, to monitor project commitments.Norman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-74354079714685789042014-10-23T19:50:00.001-04:002014-10-23T19:52:00.522-04:00On Saturday, piece of Sixth Avenue will close for a few hours so a crane for green roof can be installed on AtlanticAfter closing Dean Street and Sixth Avenue around the Barclays Center two weekends ago to allow for the erection of a giant crane to assist in the installation of a green roof around the arena, a less intrusive closure is planned for Saturday, October 25, for a few hours between 6 am and 11 pm.

This time, a crane for the green roof will be installed on the Atlantic Avenue side of the arena, which requires the temporary closure of Sixth Avenue, between Atlantic Avenue and Pacific Street. (It was actually supposed to be installed in August.)
The closure is expected to be in effect for a few hours during the afternoon and/or evening. There will be a detour of vehicle, pedestrian, and bicycle traffic from the block, while flagmen and Traffic Enforcement Agents, as well as Variable Message Signs, will be used for assistance.

Norman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-68607006517433390002014-10-23T06:00:00.000-04:002014-10-23T10:14:28.113-04:00Greenland Forest City now promoting condos to buyers in China; 2005 video shows executive claiming Forest City had no preference for condos

Two Forest City executives join two Greenland execs;
(not sure about man at left) source: Fang.com

Updated and clarified. Note Forest City says there's no sales effort.

"Projects change, markets change," Forest City Ratner executive Jim Stuckey, then the developer's point man on Atlantic Yards, told the New York Times in November 2005, after the newspaper belatedly examined the developer's plan to trade office space for more lucrative condominiums.

That was a notable evasion, especially since Stuckey claimed that the switch to condos was driven by community partners desirous of more housing.

And it was a notable understatement, given the gyrations before and since regarding Atlantic Yards (including the name change to Pacific Park), not to mention Stuckey's own sudden departure in 2007.

Forest City this year sold 70% of the remaining project to the Chinese government-owned Greenland Group. Now the new joint venture, Greenland Forest City Partners, has apparently begun the process for the first sales effort for Atlantic Yards/Pacific Park condos, in Shanghai.

Update: Forest City says no sales effort

Forest City spokesman Joe DePlasco says: "'They have not established a sales center for the condos in China. And they will not at this time. Units aren't even on sale yet." He adds: "They were talking about the joint venture, the project, Brooklyn, etc."

I know machine translation is inexact, but see below, from a local promotional/news account. which points to a sales effort. DePlasco responds, "Regardless of what the article says – or the translation of that section says – a sales office has not been opened in China and they are not actively selling units."

From machine translation of this promotional/news article.

Maybe some of this is semantic. I wouldn't expect them to be actively selling units before construction.

Greenland and Forest City executives at October 11 launch
event in Shanghai. Click to enlarge. Source: Fang.com

But it still looks to me that they have begun the process, and done so before office has been established in Brooklyn to rent the subsidized and market-rate apartments in other planned towers.

If so, the first people with a claim on apartments in a project with enormous public assistance from New York and U.S. taxpayers--direct subsidies, tax breaks, eminent domain, below-cost land, and an override of zoning--may be Chinese nationals.

Promotional event (and seeming sales effort)

On 10/9/14, New York YIMBY reported:

Greenland Forest City Partners – the joint venture recently forged between the Chinese developer that bought into the project and the Brooklyn-based firm founded by Bruce Ratner that started it – will host an introductory event for Pacific Park and 550 Vanderbilt in Shanghai this week...
They weren't introducing the affordable building, 535 Carlton, but rather the condo building.

Indeed, according to the machine translation of a Chinese promotional/news report, Saturday 10/11/14, marked the "worldwide release" of Pacific Park, with a "lavish feast," "inspiring passion passionate jazz performances," and the establishment of a sales center. (See screenshot above.)

Those present included of Greenland Chairman Zhang Yuliang and VP Xu Jing, Greenland USA's I-Fei Chang, along with Forest City Ratner's Chris Clayton and Melissa Burch. Attendees could win prizes, including tickets to a Brooklyn Nets game in Shanghai, another sign of synergy. (A separate effort to raise cheap financing via the EB-5 program is also under way in China.)

"It is promoting effects and its extraordinary influence on the regional economy, the project won three consecutive New York governor's approval, and New York City, Brooklyn government support," according to the article.

Stuckey famously defended the scale of Atlantic Yards to radio host Brian Lehrer in July 2006 by claiming the project required $1 billion--a figure I'm certain is inaccurate-- in "public infrastructure" and land purchases "before the first shovel goes into the ground to build a single affordable housing apartment or the arena."

"I think that's a very significant investment," Stuckey declared confidently. "That does deserve to make a profit. It is, after all, America."

 Or, apparently, China.

Stuckey's explanation

Stuckey's explanation to the Times was not the first time he addressed the switch evasively, though it was the first time Forest City's explanation got wide notice.

At the 5/26/05 City Council committee hearing on Atlantic Yards, the second and last in two years, Stuckey presented two versions of Atlantic Yards: one had the original 1.9 million square feet of office space and 6,000 apartments (1,500 more than announced in 2003); the other had 428,8000 square feet of office space, less than one-quarter the amount, and 7,300 apartments.

"When you do environmental impact studies, you are asked to look at alternatives," Stuckey said smoothly, "and in fact we are looking at another alternative, which in fact may have additional residential space, as shown on this drawing here, which could have as many as 7,300 residential units in this area, and a slight reduction in the office space."

A slight reduction? The addition of condos--later strategically reduced to 1,930--upended the 50/50 housing agreement just announced. Moreover, Stuckey's slide presentation indicated a drop from 1.9 million square feet to 428,800 square feet, hardly "slight."

(Forest City had increased the size of the project since the announcement.)

As shown in the video below, never before seen, Stuckey held an impromptu press conference after the hearing. Which alternative did he prefer, asked reporter Matthew Schuerman, then of the New York Observer, the version with the more office space or less?

Video courtesy of Battle for Brooklyn producers

"I don't really think that we have a preference," Stuckey replied neutrally, showing the wiles of a Vegas poker player.

"I think that the reason why we're showing both of those proposals, because we understand there's a very strong need for both jobs and housing," he continued. "And as a result of all of the meetings that we've had with the community, with elected officials, with community groups, with community boards, people who live in the area, what we've been hearing... is there is such a dramatic need for housing right now, so we have modified the plan to basically include more housing. But I don't think that we as a developer necessarily have a preference."

 Schuerman followed up: "Mr Stuckey, is it possible though, that, given the high price of housing now, that residential actually would be more profitable than office space?

"Again, I don't again think it's a matter of profit," responded Stuckey, who quickly changed the subject. "I think that Forest City has done very well as a business by building office space in Brooklyn."

Actually, as I've written, Forest City knew when the project was launched that the office market was dubious. In a 12/12/03 interview on WNYC's Brian Lehrer Show, Ratner said that "we need office space, when the market comes back, for companies not to leave the city."

In 2003, just before Atlantic Yards was announced, the city, as it pursued the rezoning of nearby Downtown Brooklyn, estimated that only 70% of potential office development would be accommodated in a decade.

In November 2009, asked by the not-unsympathetic Crain's New York Business about plans for the flagship Miss Brooklyn, Ratner snapped: "Can you tell me when we are going to need a new office tower?"

In the Times

On Sunday, 11/6/05, Times reporter Nicholas Confessore produced an in-depth but naively contortionist account, dominating the Metro section front. The headline was "Fewer Jobs and More Condos, Ratner's Opponents Complain," with the subtitle Routine Changes, or 'Bait and Switch'?

(The Times shouldn't have had to rely on "opponents" to point out that project changes--which the newspaper had failed to track at the May Council hearing--had eliminated many of the promised jobs and jettisoned the 50/50 housing promise. Bizarrely, Stuckey professed that Forest City was practicing "tremendous transparency" and claimed that criticism of the developer was "Orwellian, almost.")

The article stated:

Officials of Forest City Ratner said they eventually realized that they would have to reduce the amount of commercial space, to accommodate condominium units that would help pay for the project, including the below-market rental housing.
...The agreement signed last May between Mr. Ratner and Ms. Lewis applied only to the 4,500 rental units envisioned in the original plan. But it included a provision that if the developer added more residential units, the firm would develop 600 to 1,000 moderately priced for-sale units on or near the project site, in effect offering something close to a 50-50 ratio for all the housing associated with the project.
At the time, officials of Forest City Ratner said they were already contemplating adding 1,500 condominium units, in part because community leaders had pushed Mr. Ratner to include more housing in the project. That would have given the project 6,000 units of housing. But during a City Council presentation in May, Mr. Stuckey said the developer was contemplating adding an extra 1,300 for-sale units, bringing the total to 7,300 units.
That does not compute.

They weren't adding condos because community leaders asked for them. They added condos--as they had planned from the start--because it fit their bottom line.

Also, they didn't promise 600 to 1,000 moderately priced for-sale units, they agreed to "work toward" such a program. We haven't heard anything yet about that program, though Forest City in December 2006 said it would "seek to build" 200 of those condos on-site.

Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-8577469075867608132014-10-22T06:45:00.000-04:002014-10-22T21:09:55.779-04:00U.S. State Department protests use of official in marketing "Atlantic Yards III" EB-5 investment to Chinese, gets mention cut from promotionAlso see coverage of the misleading video used in Atlantic Yards III promotion.

From the Qiao Wai web site, last week

The promoters of the "Atlantic Yards III" investment, aimed at immigrant investors seeking green cards in exchange for cheap loans, have provoked a slap on the wrist from the U.S. State Department, which asked them to stop claiming that a top State Department official supported the project.

Now mention of Assistant Secretary of State Charles Rivkin has been removed from a Chinese migration consultancy's website promoting the investment, which still lists six upcoming seminars aimed to recruit investors.

Last week, in an article, on Twitter, and in queries to the State Department, I asked whether it was appropriate for Rivkin to be portrayed as supporting "Atlantic Yards III."

It is a $100 million slice of the overall Atlantic Yards/Pacific Park project, marketed under the EB-5 program, in which investors and their families get green cards by parking $500,000 in a low-interest loan for five years or so, as long as an economist's report suggests those funds create ten jobs. (The job-creation requirements are fuzzy, actually.)

Rivkin, as shown in the screenshot above right, got the most prominent placement in the promotion. It was, to my knowledge, the first time an active State Department official was portrayed as boosting an EB-5 program.

Now he's gone from the Qiao Wai web site, as shown in the screenshot at right, and Brooklyn Nets forward Mirza Teletovic, who has nothing to do with the EB-5 program but (duh) likes the Barclays Center, got a promotion on the page. Though the Barclays Center serves as the centerpiece of the promotion to immigrant investors, the arena has already been built and thus can't be the subject of the "Atlantic Yards III" investment.

From the Qiao Wai web site, this week

The fig leaf of official support

Another misdirection involves the other three officials portrayed as supporting the project: former New York Gov. David Paterson, former New York Mayor Mike Bloomberg, and former Brooklyn Borough President Marty Markowitz.

