Real estate experts with whom I've spoken tell me there is no way the proposed 28-story, $121 million luxury apartment tower Flaherty & Collins plans to build at the site of the former Market Square Arena site can ever cash flow. It perplexed me why even with the nearly $25 million the City of Indianapolis contributed to the politically-connected developer for the costly tower that any lender would ever loan money to the company that has a past history of building costly high-rise buildings only to file bankruptcy before work was completed. It turns out that the hucksters are relying on the controversial EB-5 immigrant investor program to raise a substantial part of the capital it needs for the project.
Under the EB-5 program, wealthy foreign investors from countries like China, India and Saudi Arabia can purchase green cards to immigrate to the U.S. by investing between $500,00 and $1 million in a qualified business project in the United States. The program has been rife with fraud. Last year, federal prosecutors charged a 30-year old man, Anshoo Sethi, with defrauding Chinese investors out of $160 million to build a hotel and convention center on the city's west side with the backing of red-faced state and local officials that Sethi had no concrete plans, let alone experience, to develop. Crooked politicians have jumped into the act. Former Chicago Mayor Richard Daley and his son have been working on several EB-5 projects in Chicago and elsewhere. Daley is working primarily with Chinese investors. Congressional investigators have sought more information about the program, including whether favors were given by the Obama administration on projects backed by Sen. Harry Reid (D-NV) and Gov. Terry McAuliffe (D-VA). Some observers fear that persons involved in espionage and terrorist activities are getting a green light to enter the country as lawful permanent residents. An ABC News investigation found multiple examples of investors with sordid pasts being approved for green cards through the program.
The Indianapolis Star's John Russell has a lengthy story today in which he tells us the 360 Market Square Project is relying on bank loans for just $57 million. The rest it plans to raise from foreign investors. The Star doesn't make this point, but shouldn't Indianapolis City-County Councilors have been told that Flaherty & Collins planned to bring dozens of foreigners to the U.S. as part of its plan to build it's city-backed deal before they signed off on it? I recently inquired of council sources about rumors Flaherty & Collins was having trouble financing the project. The council was assured there were no hang-ups in financing. They just didn't explain the unconventional funding they were relying upon:
. . . The company originally said it planned to start construction last spring. But spring came and went, and no ground was broken. The company later said construction would begin in the fall. But the ribbon-cutting and ceremonial groundbreaking didn’t take place until three months ago, as the officials worked to nail down financing.
They ended up with an unconventional financing package.
In addition to $57 million in bank loans, and $23.4 million from the city, Flaherty & Collins is turning to a controversial federal program known as EB-5 for one-quarter of the funding.
The program allows wealthy foreign investors to get on the fast track for U.S. residency if they plunk down cash to support a growing company.
Foreigners who invest up to $1 million in certain U.S. businesses — or just $500,000 in a depressed area — can qualify for legal permanent residency and a “green card” that lets them live and work here indefinitely.
The investment must create or preserve at least 10 full-time jobs within two years, after which the investor can apply for a green card.
The program has given rise to widespread complaints of fraud and abuse. Several projects across the country have gone bust, leaving investors without money or green cards . . .
A Reuters investigation in 2010 found that thousands of immigrants have been burned by misrepresentations that EB-5 promoters make about the program.
Fortune magazine found that EB-5 investments are typically sold through unregistered securities offerings and rarely involve financial brokers, so deal documents receive no scrutiny from the Securities and Exchange Commission and face little due diligence.
“Because the EB-5 industry is virtually unregulated, it has become a magnet for amateurs, pipe-dreamers, and charlatans, who see it as an easy way to score funding for ventures that banks would never touch,” the magazine wrote.
Flaherty & Collins had been negotiating since 2014 with CMB, an EB-5 regional center based in Rock Island, Ill., to get its project included.
CMB took on the project and issued fliers that touted its design and strong support from the city as key reasons it would succeed.
“The residential tower’s iconic cutting-edge design rivals the architecture of any development in the United States,” the flier said.
CMB officials said last week that it has raised more than $25 million for the project.
Despite criticism of EB-5 financing, Flaherty & Collins said it regards EB-5 as a solid source of funding.
“It’s not like drug money or something,” Collins said.
“To us, it’s just like any other lender,” Flaherty said . . .It's not like drug money or something? The truth is that Flaherty & Collins will have no idea where these investors got their money and won't care. As long as they're ponying up their $1 million contribution to an investment doomed to be a colossal failure, who cares where they got their money. The firm is ensured of making a large sum of money from development fees from the project so whether it succeeds or fails as a going concern is of no concern to them. It's other people's money, after all. One point that's not mentioned is there is an annual cap of 10,000 visas that can be issued each year under this program. That cap was reached for the current fiscal year on May 1, which means new visas won't become available until the next fiscal year begins on October 1.