They're all out of office. And they praised the overall Atlantic Yards project, not this specific slice nor the previous two slices packaged for EB-5 investors, all of which come with their own separate business risks.

But the endorsement and presence of elected officials enhance a project in the eyes of potential investors from China and business ethics--in EB-5, in China--are often not a priority.

So the EB-5 promoters blur the difference. The promotion is the work of the Qiao Wai migration consultancy in China, which works with the U.S. Immigration Fund, a Florida-based regional center, a federally-approved entity to package the investments.

And the U.S. Immigration Fund works with Greenland Forest City Partners, the joint venture building Atlantic Yards/Pacific Park, which is owned 70% by the Greenland Group, a Shanghai government-owned enterprise.

As I wrote: as with the second round of Atlantic Yards fundraising, a foreign government is profiting by marketing a scarce U.S. public resource--green card slots under the EB-5 program--to its own citizens. And that, as far as I know, is unprecedented.

Rivkin's claimed role

In the screenshot at top, Rivkin was quoted as offering vague support for the overall project:

"Held and invested in by Greenland Group, the New York Atlantic Yards project has promoted local economic development, improved local employment, enhanced local urban functions, and made remarkable contributions to local development."

It's unclear whether he said those relatively bland words, and if so in what context. (He did hold a meeting with Greenland and did speak at a conference concerning EB-5.) But even if he did, that wasn't an endorsement of the EB-5 investment.

"Assistant Secretary Charles Rivkin has not endorsed or advised on any specific visa application or process," Kerry Humphrey, Media Advisor, Economic and Business Affairs Bureau, Department of State, told me, in response to my query.

"Assistant Secretary Rivkin is a public figure and sometimes his photograph is used without permission," she added. "His picture on this website does not constitute endorsement. We have asked for it to be removed."

Humphrey explained that State Department officials in Guangzhou contacted both Qiao Wai, which works with the U.S. Immigration Fund, as well as the Association to Invest in the USA (IIIUSA), the trade association of regional centers, to remove mention of Rivkin.

Thus the IIUSA, at the State Department's request, removed Rivkin from its website, apparently this 6/26/14 post:

For those who have been waiting to join IIUSA's trade mission to Xiamen, China – we have some excited new information to share. As part of IIUSA's commitment to bringing exciting and cutting-edge programming to our conferences, we are proud to announce that Charles H. Rivkin, the Assistant Secretary of State for Economic and Business Affairs, will be a special guest to the U.S. delegation to CIFIT. Previously, Mr. Rivkin served as United States Ambassador to France and Monaco.
The headline has since been changed from IIUSA Trade Mission to CIFIT: Special Guest Charles H. Rivkin to Speak to U.S. Delegation to IIUSA Trade Mission to CIFIT Fast Approaching!

More questions

In response to my questions, Humphrey stated, "President Barack Obama has made it clear that the United States is 'open for business' and the United States warmly welcomes foreign investors to operate in our transparent, stable and open market."

That sounds like an overall endorsement of the EB-5 program and others drawing foreign investment. (Then again, note some new skepticism from the Migration Policy Institute.)

"We value the feedback we receive from overseas investors and others looking to do business in the United States," she added. And, apparently, they listen to feedback from those who see how such business can be hyped.
Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-90283815938566160142014-10-22T06:30:00.002-04:002014-10-22T07:28:53.160-04:00In video for "Atlantic Yards III," the arena (soon to be sold) still gets prominence, while (stalled) B2 building portrayed as progressAlso see coverage of the use of a State Department official in Atlantic Yards III promotion.

So, what's the difference between Atlantic Yards II, the second effort to raise funds from immigrant investors under the EB-5 program (visas for low-interest loans that purportedly create jobs) and Atlantic Yards III, the third effort?

Well, Atlantic Yards II aimed to raise $249 million from 498 investors, mostly from China, while Atlantic Yards III, which is ongoing, aims at $100 million from 200 investors. But the projects are essentially similar.

Both promotions heavily on the Barclays Center, though the money (presumably) will go to construction of residential towers and/or infrastructure, and maybe even to pay off the first round of Atlantic Yards EB05 financing. And, as shown below, the upbeat videos promoting each project are very similar.

The projects are marketed by the U.S. Immigration Fund, a federally authorized "regional center" set up to package and promote such projects, along with the Qiao Wai migration consultancy in China, with the cooperation of Greenland Forest City Partners, the joint venture building the project.

The leader of the U.S. Immigration Fund, Nicholas Mastroianni II, Fortune recently reported, "has a long history of legal problems, failed ventures, and unpaid debts—which have continued even as his professional fortunes have turned sharply upward—leaving a legacy of conflicts, judgments, and entanglements." Perhaps he's found the lightly regulated EB-5 world more to his liking.

The Atlantic Yards III video

The video below uses the same interviews with Forest City Chairman Bruce Ratner and CEO MaryAnne Gilmartin that appear in the Atlantic Yards II video (bottom), with a focus on the Barclays Center, but with some new visuals.

Despite the official name change from Atlantic Yards to Pacific Park Brooklyn, they don't want to confuse the potential investors from China--where Atlantic Yards must be somewhat of a brand--so they're still calling it Atlantic Yards.

There are two new ironies. The video includes several dramatic shots (see above right) of the B2 modular tower, seemingly rising boldly in the sky. But B2 is stalled, and the subject of a bitter legal dispute.

That adds some irony to Ratner's claim about Forest City, in the video, "One of the most important thing about our company, if you were to ask people in New York is: they get it done. We finish things... We understand that it's very important for all the people in EB-5 that we do what we say we'll do."

Also, not only can the investors not put their money into the Barclays Center, Forest City soon may not own it. Its share of the arena is now up for sale, and may even be transferred early in the process by which the immigrant investors come to the United States.

Some new visuals

The new video contains some new visuals showing Forest City's partnership with Greenland and with EB-5 promoters. Some screenshots below. Note the Chinese subtitles, which (I presume) translate the statements by Ratner and Gilmartin.

The Greenland Forest City Partners logo. In Brooklyn?

Greenland and Forest City, working together

Ratner greets (I believe) Ding Ying of Qiao Wai and Nicholas Mastroianni III of the U.S. Immigration Fund

The Atlantic Yards II video

Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-46730522435284074552014-10-21T08:00:00.000-04:002014-10-21T14:26:44.961-04:00Current management seen as continuing at Barclays Center (operating company), though not clear how long; why is Ratner selling for seeming low price? Forest City Enterprises and Bruce Ratner are selling their 55% share of the Barclays Center--actually, the arena operating company--and only a few details have emerged since Sports Business Journal broke the news yesterday.

Sports Business Journal noted that investment bank Evercore, which is packaging the arena deal, declined to comment, and "Forest City referred questions to Nets and arena spokesman Barry Baum, who declined to comment."

Yesterday, however, there was a statement, as ESPN reported:

"Our goal is to identify a strategic partner as we continue to capitalize on the great performance of Barclays Center and the promise of Nassau Coliseum," Barclays Center spokesman Barry Baum said in a statement. "The current management team [Ratner and Barclays Center CEO Brett Yormark] will continue in its existing role."
That doesn't mean much. The current management team could continue as long as those owning the arena operating company decide to keep it. And the mention of the Nassau Coliseum suggests that the expected buyer/strategic partner might also get a piece of the Long Island arena.

Capital New York added this detail:

Exactly what sort of ownership structure will be created for the Barclays Center remains to be seen, but any deal will keep the Nets in place as the controlling owners. The team has a 45 percent stake in the arena.
I'm not sure of that syntax, because the Nets are not currently "in place as the controlling owners." Prokhorov, who owns 80% of the team, is a minority owner of the arena holding company. That might simply be an awkward interpretation of the statement that the current management would remain.

The Daily News reported:

Still, insider sources said that the best way to drive the value for Barclays Center is to keep the key players in place, meaning Ratner and CEO Brett Yormark could maintain their roles as day-to-day operators of the arena.
I'd bet those "insider sources" were current management.

A tenant/occupant owner, or not?

The new Islanders ownership has been mentioned as a potential buyer, as well. Sports Business Journal observed:

Indeed, if one of those two teams' owners does not buy the arena — the Nets' controlling owners hold the other 45 percent stake of the building — the structure would join a select list of venues in sports: an arena hosting two professional sports teams, but all three entities having separate ownership.
That runs counter to the traditional model of a team wanting to control the arena it plays in, enabling that franchise to benefit from having non-sports revenue at the facility as well.
If and when Prokhorov takes a majority, that means that almost all of the Atlantic Yards project--the arena plus 15 planned towers--will be under the control of foreign owners.

Ownership of the Barclays Center and the Brooklyn Nets

I'd bet that the one remaining building, the stalled B2 modular tower, will eventually be owned by Greenland Forest City Partners, the joint venture 70% owned by the Shanghai government-owned Greenland Group.

Public ownership

Note that neither Porkhorov nor Ratner actually own the arena, which is technically publicly owned and leased for a dollar.

The arena is nominally owned by the Brooklyn Arena Local Development Corporation, a creation of the Job Development Authority, which is an alter ego of the Empire State Development Corporation. That enables a complicated process for the developer to save money via the issuance of tax-exempt arena bonds.

The arena is then leased (I believe) to Brooklyn Arena, LLC, which is currently owned 55% by a Forest City affiliate and 45% by a Prokhorov affiliate. (See graphic at right from the 2010 Official Statement for the arena bonds, and click to enlarge.)

The new owners will still have to pay PILOTS (payments in lieu of taxes) to pay off the $511 million in tax-exempt bonds.

Sale at a loss?

The Daily News picked up (without credit) my observation that the $750 million assumed valuation, based on revenue flow, appears to be a loss, based on $930 million or $845 million in project costs (which add infrastructure). Ratner's share would be some $400 million.

The Wall Street Journal reported:

The move stands as a test for the value of the arena. In its first full year of operations, the building generated just shy of $30 million of operating income, less than its debt expenses, Forest City reported, leading to a loss for the year.
Since then, the performance has improved—it reported $21 million in operating income in the first six months of this year.
But at a pace that is still well below initial projections, which envisioned more than $70 million in annual operating income.
Even so, that doesn't mean Ratner should be selling at a loss, especially since the Barclays Center appears poised to reap more consistent revenues when the Islanders move in September 2015.

Could the concert business be that variable? Were some of the big-name concerts achieved by giving the artists particularly sweet deals?

Or is there more to the price and the contours of the deal than meet the eye?

One thing to note is that Forest City will still remain in the arena business, with the project to revamp the Nassau Coliseum. One of the selling points for that detail was potential synergy with the Barclays Center.

A wild-card explanation

Here's a wild-card thought as to why they might be selling the arena: maybe Forest City recognizes that, even with the coming green roof on the arena, it won't muffle sound enough before it hits the adjacent apartment buildings that they are building (two of them with Greenland). And they don't want to be responsible.

Ratner's selling the Nets

Ratner has been unable to sell his 20% share of the Nets, though the paper valuation of the team has rocketed, to a potential $1 billion or more. There's apparently a gap between the paper value and the lack of annual profits.

 Sports Business Journal reported:

The problem, market insiders said, are the steep financial losses at the Nets, which incurred a U.S. sports record loss of $144 million last season, according to published reports. The team has committed to stop the red ink after this season, but with an owner, Prokhorov, seen as willing to tolerate losses to sign top players, finding a willing partner subject to capital calls is not easy.
...Forest City paid Prokhorov a fee to avoid capital calls through July 2015, according to Forest City's annual report, so the purchaser of the stake would apparently enjoy one capital-call-free season — the coming, 2014-15 season.
Murkiness about Prokhorov

Prokhorov's future is up in the air, too, as the Daily News reported:

Meanwhile in Russia, a leader of a political party said Monday that Mikhail Prokhorov could again dive into Russian politics "at any moment" ahead of the 2016 elections. As part of Russian law enacted under the rule of President Vladimir Putin, the 49-year-old Prokhorov would either have to divest his majority shares of the Nets or place the basketball team under control of one of his Russian companies if he again wants to run for office.
ESPN reported that at least one interested party said Prokhorov would be willing to give up majority ownership for the right price.Norman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-47346894795191039752014-10-20T09:40:00.000-04:002014-10-21T08:57:43.942-04:00Breaking: Ratner's selling share of Barclays Center (at a loss?)See update that explains that current management should remain, at least in the near term.

NetsDaily, drawing on Sports Business Journal's paywalled report, tells us Bruce Ratner selling majority share in Barclays Center. And while the publication did not report the projected sales price, it suggested that the arena's worth $750 million based on revenue flow, with Ratner's 55% share (part of a consortium with about 100 other investors) valued at a little more than $400 million.

That's an interesting number, because the arena, the transit connection, and site work cost $934 million, Forest City has said. Another accounting put project costs at $845 million.

I don't doubt the calculations regarding the sale are complicated, but that $750 million figure on its face looks like a loss.

In the first year, arena revenues were well below the expected figure, though they improved in the second year. The advent of the Islanders in 2015 should deliver a steadier revenue flow, even if concerts diminish.

So it's curious that the arena's for sale; perhaps Forest City recognizes that the upside from the Islanders is most available now, or perhaps Cleveland has decreed it. But Ratner has called the arena "fortress real estate," meaning it's something that can't be easily duplicated.

SBJ writer Daniel Kaplan suggested that potential owners could be Nets owner Mikhail Prokhorov, who owns a 45% share of the arena, or the new owners of the Islanders, former Capitals owner Jonathan Ledecky and London-based investor Scott Malkin.

If Prokhorov controls the arena, that would mean that foreign owners control all of Atlantic Yards. (Update: Yes, as the commenter points out, except for B2. But I wouldn't be surprise to see the Greenland Group take a share.)
Norman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-25921008109615003322014-10-20T06:00:00.003-04:002014-10-20T12:13:30.679-04:00Photo & GIF show 550 Vanderbilt rendering skewed to diminish size; model released in China (but not U.S.) suggests full Atlantic Yards bulk

What's wrong with the rendering at right of 550 Vanderbilt, the planned condo tower at the northwest corner of Vanderbilt Avenue and Dean Street?

It's not just that, as I wrote, the rendering offers a selective perspective, which minimizes the scale transition between low-rise buildings on Vanderbilt and this 202-foot tall, 17-story, 275-unit tower.

It's that the perspective itself is a lie. It makes the three-story, mixed-use red brick building across the street look shorter and wider than the reality. That allows the tilted tower to fit in the rendering.

Let's try a GIF to compare a photo of that three-story building at 552 Vanderbilt, which has the restaurant Chuko Ramen on the ground floor, with a similarly cropped piece of the rendering.

It's odd, isn't it. The top left corner of the photo and rendering pretty much start with the same sliver of the adjacent building, then extend to the cornice of 552 Vanderbilt. And the bottom right border is the southwest corner of Vanderbilt and Dean.

In the rendering, however, the three-story building at 552 Vanderbilt is stretched and tilted. The far side of the building points down, and both the windows and the brick between them seem widened.

The result? Minimizing the scale of 550 Vanderbilt, which is actually one of the smallest buildings planned for Atlantic Yards.

In China, a huge project

Ironically enough, in China, potential immigrant investors in "Atlantic Yards II"--the second round of immigrant investor funding, now on its third round--were in January 2014 shown the model below, which emphasizes the full scale of the project and may exaggerate at least some of the towers.

(They were shown the model at an event sponsored by the Qiao Wai migration consultancy, which works with the U.S. Immigration Fund, the "regional center" packaging the low-interest loan under the EB-5 program. The U.S. Immigration fund was working with Forest City Ratner and, presumably, the Greenland Group, its pending partner. Surely the model was produced in cooperation with Forest City.)

This model has not been shown publicly in the United States. In China, the audience is different: the immigrant investors wouldn't care about community impact but rather would be impressed by the project's grandeur. And Greenland, now the 70% owner of Atlantic Yards (minus one tower and the arena), loves to build big.

Consider that the southern wall of 550 Vanderbilt, at the southeast corner of the site, is ten stories, while the current plan, as shown in the rendering above, is for seven stories. Also note how the open space--remember, Pacific Park?--seems minimized.

Also note that the model may indicate a change in the project plan--or simply was an expedient but incorrect interim representation. The tallest building on the eastern third of the site, Building 9, over the railyard between Carlton and Vanderbilt avenues, is supposed to rise 419 feet.

But it looks nearly as tall as the 511-foot B1 and the 510-foot B4, both on the arena block. Could some buildings will be taller or smaller than previously represented? Stay tuned. As I've said, Atlantic Yards is a "never say never" project.

The tight view of Vanderbilt and Dean: photo

The tight view of Vanderbilt and Dean: rendering

The full view of Vanderbilt and Dean: photo

The full view of Vanderbilt and Dean: rendering

 552 Vanderbilt, from Google Street View

From Google Street View

Norman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-20260099204381799322014-10-20T05:30:00.000-04:002014-10-20T05:30:03.507-04:00OK, Pacific Street between Carlton and Vanderbilt will be restored to two-way traffic tomorrowA message from the developers of Atlantic Yards/Pacific Park:

On Tuesday, October 21, 2014 at 11:30 AM Pacific Street between Carlton Avenue and Sixth Avenue will be restored to TWO-WAY TRAFFIC.
Last Tuesday, 10/14/14, I cited the latest project Construction Alert, which indicated that Pacific Street between Sixth and Carlton avenues were to be restored to two-way traffic a day later, weather permitting.
Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-34201776409669946122014-10-19T08:00:00.000-04:002014-10-19T08:03:23.080-04:00If the use of "game mechanics" can improve the democratic process, would it have helped with Atlantic Yards? No.So, the epic Atlantic Yards hearing in August 2006 serves as the distinct "Don't" lead anecdote in Making Democracy Fun, the recent book by Josh Lerner. He's Executive Director of The Participatory Budgeting Project, "a non-profit organization that empowers communities across North America to decide how to spend public money."

What's the solution? As noted in a book excerpt published in the October 2014 Utne Reader, What the Democratic Process Can Learn From Good Game Design, "Implementing game mechanics, such as collaborative competition, can make the democratic process more effective and even enjoyable."

That may well be true, but it has nothing to do with the hearing on the Atlantic Yards Draft Environmental Impact Statement. As I now know, though didn't convey in my coverage (which was among the sources Lerner drew on), the hearing wasn't meant to produce a meaningful outcome.

It could have been less of a charade, with some of the reforms Lerner suggests below. But it still would not have led to collaborative decisions, the way, say, participatory budgeting does.

Instead, under New York State law, an environmental review produces a disclosure document, aimed to disclose but not necessarily mitigate impacts. It does not involve decisionmaking. The public hearing is the publicly theatrical part of a process that also includes an opportunity to comment in writing--and the comments made in writing have exactly the same (minor amount of) weight.

The disclosure document can disclose some options that represent changes around the edges--say, reducing the amount of parking in the project--but that is relatively rare.

Rather, the environmental review is a document, required under the state's legal framework, aimed to avoid lawsuits. The deal and the project arrive already cooked by the parties that matter. Their big fear--as has emerged in more than once in the Atlantic Yards saga--is a lawsuit.

From the book/article: Atlantic Yards

 Lerner writes:

Everyone loves democracy—except for most of the time, when they hate it. Despite its wide appeal, democracy has a remarkable ability to be fantastically boring, bitterly painful, and utterly pointless. This ability is so incredible that, in mere hours, democracy can transform a thousand passionate activists into a room full of lifeless faces and empty chairs.
Case in point: A public hearing on the largest development project in New York City history—Brooklyn's Atlantic Yards.[actually it's Brooklyn history] On a late August afternoon in 2006, hundreds of opponents and supporters crammed into a university auditorium, with latecomers lined up outside. Officially, the hearing's goal was to collect input on the project's Draft Environmental Impact Study [Statement, not study]. In other words, to help determine if the developer could plant a new basketball stadium and 16 soaring apartment towers in the middle of Brooklyn's brownstone neighborhoods. And if so, how?
The hearing was a nasty battle. Opponents protested that they only had 66 days to review 4,000 pages of technical documents. They warned about endless traffic jams and sketchy guarantees of affordable housing, claiming that the new apartments would just be "rich folks' housing." Unions and other supporters praised the new jobs, housing, and basketball team that the project vowed to deliver. Amid the chaos, the hearing organizers called in the police to remove an outspoken critic. Speakers faced constant heckling and threats. "The bulldozers are coming," boasted an ironworker, "and if you don't get out of the way, they're going to bulldoze right over you."
The Atlantic Yards hearing was about as much fun as, well, your average municipal hearing. After listening to waves of repetitive presentations and canned rhetoric, most of the crowd left early. Those who remained looked dazed. Many walked away frustrated, after signing up to present and not having time to speak. Thousands of other 'concerned citizens' had, no doubt, opted to stay home entirely, to avoid a futile shouting match. In the end, the hearing also failed to deliver a clear sense of how to improve the Environmental Impact Study.
The problems that plagued the Atlantic Yards hearing are typical of democratic participation. Governments and organizations are calling on citizens to engage more actively in political processes, beyond voting in elections. In most cases, though, participation is dominated by the 'usual suspects' and extreme voices, and widely dismissed as pointless. It rarely resolves conflicts or changes decisions. For most people, these opportunities to participate are simply not very attractive, compared with the countless other ways to pass time.
From the book/article: AY & game design

Lerner offers these suggestions:

Once I looked at public participation through the lens of game design, I began to question what I thought I knew about democracy. I reflected back on my experience as an urban planner and facilitator, designing and leading scores of workshops and meetings for community development programs in North America, Latin America, and Europe. I revisited the lessons learned from years researching participatory democracy in a dozen countries. And I realized, more so than ever before, why some meetings worked better than others. I glimpsed the power of good game design.
In the case of Atlantic Yards, game design concepts explain why the hearing was not fun, and how it was designed to fail. The organizers made conflict more antagonistic, asking presenters to explicitly identify as either for or against the development. They offered no opportunities to tackle problems collaboratively. They did not announce the hearing rules in advance, and the facilitator ignored rules about speaking time limits for many politicians and project supporters. People did not really know what they could accomplish by attending, and they had no way to measure progress toward any particular outcomes. There were almost no engaging visuals or sound effects. Combined, these design choices doomed the hearing.
In part, I don't disagree--there was no room for people to claim a more nuanced stance and it was irresponsible not to explain the hearing rules in advance or adhere to time limits--but those reforms would not have helped. Nor would better design choices have helped.

Consider: more recently, the public hearings have been somewhat better run, but the fundamental issue remains unchanged.

There was, in the initial and later rounds of environmental review, a huge goal at stake--for Forest City Ratner to get to "entitlement," or the permission to build the project as proposed. The goal was not to hear the public offer tweaks.

What's democracy?

If "games are designed to be enjoyable, and democracy is not," as Lerner aptly writes, the Atlantic Yards hearing was designed not to be democracy in the first place. There was no shared goal. There was no plan. There was no common resource that was the subject of tabula rasa decisionmaking.

The Empire State Development Corporation (aka Empire State Development) was set up to avoid "red tape," to push through projects without the messy democracy of a legislative review.

Lerner writes:

To maximize the fun and minimize the dangers, I propose that governments and organizations redesign democratic processes to include 5 kinds of games and 26 game mechanics. When appropriate, they should use animation, team-building, capacity-building, analysis, and decision-making games. But, more important, they should design democracy to be more like a game, by drawing on game mechanics that engage the senses, establish legitimate rules, generate collaborative competition, link participation to measurable outcomes, and create experiences designed for participants.
Those sound fine, but with Atlantic Yards and other ESD projects, there was, and is, no way to "link participation to measurable outcomes."

Even finding a way to incorporate public participation going forward has been a challenge--and the subject of another article.Norman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-85714342081143333172014-10-19T06:30:00.000-04:002014-10-19T17:19:53.580-04:00Gehry gets big retrospective in Paris. Atlantic Yards *context* gets ignored.Updated to clarify that a model of Atlantic Yards is included, just no context.

Los Angeles Times architecture critic Christopher Hawthorne yesterday wrote, Comprehensive 'Gehry' retrospective in Paris draws sociological blank:

The exhibition is an impeccable vacuum. The curators have worked strenuously, if invisibly, to keep at bay the full range of issues that have given the rest of the architecture world a full-on identity crisis in the last decade or so.
The curators cast Gehry in a well-worn mold: as one of the Great Men of contemporary architecture, a lone creative genius who has navigated a path from teenage Canadian immigrant in postwar Los Angeles to global superstar, churning out unorthodox houses, museums and concert halls all the while.
...Other banished subjects include Gehry's complicated relationship with Los Angeles, his adopted hometown; the uncertain fate of his proposed memorial to Dwight D. Eisenhower near the Mall in Washington, D.C.; the political uproar that greeted his plan, sponsored by Bruce Ratner, to drop more than a dozen separate buildings and an NBA arena into the middle of Brooklyn; and recent controversy surrounding labor conditions for construction crews in Abu Dhabi, where Gehry's firm is designing a massive Guggenheim satellite due to be completed in 2017.
Hawthorne makes the case that museums can treat architecture exhibitions more broadly, and urges curators at the Los Angeles County Museum of Art, where the Gehry show is scheduled to appear in September 2015, to broaden the frame.

Here are a couple of Gehry retrospectives.

And just as the curators omitted the context of Atlantic Yards from Gehry's history--there is a model in the show--so have the new owners of the project written out Atlantic Yards, converting the project to Pacific Park Brooklyn. Except in China.

Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-37134969035036986012014-10-18T15:05:00.000-04:002014-10-18T15:05:02.454-04:00The spiffy future of 470 VanderbiltIt's quite interesting to see the way RXR Realty, which bought a nearly 75-year lease on 470 Vanderbilt, the factory turned server farm turned office space at the northwest corner of Vanderbilt and Atlantic Avenues, expects to see it spiffed up, with upscale retail on the ground floor. (And with city's tallest public housing tower in the background.)

Presumably that retail will become more attractive when Atlantic Yards/Pacific Park towers open across Atlantic, first between Dean and Pacific streets, later between Pacific Street and Atlantic Avenue.

As RXR states:

470 Vanderbilt Avenue is a Class A office building prominently situated on a 3-acre, full city block bounded by Atlantic Avenue and Fulton Street. Just minutes away from the Barclays Center and the Atlantic Yards Development, 470 Vanderbilt has recently undergone a $74 million dollar capital improvement program transforming it into one of the most state-of-the-art assets in this emerging neighborhood.
Crain's wrote in February:

The 10-story property is largely leased. In 2011, GFI Development, the firm that sold the leasehold to RXR Realty in the deal, leased six floors of the building, space totaling about 400,000 square feet, to the city's Human Resources Administration for 20 years. It was a homerun transaction for a property that for years had struggled to find tenants and sat vacant.
RXR's one-page ad

Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-19276762807266576812014-10-17T08:00:00.000-04:002014-10-17T08:08:37.410-04:00Poor timing for Popular Mechanics article saluting modular breakthrough with B2 towerIn what looks like unfortunate timing, likely based in part on a long lead time, Popular Mechanics on 10/7/14 published Building a High-Rise, One Room at a Time: The United States' first modular skyscraper is coming together in Brooklyn.

The article is written in the present tense, though construction as been stalled at Forest City Ratner's B2 site (aka 461 Dean) since August:

At the 461 Dean construction site in downtown Brooklyn, there is no barking foreman. There's no screeching chop saw or pounding jack hammer. The loudest thing you hear is a hand-driven pulley, rattling like an anchor chain through a hawsehole as a lone worker in a hard hat uses it to tension the lift cables attached to what looks like a particularly sleek trailer home.
Except it's not a trailer home. It's a finished apartment. Sitting on a flatbed.
There is an interesting anecdote in the piece:

A project of 461 Dean's scale involves many people, but it was primarily the brainchild of two: Roger Krulak, a senior vice president at Forest City Ratner, a leading property developer in New York; and David Farnsworth, a principal with Arup, the famed architectural engineers. They met in 2008, when the Great Recession had put a premium on streamlined construction methods. Despite finding that modular high-rise construction was both plausible and cheaper than conventional methods, with big money for projects tight, the two had to put their idea on the shelf—until Forest City Ratner CEO Bruce Ratner saw a viral video of a Chinese company building a hotel in 15 days. He sent Krulak an email: "How do we build this here?"
Skating lightly over impasse

But it skates very lightly over the current bitter battle:

Unfortunately they couldn't perfect the partnership, as FCS and Skanska are currently at a legal impasse, but the two men did create a system that will revolutionize construction.
Are we sure? As I wrote in September, the stalled tower may be not just delayed but also defective.

"It is impossible to predict that the building when completed will perform as designed; and in particular, it is impossible to predict that the curtain wall joints will be and, over time, will remain effective barriers to the passage of air and water," warned Skanska USA Building in a 146-page letter August 8 to estranged partner Forest City Ratner.

"[I]n simple terms, no one knows if the building is going to leak," Co-Chief Operating Officer Richard Kennedy wrote, arguing that the system did not work.

Is it a breakthrough?

According to the Popular Mechanics article, "461 Dean is built from blueprints of the sort used in the aerospace industry" and the "placement of every component is predetermined and referenced to a single, fixed point." But that's not working, according to Skanska.

Yes, Skanska is seeking advantage in a legal proceeding, so its claims--as well as Forest City Ratner's counter-charge that Skanska early on signed off on the building's constructability--deserve some measure of skepticism.

At the same time, celebration seems premature. But Farnsworth and Krulak were honored by the magazine with a Breakthrough Award, as noted by Real Estate Weekly.

Norman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-49574148193023232302014-10-16T05:00:00.000-04:002014-10-15T21:17:40.772-04:00In China, Nets' visit boosts "Atlantic Yards III": deceptive pitch for cheap financing from Chinese millionaires seeking green cards under EB-5

Nets vs. Kings in Beijing

The Brooklyn Nets, in China for the NBA's Global Games, have played in Shanghai and Beijing. The Nets sold "Hello China" t-shirts. The Brooklynettes saw the Great Wall. The team revamped a gym in Beijing with a Nets theme.

Tweets, press releases, and articles piled on publicity.

A quieter--at least to an American audience--but cynical and deceptive activity was also under way: a third effort to essentially sell visas to Chinese millionaires (and their families) in exchange for short-term low-interest loans of $500,000 that purportedly create ten jobs.

The"Atlantic Yards III" promotion--aiming at $100 million from 200 investors--should save Greenland Forest City Partners tens of millions of dollars in interest, while delivering big fees to the middlemen, including lawyers, immigration consultancies, and the U.S. Immigration Fund, the federally-authorized regional center that packages the investment.

It comes on top of $228 million raised in 2010 by Forest City Ratner under the federal government's EB-5 program, and $249 million raised earlier this year by Forest City, in combination with Greenland. (In the Chinese EB-5 market, the Atlantic Yards brand has enough cachet that they're not calling the project Pacific Park.)

From the opening seminar Oct. 10 in Shanghai; Nicholas
Mastroianni III of U.S. Immigration Fund at left

Why bother, when the partners presumably have a significant amount of equity? Because they need loans to proceed with the project, and they want a bargain.

"It's a very low-cost way to fill out your capital stack," a real estate lawyer has said, comparing a 12% interest rate for a mezzanine loan to an EB-5 loan in "the low single digits."

(The immigrant investors care more about getting green cards, and getting their money back after five years, than a robust interest rate.)

Reasons for cynicism about EB-5

The federal government's EB-5 program should inspire significant cynicism on its face, given that it's dubious to let the wealthy, especially ones with no special skills, jump the immigration line.

Also, it's fundamentally dubious to hand out green cards when no actual new jobs need be counted (indirect jobs are OK) and when private companies--not the public--are the major beneficiaries.

The EB-5 track record should inspire further cynicism, given that, to qualify for the $500,000 investment, the regional centers gerrymander the map to ensure that the project is located in an area of high unemployment. (Remember the "Bed-Stuy Boomerang" that encompasses Atlantic Yards?)

Indeed, the gold rush is such that EB-5 has generated some clear scandals, such as the one that inspired a Fortune cover story in July, or the one that's become a huge topic in the race for Senate in South Dakota.

"[B]ecause the EB-5 industry is virtually unregulated, it has become a magnet for amateurs, pipe-dreamers, and charlatans," observed Fortune, which offered a good primer on EB-5.

Why this EB-5 project is even more questionable

With Atlantic Yards III, the scandal is what's legal or--apparently--tolerated by agencies that pay too little attention. But it should inspire more cynicism (as with "Atlantic Yards II") for three major reasons:

At the opening seminar: shooting hoops with Sam Perkins (?)

the publicity for the project accents the Barclays Center and basketball, but the investment under consideration cannot go into the already-constructed arena

the publicity claims support not only from officials no longer in office but also a current top State Department diplomat

Greenland Forest City Partners, the joint venture that will reap the savings from a below-market loan, is 70% owned by the Greenland Group, itself owned by the Shanghai government

In other words, as with the second round of Atlantic Yards fundraising, a foreign government is profiting by marketing a scarce U.S. public resource--green card slots under the EB-5 program--to its own citizens.

This is, as far as I know, unprecedented. And the role of Greenland (see the green logo at top left in the advertisement below) enhances the investment for a Chinese audience.

Web advertisement for Oct. 10 investment seminar for "Atlantic Yards III" in Shanghai. Note pebbled basketball surface.

If this is legal, it's unimaginable this scenario was contemplated by Congress when it authorized the program in 1990, aiming to compete with other countries that were welcoming the world's wealthy in the wake of uncertainty in Hong Kong.

In other words, it's twisting the spirit, if not the letter, of the law even more than the dubious 2010 first round of Atlantic Yards EB-5 fundraising.

First round of EB-5, 2010

Then again, Forest City Ratner and Greenland, two hard-charging companies willing to push the envelope, seem to have good company with the Qiao Wai Group, itself questioned in the Chinese press in 2011, and the U.S. Immigration Fund.

The firm's leader, Nicholas Mastroianni II, as Fortune just reported, "has a long history of legal problems, failed ventures, and unpaid debts—which have continued even as his professional fortunes have turned sharply upward—leaving a legacy of conflicts, judgments, and entanglements."

(Earlier this year Mastroianni hired Charles Gargano to promote EB-5 projects. As former head of the Empire State Development Corporation, New York state's economic development agency, he can offer the patina of government support, which provides an edge before Chinese audiences.)

Misleading pitch, claiming diplomat's nod

One immigration lawyer has decried a "pandemic of hype-driven EB-5 marketing," particularly in China. The promotion for "Atlantic Yards III" sure qualifies, where a not-so-savvy audience can be seduced by the glamor of an arena and the NBA.

While advertisements for the first seminar (see left) showed the planned three towers around the arena, of course, there was no mention that the first tower, built via experimental modular technology, is stalled and mired in lawsuits.

It's misleading, notably under the heading of the Chinese terms for "government support," as indicated in the graphic below right.

The proponents of the "Atlantic Yards III" investment, on a web page set up by the Qiao Wai Group migration consultancy, include elected officials like Mayor Mike Bloomberg, Gov. David Paterson, and Borough President Marty Markowitz, who are no longer in office.

There's no way they can support the specific $100 million investment in Atlantic Yards III, which presumably will be aimed at construction of residential towers and/or infrastructure--unless it's somehow deployed to pay off previous EB-5 loans.

From Qiao Wai web site

Their comments, according to a machine translation, represent general support for the arena, Atlantic Yards, and jobs, not the specific EB-5 investment,

Also, this is the first time I've ever seen EB-5 promoters claim that a top U.S. diplomat is in support, in this case Charles Rivkin, Assistant Secretary of State for Economic and Business Affairs. As far as I can tell from a machine translation, Rivkin is saying optimistic things about Atlantic Yards.

It's highly doubtful, however, that if he said such things, he did so in official support of the overall Atlantic Yards project, much less official support of this specific EB-5 investment. (I've queried the State Department.)

Zhang (l.) & Rivkin. Photo: Greenland

According to a press release from Greenland, Rivkin on 9/5/14 met with Greenland Group President Zhang Yuliang and six other Chinese entrepreneurs on U.S.-China trade and economic relations.

That press release apparently triggered coverage in the Chinese press, including reported praise from Rivkin for Atlantic Yards.

But I'm pretty sure that no State Department official would ever favor one EB-5 investment over another or offer official support.

The opening seminar

Machine translation of Chinese headline

As noted in the screenshot of the translated headline at right, the visit by the NBA teams was promoted, at least in China, as part of the EB-5 immigration program. One article from Qiao Wai promised VIP tickets for the a Nets game

And, as shown in a photo near the top of the page, at the Oct. 10 event, visitors got to shoot a basket with a very tall ex-professional basketball player, apparently Sam Perkins.

According to a Chinese language news account of the event, Perkins was joined by current Net Jarrett Jack as well as Chocolate Thunder himself, the retired Darryl Dawkins, who also participated in the 2010 effort at EB-5 fundraising. (I wrote in 2010 how project promoters relied on the distraction of basketball.)

Darryl "Chocolate Thunder" Dawkins helps hawk green cards

Also participating were CEI Ding Ying of Qiao Wai, Nicholas Mastroianni III of the U.S. Immigration Fund, and Chris Clayton of Forest City.

The apparent success of the previous Atlantic Yards EB-5 fundraising--numerous investors have seen their I-829 petitions granted, thus allowing permanent residency after a two-year conditional period--has fueled similar claims about Atlantic Yards III.

According to the news account, 14 Chinese families signed up on the spot, a good start to the 200-investor quota.

Then again, the entire history of EB-5 promotion has stressed the arena and basketball, even though the money was not going into the arena.

Due diligence investigation by immigration firm?

Check out the photo at right, from the web site of the Kunpeng immigration consultancy, which shows Kunpeng affiliates visiting the arena and holding basketball, joined by noncredible pitchman Gregg D. Hayden of the New York City Regional Center (the middleman for the first round of EB-5 money) and, I believe, Rebecca D'Eloia of Forest City Ratner.

The Qiao Wai web site also apparently suggests that, according to a machine translation, "the government will provide an additional $18.3 million" in subsidies and tax breaks. It's unclear what that means, but it may refer to the subsidies assigned to one or more residential towers.

One final element of the pitch is that the fourth and fifth stages of Atlantic Yards--who knew it was divided that way?--will not be open to EB-5 investors. (We'll see.)

Who's involved

As shown in the screenshot below, the promotion from Qiao Wai touts the role of several "heavyweight guests" (according to machine translation), some of whom may not be formally involved in the EB-5 pitch.

In the top left is Qiao Wai's Ding Ying, followed by Forest City Ratner's Melissa Burch, Chris Clayton, and Jeffrey Rosen. At top right is the U.S. Immigration Fund's Nicholas Mastroianni II, and at bottom left is his son Nicholas Mastroianni II.

From Qiao Wai web site

Then, oddly enough, come the retired players Perkins and Dawkins, as well as current Nets players Mason Plumlee and Jarrett Jack. As noted above, Jack apparently attended one promotional seminar. Perhaps Plumlee was assigned to the other

Fun fact: Plumlee is described in Chinese---at least according to imperfect machine translation--as "the American version of Yao Ming." That's is a disservice both to the legendary, post-playing 7'6" Chinese center and the mobile, promising 6'11" second-year Nets center-forward.

Who's in charge? Greenland

It's notable that the Qiao Wai web site portrays the partners with Greenland's Zhang above Forest City Enterprises CEO David La Rue. (It also associates him with the subsidiary Forest City Ratner.

By contrast, when "Atlantic Yards II" was presented to potential buyers, the Greenland deal was announced by not consummated, and LaRue came first.

The text below about Greenland, according to a machine translation, describe the history of the company, its significant growth internationally, and the process to take 70% ownership of Atlantic Yards.

From Qiao Wai web site

The text about Forest City describes the company's history, range of activities in key markets, and previous EB-5 immigrant investor projects, according to a machine translation.

Promoting Barclays Center

Remember, the arena is irrelevant to the EB-5 investment at hand, but the Qiao Wai web page still promotes it.

There's an approving quote from Nets player Mirza Teletovic, as well as "local retired teacher Andrea Cave," whose quote apparently comes from her statement to the Daily News that the area "was really crappy" at one time but is "much safer now."

From Qiao Wai web site

More glaringly, there's a screen shot of the free daily Metro, which offered an enthusiastic "sneak peek at Barclays Center" in August 2012. Unmentioned here, of course, is that the section was an advertorial.

Then again, in China, pay-for-play is so routine "many publications and broadcasters even have rate cards listing news-for-sale prices," the New York Times reported in 2012.

From Qiao Wai web site

More seminars coming

The launch seminar, on October 10, was only the first. As the screenshot at right indicates, 12 such seminars were scheduled around China.

Reassuring investors

One article from Qiao Wai detailed the history of events at the arena and reported that several reporters from Chinese news outlets visited the Barclays Center and reported that it was a good example of an EB-5 project.

They are apparently in the photo below.

Previous postings on Chinese web sites include photos of Forest City Ratner and Greenland executives cordially memorializing their transaction.

Bruce Ratner and Zhang Juliang shake hands

Ratner apparently signs papers as executives from both companies look on

Norman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-46930816471064114042014-10-15T06:00:00.000-04:002014-10-16T08:05:34.612-04:00Former ESDC head "Ambassador" Gargano, "classy political opportunist," now a leader of EB-5 firm promoting Atlantic Yards investment Update: see how U.S. Immigration Fund is pitching "Atlantic Yards III" in China.

The "Ambassador" is back, and the circularity is stunning.

Charles Gargano, official handout
photo from U.S. Immigration Fund

Charles Gargano, the chairman of the Empire State Development Corporation when Atlantic Yards was proposed and first approved, now has a job promoting Atlantic Yards and other EB-5 projects to green card-seeking immigrant investors in China.

Gargano, a "classy political opportunist" who was embarrassingly evasive about the project in TV and radio interviews, is now part of a scheme that has several dubious beneficiaries.

He's now Executive Director of the U.S. Immigration Fund, which despite its official-sounding name and logo (below), is a private company, based in Palm Beach, FL, which has gone through the requisite hoops to market such investments.

He's helping companies like Greenland Forest City Partners--the new developer of Atlantic Yards/Pacific Park, 70% controlled by the Shanghai city government-owned Greenland Group--gain below-market loans thanks to a loosely regulated federal program.

Not only is he helping Forest City increase profits by exploiting a public asset--green cards--that is too easily provided by the federal government, he's helping a Chinese government make money by marketing a previous quota of U.S. residency slots to Chinese citizens.

And he's helping the U.S. Immigration fund, whose leader, Nicholas Mastroianni II, Fortune just reported, "has a long history of legal problems, failed ventures, and unpaid debts—which have continued even as his professional fortunes have turned sharply upward—leaving a legacy of conflicts, judgments, and entanglements."

The deceptions at the core of EB-5

In that program, immigrant investors and their families get green cards in exchange for a $500,000 investment that purportedly creates ten jobs.

However, the jobs are calculated on paper, not a head count, and the job creation can be calculated based on the entire project cost, not merely the immigrant investors' share.

So no new jobs need actually be created, and it's often "margin for the developer," as one analyst has said. It's an astonishing benefit to entrepreneurs and developers, as the federal government essentially gives away a precious public resource rather than ensure that the resource reaps public benefits.

The alchemy is such that Andrew Kimball, when he headed the Brooklyn Navy Yard, the first local recipient of EB-5 funds, gave a revealing quote to Crain' s in 2012, seemingly incredulous at the opportunity to leverage public assets for private gain.

"At first, we were sort of scratching our heads, thinking, is this real?" Kimball said. "The next thing we knew, we were falling out of our chairs."

As Dartmouth's John Vogel wrote 2/22/13 in U.S. News:

Question No. 4: Are there good alternative uses for the EB-5 money? One of the oddities about the EB-5 program is that the U.S. government is giving out the green cards, but the entrepreneur who puts together the investment gets the money. This scheme seems inefficient and open to corruption. If our government really believes that it is a good idea to sell green cards, maybe we should drop the pretense that this is a job creation program. It might be more efficient to have the money go directly to the U.S. Treasury and reduce the deficit by billions of dollars a year. In fact, the U.S. government could auction off these green cards and perhaps raise even more money.

Enter the Ambassador

For Gargano, a longtime operator, there's surely a reward, and the job surely is distant enough from his government service to pass muster with any conflict-of-interest rules.

Promoted as "Ambassador Gargano" in the press release below, he served as Ambassador to the Republic of Trinidad and Tobago from 1988 to 1991, a notable political appointment as thank-you for his prodigious fund-raising on behalf of Republican candidates.

It's part of a pattern in which former government officials offer a pretense of governmental presence, support, and sanction for private companies pitching EB-5, thus reassuring Chinese investors.

(Former Gov. David Paterson took a job briefly with an EB-5 firm. Sen. John Sampson, while in office also took a purported volunteer role with an EB-5 firm, but was dropped after he was indicted.)

In March, when Gargano's appointment was announced, photo distributed (above right) shows him posed in front of an American flag.

The U.S. Immigration Fund is led by Mastroianni, a construction executive and developer in Florida who has expanded to organize and promote EB-5 projects, and reap a rich array of fees.'

It has pitched the second round of EB-5 fundraising for Atlantic Yards, for $249 million, and now the third round of EB-5 fundraising, for $100 million. (Another middleman company handled the $228 million first round.)

Gargano promotes 101 TriBeCa

Gargano appeared at a 10/10/14 presentation in Shanghai promoting the latest EB-5 fundraising for Atlantic Yards.

Earlier this year, he pitched another project, 101 TriBeCa, a 63-story, 433,800 square-foot luxury residential condominium tower marketed by the U.S. Immigration Fund.

In June, he promoted another Fund project, known as 701TSQ, a 39-story hotel/retail project in Times Square.

One news article/press release about the latter project even used an October 1995 photo of Gargano with Gov. George Pataki and others to promote the Ambassador's standing.

It's hard to imagine that any of these projects are truly targeted at employing people in areas of high unemployment, which is required by statute when immigrant investors invest $500,000, rather than $1 million.

After all, nearly every EB-5 project competes for investors by ensuring they are in such Targeted Employment Areas, often through creative gerrymandering that somehow connects a wealthy area like Midtown Manhattan, Lower Manhattan, or the Atlantic Yards site with poorer districts. And that's OK to federal regulators.

Gargano's background

"I like Charlie. The guy has taste," said attorney Edward Hayes in 1999. "Many people think of Charlie Gargano as a shady political opportunist. He is not. He is a classy political opportunist."

As the Times reported 9/3/95:

Mr. Gargano is the colorful, sometimes controversial, immensely successful chief fund-raiser who collected $14.5 million to finance Mr. Pataki's upset victory last fall and who continues to be chairman of $1,000-a-plate Republican fund-raising events.
Mr. Gargano is also the Commissioner of the State Department of Economic Development, a job he has held since February that gives him enormous leeway in handing out millions of dollars worth of contracts to businesses across New York.
At times these last seven months, it has been hard to know which Charles Gargano was sitting at the table -- the one asking state business leaders for money or the one giving them the taxpayers' money.
The latter, most likely, was in evidence in 2006 when, dissembling about eminent domain, Gargano was said by WNYC's Brian Lehrer, who typically avoids harsh judgments about Atlantic Yards, to have displayed "classic political evasiveness."

In March 2007, the Village Voice's Tom Robbins found "several cases in which Gargano had the public pay his fare and ignored his own agency's stiff standards on expense reimbursement."
 The press release, in full, issued 3/26/14:

U.S. Immigration Fund Appoints Ambassador Charles Gargano as Executive Director
NEW YORK, NY--(Marketwired - March 26, 2014) - U.S. Immigration Fund, a national leader in EB-5 financing, appointed Ambassador Charles Gargano as Executive Director of the organization March 1, 2014. In this role, Gargano will oversee the future development and success of the U.S. Immigration Fund portfolio of USCIS-approved Regional Centers.
Charles Gargano has spent more than 20 years in public service at the State and Federal level, serving Presidents Ronald Reagan and George Bush, and New York Governor George Pataki. His governmental roles have included:
Deputy Administrator of the Federal Urban Mass Transportation Administration in 1981;
Ambassador to the Republic of Trinidad and Tobago from 1988 to 1991;
Chairman and CEO of the Empire State Development Corporation and Vice Chairman of the Port Authority of New York and New Jersey from 1995 to 2007.

Prior to entering public service, Mr. Gargano, a Professional Engineer, was a partner in Posillico Construction and Engineering Corporation for 21 years.
As Executive Director of U.S. Immigration Fund, Gargano will be responsible for business development and relationship management, project negotiation and operational oversight.
"I am confident that Charles Gargano will be an undeniable asset to our company," explains Nick Mastroianni, President of U.S. Immigration Fund. "His successful career in both the public and private sectors is indicative of his drive to form reliable, long-lasting partnerships and dedication to improving not only New York City, but the U.S. as a whole, through well-planned growth and development."
Mastroianni continues, "We look forward to a long and prosperous future with Mr. Gargano."
Mr. Gargano will primarily represent U.S. Immigration Fund's New York Regional Center, a Manhattan-based operation that will facilitate over $1 billion in EB-5 financing through 2014.

About U.S. Immigration Fund
U.S. Immigration Fund provides worthwhile opportunities for foreign investors and their families to obtain permanent U.S. residency through the EB-5 Visa Program. U.S. Immigration Fund has partnered with investors and leading developers to facilitate more than $3.5 billion in real estate development and more than $900 million in EB-5 financing, which will create more than 27,000 U.S. jobs.

Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-15718121657229330582014-10-14T13:00:00.001-04:002014-10-14T13:00:20.137-04:00From the latest Atlantic Yards/Pacific Park Construction Update: Pacific Street to be restored to two-way traffic, sidewalk bridge coming on AtlanticThe latest Atlantic Yards/Pacific Park Construction Update, for the weeks beginning October 13 and October 20, was released at about 12:30 pm today by Empire State Development, after preparation by Greenland Forest City Partners.

The document, the text of which is pasted in below (and in full), discloses relatively little that seems dramatic.

On Atlantic Avenue, as workers prepare for a mat for a crane to be used for the green roof, they will not chop out the existing sidewalk but instead install infill of stone/gravel. (What exactly that means isn't clear to me.) The date for installation of that crane has not been set.

Also, a sidewalk bridge to protect pedestrians from any falling objects will be installed along Atlantic Avenue near the arena.

Tomorrow, October 15, weather permitting, Pacific Street between 6th Avenue and Carlton Avenue will be restored to two-way traffic.

Also, though it was supposed to start in the previous two-week permit, demolition of 752 Pacific Street is expected to start during this reporting period.

Questions may be sent to Nicole Jordan ESD's Manager, Pacific Park Brooklyn Project Community/Government Relations at 212-803-3736 or firstname.lastname@example.com, or Greenland Forest City's Community Liaison Office, information below.

The text below is from the document.

B-2 Tower, Modular Residential
• Work at the B2 site and within the modular factory has been halted.

Arena Green Roof
• Site preparation within the B3 site location and behind the Atlantic Avenue Maintenance and Protection (MPT) will continue
• On Atlantic Avenue, prep work for the crane mat will continue. The existing sidewalk will not need to be chopped out; temporary infill of stone/gravel will be installed. Installation of the sidewalk bridge along Atlantic Avenue will commence during this reporting period.
• Steel deliveries will begin on or about October 22nd. Deliveries will be made to both the B3 and Atlantic Avenue crane locations.
• Due to changes in construction logistics, the Atlantic Avenue crane required for the Green Roof construction was not installed during the weekend of October 10th and will be installed at a later date. It is expected that the installation, which is smaller than the crane located within the B3 site, will have minimal impacts. A community notice will be issued in advance of the installation date.
The revised Community Notice, which has been distributed to the community, is attached.

B3 Residential Tower
• Soil characterization borings are to facilitate soil disposal related to future B3 building construction have been completed.

LIRR Yard Activities - Block 1120 & 1121
• On October 15th (weather permitting), Pacific Street between 6th Avenue and Carlton Avenue will be restored to two-way traffic. Barrier on the north side of Pacific Street will be shifted north, the roadway will be restriped and traffic lights will be adjusted. The sidewalk along the north side of Pacific Street will remain closed.
• Support of Excavation (SOE) work including the installation of lagging and tiebacks will continue within this area during this reporting period.
• Drilling of SOE minipiles under the east side of the 6th Avenue Bridge will continue during this reporting period.
• During this reporting period, the Contractor will continue excavation and hauling of soil from Blocks 1120 and 1121. Soil that has been classified as clean, contaminated or hazardous will be removed from the site as part of the excavation activities and brought to appropriate disposal locations. While this work is underway, protocols for the trucks entering and exiting the site have been put into place. These protocols provide instruction on roadway routing to and from the project site, queuing of trucks while on site and vehicle idling.
• Manhole/Duct bank installation work will commence within the eastern portion of Block 1120 during this reporting period.
• Work in the area of the yard between the Arena and 6th Avenue will continue during this reporting period. Work will include electrical, telecommunications, plumbing installations, and minor grading/paving for the trailers
• All work shall be done during daytime hours pursuant to approved NYC DOT permits; while not expected, if required, any nighttime or weekend work would be pursuant to proper permits and advance notification will be given to the community.
• Particulate monitoring will continue during these activities and soil will be kept damp as needed.
• Soil characterization borings are being conducted to facilitate soil disposal related to Yard construction. This work is expected to be completed during this reporting period.

LIRR Yard Activities – Atlantic Avenue
• Installation of the Stage 2 of the MPT is complete. MPT installations along Atlantic Avenue will be modified as work progresses. This work will be ongoing and MPT will be in place along Atlantic Avenue for approximately 24 months. Transportation Enforcement Agents (TEAs) will continue to be in place, as outlined in the DOT permit stipulations.
• Excavation and exploratory work will take place along Atlantic Avenue This exploratory work is to investigate the construction of the existing LIRR tunnel roof for future structural tie-ins for the west portal. Some of this work may be completed during overnight hours; however, none is expected to occur during this reporting period.

Block 1129
• Additional soil characterization borings required to facilitate soil disposal related to future building construction within Block 1129 will be completed during this reporting period.
• Subject to receipt of permit, Demolition of 752 Pacific Street is expected to commence during this reporting period. A construction fence will be installed around the demolition site.

How to Reach Pacific Park Brooklyn Community Liaison Office (CLO)
The Community Liaison Office has been relocated to Atlantic Center, 625 Atlantic Avenue. Located on the 3rd floor, visitors seeking the office should enter through the mall entrance located at the corner of Atlantic Avenue and So. Portland Avenue. The CLO's hours are M-F from 9am – 4pm and the phone number, 866-923-5315 and email, firstname.lastname@example.com remains the same.

Atlantic Yards/Pacific Park Construction Alert October 13, 2014
Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-15995258399281393252014-10-14T12:30:00.000-04:002014-10-14T12:34:52.491-04:00Apparent prank: hacked sign inside Atlantic Yards parking lot (while trash is ignored)Ok, it's not on the level of the "Fuck Ratner" directional sign a wag hacked on public Flatbush Avenue in March 2010, potentially endangering drivers.

But clearly visible for a period of time yesterday on the Atlantic Yards parking lot on Dean Street between Carlton and Vanderbilt avenues, as shown in the photo sent to me, was a sign claiming "Marotta has smal penis!"

It appears to have been a juvenile prank--the sign was off at some point yesterday--aimed (I presume) at someone working at or associated with the site. No I don't know who Marotta is.

The sign likely didn't affect anyone driving by, though it was an affront to workers and neighbors walking by, since it could be seen through the fence, as the video below shows.

And it seems to me that the efforts put into hacking the sign might have better been put into cleaning up the trash around the lot's exterior.

Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-48459127830999517382014-10-14T08:54:00.000-04:002014-10-14T12:58:04.904-04:00Fortune: "The tangled past of the hottest money-raiser in America's visa-for-sale program" (+ next step for inquiry)Fortune Magazine's Peter Elkind and Marty Jones, who produced the tough investigation of the EB-5 immigrant investor program in a July cover story (my comments), today offers The tangled past of the hottest money-raiser in America's visa-for-sale program.

And yes, Atlantic Yards is part of it, as is the Nassau Coliseum.

They write:

In recent years, the EB-5 visa program, which essentially allows wealthy foreigners to buy U.S. citizenship by investing $500,000 in a project that creates U.S. jobs, has exploded: The number of visas granted under the program has more than doubled since 2009. As that has happened, the program has taken on more and more glamorous, big-budget projects and the controversy surrounding it has increased...
It would be hard to find a figure who has risen faster in this burgeoning realm than Nicholas Mastroianni, II. In just four years, he has developed a lucrative role raising money for marquee projects such as Atlantic Yards, the giant Brooklyn development anchored by the Barclays Center, home of the NBA's Nets. Forest City Ratner, which is developing Atlantic Yards, has also retained Mastroianni to raise EB-5 money for its renovation of the Nassau Coliseum, home of the NHL's Islanders. Other Mastroianni clients include the developers of three large Manhattan projects: the Charles, a 31-story condominium tower on the Upper East Side where the penthouse reportedly sold for $38 million; Bryant Park, a 32-story midtown Manhattan building with a luxury hotel and condos developed by HFZ Capital Group; and 855 Avenue of the Americas, a 41-story mixed-use edifice being developed by the Durst Organization.
All told, Mastroianni's website boasts of involvement with $5.5 billion in development projects over the years, funded with $1.4 billion in EB-5 money, resulting in "40,000 jobs created." Those are massive sums given that the entire EB-5 system raised a total of about $1.8 billion last year. Forest City Ratner CEO MaryAnne Gilmartin calls Mastroianni the " 'go-to' leader in the field of EB-5 funding."
Long history of legal problems, but new accolades

And here's the thing:

To call Mastroianni's rise improbable would be an understatement. A squarely built 50-year-old with a Long Island accent, Mastroianni has a long history of legal problems, failed ventures, and unpaid debts—which have continued even as his professional fortunes have turned sharply upward—leaving a legacy of conflicts, judgments, and entanglements.
The article delves into all that, including Mastroianni's significant political contributions in support of EB--5. In response to the investigation, he hired a crisis communications firm to collect accolades for him; would you believe that Gilmartin has "witnessed first-hand his competence and collaborative talents."

What's missing: the deceptions in China

This article goes far to suggest how people with questionable pasts in the United States have reinvented themselves and gotten rich off EB-5. (Same for one of the "Billboard Boys" involved in the first round of Atlantic Yards fundraising.)

What it doesn't do--and what can be the subject of more investigation--is show how, in the loosely regulated world of EB-5 fundraising in China, they can get away with pushing the envelope on truth, as I described earlier this year in coverage of the second round of EB-5 fundraising for Atlantic Yards.Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-60437185637185944982014-10-14T08:00:00.000-04:002014-10-14T08:20:38.986-04:00Forest City selling Downtown Brooklyn site for far more than it'll pay for Vanderbilt Yard, though latter offers six times the development rightsDevelopers of Atlantic Yards/Pacific Park are getting the Vanderbilt Yard cheap, aren't they, as the value of land in and around Downtown Brooklyn continues to skyrocket.

Crain's New York Business yesterday wrote, Forest City puts $185M downtown B'klyn site on market:

Forest City Ratner Cos. is looking to either sell a development site it owns in downtown Brooklyn worth an estimated $185 million, or find a developer willing to partner with Forest City Ratner on building a residential tower there, the company confirmed Monday.
The site, at 625 Fulton St., between Hudson Avenue and Rockwell Place, is being marketed by CBRE Group, and has the potential for more than 600,000 square feet of residential space, according to city records. The details of the potential sale were first reported by Real Estate Alert late last month.
While the price is based on an estimated $300 per buildable square foot at the former chocolate factory--which once held offices, including that of Atlantic Yards Community Benefits Agreement signatory BUILD-- it's possible the price could go even higher, to $350 per square foot or more, according to Crain's.

It's a remarkable turnaround for a site that, earlier this year, left Forest City technically in default on the mortgage, as noted by Crain's. It's also interesting that Forest City's partner on Atlantic Yards, the Chinese government-owned Greenland Group, is not (yet) a partner on this new site.

The huge gain

Not only does the sale likely represent a huge gain for Forest City, which bought the land in 1989 when real estate was cheap, it offers a significant contrast with what Forest City--now Greenland Forest City partners--will pay for the Vanderbilt Yard development rights, the key public property that's part of the Atlantic Yards/Pacific Park project.

As I wrote in March, development rights for the 8.5-acre Vanderbilt Yard, after a MTA-requested appraisal, were appraised in 2005 at $75 per buildable square foot, for more than 3.6 million square feet. That's six times the buildable area offered at 625 Fulton.

In 2009, the MTA, faced with Forest City Ratner's request to renegotiate the deal, said that it would be dangerous to get a new appraisal and seek new bidders because of the bad economy. And the MTA ignored the suggestion, from the Regional Plan Association, that the public agency should claim a piece of future revenues.

So Forest City, instead of paying the full $100 million in cash originally promised, got to put down $20 million for the portion of the railyard needed for the arena, then could pay the rest over 22 years, at a gentle 6.5% interest rate, for 3.6 million square feet.

In other words, the upside went to Forest City, as the economy, and real estate market, swung back quickly.

Looking at the details

A new appraisal in 2010 of Atlantic Yards land, which included some land over the railyard, valued development rights at more than $179/square foot.

The market has continued to rise. At $350/square foot, 3.6 million sf is worth $1.26 billion!

Yes, it's not an apples to apples comparison.

Forest City has/had hundreds of millions of dollars in additional costs for the new railyard, deck, and new transit entrance that were part of the deal and required to get vertical development started over the part of the railyard where there will be housing. (The part of the railyard used for the arena is below-grade.)

But even if that cost hits $400 to $600 million--now, with increased construction costs, a sum far more than Forest City ever estimated--it still looks like a bargain.

Norman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-59064695497038948272014-10-13T07:15:00.000-04:002014-10-13T20:41:29.541-04:00As rumors fly about possible (partial) sale of the Nets and arena, valuations skyrocket thanks to new TV contractOr, as Slate put it, Russian Plutocrat Set to Make $1.6 Billion in Brooklyn Via Tax Money, Threat of Property Seizure.

There's been a lot of chatter in the past ten days on the possible sale or "combination of assets" involving the Brooklyn Nets, the Barclays Center, and the owners of the Los Angeles Dodgers and other sports properties.

Many of the sources are unnamed and/or on background, so it's hard to tell how serious the deal is, and how much each source is using a leak to jockey for advantage.

But the bottom line is this: Nets' principal owner Mikhail Prokhorov has seen a huge rise in the value of his share of the team and the Barclays Center operating company.

So too has Forest City Ratner scored on its 55% share of the arena, and though Bruce Ratner sold the Nets and a share in the arena to Prokhorov at an unwise time, in retrospect, the boom in the team's value has made Ratner's 20% remaining share of the team quite valuable.

NetsDaily's Bob Windrem (aka "Net Income") broke the story 10/2/14, Brooklyn Nets in talks with Guggenheim, Dodgers owners, on "combination of assets":

The ownership of the Brooklyn Nets is in "ongoing discussions" with Guggenheim Sports and Entertainment Assets on a "combination of assets." Mikhail Prokhorov would remain in control of the Nets and Bruce Ratner would remain in control of Barclays Center, say sources close to the discussions.
Guggenheim Sports and Entertainment Assets is an affiliate of Guggenheim Partners. Another affiliate, Guggenheim Baseball Management, own the Los Angeles Dodgers.
In the discussions, the team is being valued at $1.7 billion and the arena at $1.1 billion, said multiple sources. There is no agreement yet, nor a deadline for a conclusion of the discussions. The next step would be an agreement in principle followed by a closing. The combined assets of a new entity could be as high as $8 billion.
... Presumably, in a combined entity, both Prokhorov and Ratner's shares would be reduced, but still be controlling.
...Also uncertain: would Nets ownership have any role with the Dodgers following a combination of assets.
Note that in April of this year Forbes estimated the Nets were worth $780 million, while in May those selling Ratner's share valued the team at $1 billion. That now seems conservative. In other words, it's possible that Forest City will get more in cash for the sale of 20% of the team than the $200 million it did for 80% of the team.

(Prokhorov also some of Forest City's losses, up to $60 million, took on debt, and has absorbed ongoing losses due to the league's most expensive payroll.)

The league's TV deal

Increasing the value of the team and the rest of the league, and complicating future labor negotiations, was a TV deal announced last week that triples revenues. The Times reported 10/7/14, Owners Can't Line Their Pockets Now and Cry Poverty Later, LeBron James Says:

At the Cleveland Cavaliers' practice facility,LeBron James threw down the gauntlet on future collective bargaining negotiations three years after the players were locked out and lost ground with team owners in a settlement on shared revenue.
"The whole thing that went on with the negotiation process was that the owners were telling us that they were losing money," James said. "There is no way they can sit in front of us and tell us that right now."

The Times reported 10/7/14, ESPN Will Stream Out-of-Market Games on Web as Part of N.B.A. Deal, with an incredible quote from one owner:

The N.B.A.'s new deals with ESPN and Turner Sports, which are worth $24 billion over nine years, provide the two media giants with the sort of sweeteners that are common in sports television contracts: more games, more highlights and more video to enhance their studio shows, as well as new programming like a postseason awards show on TNT.
...The renewals with ESPN and TNT, which go into effect in 2016, represent the first television deal done by [NBA Commissioner Adam] Silver since he became commissioner this year. The deals will bring an average of $2.66 billion to the league each season, up from the average $930 million it will receive for the final two years of the current deal.
The increased media revenue will fuel salaries, raise the salary cap and almost certainly push up consumer's cable bills.
For owners, the new deals symbolize the increased value of their franchises and could lead to profits for teams that had been losing money.
Expectation of the payoff provided a rationale for the sale of the Milwaukee Bucks at $550 million and the Los Angeles Clippers at $2 billion. Ted Leonsis, the owner of the Washington Wizards and head of the league's media committee, said, "There's never been a better time to be an owner of an N.B.A. franchise or frankly any professional sports team."

The Brooklyn Game reported 10/6/14, What does the new NBA deal mean for the Nets?

With the NBA slated to make an incredible amount of money in the new television deal, owners looking to sell their teams have never had a higher valuation. Enter the Nets, who have reportedly engaged the Guggenheim partners in discussion about a "combination of assets" that would combine Brooklyn Nets ownership with Los Angeles Dodgers ownership.
The details of the combination are unclear, and could change in an instant depending on either side's desires. If Nets owner Mikhail Prokhorov wants to sell his stake in the Nets franchise, his return could be 15 times his original investment of about $200 million. If they merely decide on some sort of partnership with Guggenheim, the proprietors of the Brooklyn Dodgers trademark, there's still an incredible amount of money to be made off that branding alone, and the ability to cross-brand the Nets & Brooklyn Dodgers could drive the price up further.
The deal off, the deal on

Since then, conflicting reports have emerged. The Wall Street Journal reported 10/7/14, Nets GM: Team Isn't Cutting Costs or Looking for Sale:

The Nets are not cutting costs, they are still competing for a championship, and principal owner Mikhail Prokhorov is not selling the team, general manager Billy King said prior to Tuesday night's preseason opener against Israel's Maccabi Tel Aviv.
That still leaves room for other deals.

The New York Post reported 10/9/14 Dodgers-Nets parent companies uniting unlikely:

The parent companies of the LA Dodgers and the Brooklyn Nets will not be getting hitched after all, The Post has learned.
Although the two sides held talks recently, they have broken down and are unlikely to begin again, sources tell The Post.
...Prokhorov still wants to sell some of his 80 percent stake in the Nets — and Ratner wishes to unload his 55 percent Barclays stake, sources said.
The talks about combining assets would have allowed Prokhorov and Ratner to remove some cash from the deal.
If Ratner's selling his share of the arena, that would be a shift, since in May 2013 he described it as a unique investment:

So I realize that and having an arena is a very special thing because I use the word fortress. It's fortress real estate in a way. meaning it is something when you create it that can't be duplicated easily. Look, in almost half a century, this is only the second arena after MSG in an area this large."
NetsDaily reported 10/9/14:

NetsDaily received an email yesterday from a Guggenheim spokesman stating much the same. However, sources tell NetsDaily that things are not so dire, noting that deals like this are often difficult. The Guggenheim entity reportedly involved in the talks, Guggenheim Sports and Entertainment Assets, is different from Guggenheim Baseball Management that owns the Dodgers and that its range of investors could be different from those who have interests in the Dodgers, noted one source.

NetsDaily reported 10/10/14 that Nets CEO Brett Yormark told Reuters:

"Mikhail Prokhorov, our principal owner, is not looking to sell the team and for that matter, he's not necessarily looking for investors. He loves the Brooklyn Nets. He plans to be an owner for a very long period of time and is really focused on how we build the Brooklyn Nets brand as well as the Brooklyn Nets product. And that is what he is most focused on."

Then again, Yormark was the guy who insisted in March 2009 that original architect Frank Gehry was still on the project and still "loves" it, though it later emerged that Forest City had dumped Gehry Gehry's arena in November 2008.

Most recently, the Daily News reported 10/10/14, Nets still reviewing 'multiple' proposals from Dodgers parent group: source:

The Nets are currently reviewing "multiple" proposals from the Dodgers parent group about a possible merger of corporate assets, meaning the Dodgers could still be returning to Brooklyn despite repeated claims by the baseball group the deal is dead, a source close to the Nets told the Daily News on Thursday.
...However, because of the amount of media attention paid recently to the business talks and due to the Nets' current trip to China, the discussions have been tabled and are in a holding pattern, the source said, but they have not been terminated.
Walter recently released a statement through a spokesman saying that he has no interest in the Nets, but the source dismissed that claim as nothing more than a negotiation ploy.
Stay tuned.

Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-11288592267056711442014-10-12T09:39:00.000-04:002014-10-12T09:43:19.082-04:00Huge crane for green roof installation erected at B3 site next to arena; appears to be two months behind schedule

Photo taken this morning.

Wow, it's big.

Officials shut down Dean Street and Sixth Avenue around the Barclays Center this weekend to allow for the erection of a giant crane to assist in the installation of a green roof around the arena.

The crane is located on the site of the B3 tower--at the northwest corner of Dean and Sixth. As shown in the photo at right, the crane (center) appears larger than the crane (left) set up to install modules for the now-stalled 32-story modular tower next to the arena.

As shown in the video below, the pieces of the crane stretched two blocks along Sixth Avenue, from Pacific Street to Bergen Street.

The crane, according to plans announced in June, was supposed to be installed in August and last six months, through January. It appears to be two months behind.

More on the photos

The photos below are in chronological order. Those involving the erection of the crane were shot yesterday, a rainy day. Those showing the crane installed are from this morning.

Note: though flagmen and Traffic Enforcement Agents were supposed to be provided, according to the Community Notice, I didn't see any in the photos and video sent to me by AY Info NYC.

Video taken yesterday

Crane installation: yesterday

Crane installed: today

Norman Oderhttp://firstname.lastname@example.com:blogger.com,1999:blog-20743459.post-19323448068189539082014-10-12T07:30:00.000-04:002014-10-12T07:30:25.263-04:00BP Adams's agenda: more 50/30/20 housing (but devil is in the details)The Real Deal reported 10/1/14, in Borough presidents' big real estate agendas: A look at the five beeps varying development and land use plans:

For Brooklyn Borough President Eric Adams, one goal sticks out among the others: creating more affordable and middle-income housing. And if you ask him, Brooklyn is just the place to build it.
To achieve that goal, Adams is hoping to upzone multiple areas in the borough — such as the swath around Broadway Junction on Nostrand Avenue on the border of Bedford-Stuyvesant and East New York, as well as parts of Flatbush — to allow for more residential development.
He also backs de Blasio's mandatory inclusionary zoning policy that would require developers to include affordable housing in projects that need zoning approvals....
While Adams is a staunch supporter of de Blasio's housing policy, he told TRD he'd prefer to see the existing 80-20 market rate-to-affordable housing ratio tweaked by adding a middle-income housing component to the equation. "My ratio," he said, "is 50-30-20. That's my goal." (In that plan, 50 percent of the units would be market-rate, 30 percent middle-income and 20 percent affordable.)
As a commenter pointed out, Nostrand Avenue (home of The Junction) has nothing to do with Broadway Junction.

The 50/30/20 template is that set for the 4500 Atlantic Yards/Pacific Park rentals--not the overall housing, which adds 1930 condos--so perhaps we'll see it being used by Adams as an example.

Then again, the devil is in the details, since many of those rentals--especially those in the next two buildings--will be way out of reach of the Brooklynites who rallied for Atlantic Yards.

Half the subsidized units in those next two towers will be designated for households who'd pay nearly $3,000 for a two-bedroom unit and commensurate rates for smaller units.Norman Oderhttp://email@example.com:blogger.com,1999:blog-20743459.post-59627189968251877532014-10-11T09:00:00.000-04:002014-10-11T21:54:09.389-04:00The Forest City Ratner Cafe, at the Brooklyn Children's Museum, and Gilmartin's new role on WNYC board

As John Pinamonti famously sang, in his elegy/anthem "The Burrow" (bottom), "It makes me sad/yeah, it's such a pity/they're trying to rename Brooklyn "Forest City."

I was reminded of that at Community Board 8 monthly general meeting on Thursday night 10/9/14, held at the Brooklyn Children's Museum.

The picture at right, indicating the Forest City Ratner Cafe, is a reminder of Forest City Ratner's widespread philanthropy in Brooklyn (often through its shadowy foundation), which is now joined by other philanthropic heavyweights like the Barclays Center and the Brooklyn Nets.

It's always hard to tease out strategy from generosity. And corporate gifts do have tendency to quiet dissent and/or generate excess enthusiasm (see: BAM). Such enthusiasm in turn can enable tax breaks and other public support for Forest City, thus enabling more generosity. A virtuous cycle or a virtuous circle?

Gilmartin on WNYC

The news emerged on Twitter Thursday that Forest City Ratner CEO MaryAnne Gilmartin was named to the 35-member board of WNYC radio, a post with likely some fundraising role.

And it raised some eyebrows when Gilmartin's role was disclosed at the end of a somewhat skeptical WNYC article on the troubles with Forest City's B2 modular tower.

Indeed, Noticing New York blogger Michael D.D. White posted a protest on Facebook, urging people to protest Gilmartin's appointment.

In a Twitter exchanges with Raul Rothblatt, who'd expressed dismay about Gilmartin's role, I pointed out that it didn't appear to affect the WNYC coverage yesterday, but we should keep watch.

Gilmartin is a capable, charismatic person with a lot of power, and a lot of money. She's head of a company that is part of the Culture of Cheating, as I've described it.

She's also in the middle of an extremely contentious dispute with Skanska over the B2 tower and was described by an adversary as "less than pleasant, if not rude." In other words, she's a potential subject for future coverage.

If I worked in the WNYC news and talk operation, I'd want reassurances from the bosses that no board members should have influence in coverage and programming. (They likely do have a policy, but I haven't seen it, hence my suggestion below.) But it's awkward, nonetheless.

And it might be time for WNYC, which offers no information about its board beyond names, to explain the criteria for choosing them, the board's tasks, biographical information, and safeguards regarding their influence on WNYC content.

The Burrow

Norman Oderhttp://email@example.com