The Star wasn't much concerned at the time, although Russell does include in his story the fact that Mayor Ballard's former deputy mayor of economic development, Deron Kitner, who brokered the deal between the City and Flaherty & Collins, is now working as the company's general counsel. It's just a free-for-all with this administration. Ballard has been assured federal and local prosecutors won't investigate the rampant public corruption in his administration so they're just raping and pillaging taxpayers at will until his term ends at the end of the year.
UPDATE: The New York Times had a story on Friday about the growing popularity of the EB-5 program. The story speaks very approvingly of the program, although it mentions how developers qualify many projects in economically booming areas as projects eligible for the lower investment threshold of $500,000 per investor by claiming nearby census tracts with higher unemployment rates. I suspect Flaherty & Collins did the same for their project, even though the luxury high-rise building is being built in an area that quite clearly is not economically-depressed. Hat tip to the reader who noticed this story.
Auctioning the liberty, sovereignty & security of Americans is patently corrupt; a blatant violation of the Constitution & oath to uphold the same.
Like the numerous other corrupt deals the incompetent Greg Ballard lied about, this Flaherty & Collins Tower of Babel made no economic sense from the get-go. We have Councilors who are no more qualified to judge these types of projects than most fifth graders but we allow municipal economics ignorant Democrats and Republicans to spend our confiscated tax dollars with ease. The Councilors don't even know the correct or appropriate questions to ask... and John Russell's story prove that.
Those who do not learn from the past are doomed to repeat it and this sure seems appropriate when we recall the previous failed Taj Mahal proposed for the very same Flaherty/Collins site. Many of the same reasons for the earlier failure are present today.. and more... including the lies about the financing.
I could shout and list the names of the ignorant self-interest based Democrat and Republican Councilors who were chomping at the bit to shove barrels of our money to Angie's List, digital sign companies, the Criminal Justice Center scam, the AES gawd-awful parking meter deal, ad nauseam. Why vote... other than Scales most of the creeps on the Council haven't a clue to do much more than take campaign "donations" because, as one whined, "the sad truth is campaigns are expensive." Bottom line.. if you have the money you can buy off a Democrat or a Republican.
I remain angered to this day that the lives of our firefighters were put at risk when a professional arsonist set F&C's Cosmopolitan project afire at the same time their high-rise condo building in Charlotte, NC tanked. There was never a proper investigation to discover the culprits despite ample surveillance video footage. Carl Brizzi's office tried desperately to pin the blame on an innocent, black man while letting the statute of limitations run on the true culprits.
Anon 10:41 makes a good point. I am one of those of us non-IFD persons who suspected a professional arsonist the minute I heard about that Cosmopolitan fire and then I was convinced that was the case when I saw Brizzi nail an indigent, innocent African American to the wall in false blame... the charge made no sense in context of the accused's situation.
I've watched Carl Brizzi at numerous GOP functions and the guy is as unctuous as Valvoline. All I can surmise is that Brizzi either has a lot of dirt on some politicians OR his connections with the equally corrupt attorney David Brooks may have been helpful. The bottom line is that IMHO Carl Brizzi is a crook and should be in a federal prison.
Along the lines of Pete Boggs, this is a sign of the death throes of empire, sort of like dying monarchies marrying the prince to the rich but ugly outsider. U.S. can't sell noble titles to attract capital so auctions citizenship, the closest approximation.
The Republic is lost. Don't kid yourself. We live in an oligarch where the masses are slaves to the people of one ethnicity who now seem to control everything.
The Star said,
"Flaherty & Collins usually builds projects only four or five stories tall. Its Axis apartment project a few blocks west, for example, has 44 more units than 360 Market Square. But it is only five stories tall, and takes up an entire city block.
But the company wanted this project to stand out."
F&C is having serious financial problems already with its Axis project. That should be an indicator of what is ahead for 360 Market.
OK, so we started out worrying about poor illegal immigrants in the country stealing "American" jobs. Now we're worried about immigrants who are entering legally and putting up millions of dollars that will be used to create American jobs, so, mostly, the idea is that we just don't like foriegners?
Gary, the Republic died a long time ago, probably at the beginning with the whiskey tax and putdown of the Whiskey Rebellion, or at the least Alien & Sedition Acts. I am talking about the Empire that arose with invasion of Canada in 1812, Mexico in 1846, Confederacy in 1861 ...
I am picking up what you are putting down regarding the money changers at Goldman Sachs and Federal Reserve doing Yhwh's work.
This high rise luxe living tube sounded unreasonable from the start. Anon 12:21 draws connections only a looney liberal could make: a story about shady financing equates to xenophobia. No one anywhere in the Indy Star story or in the AI Comment posting section states or hints dislike with foreigners. This is a typical left liberal trick that hypocrites like Barry Obama and Hillary Rodham Clinton use frequently....it's called the straw man argument.
But funding coming from countries that trample on personal civil rights, gay rights, and feminist rights (China, India, and some of the Saudi countries) is just okey dokey as long as a few short term contractor jobs are "created".
If the Republic is lost the blame lies directly with an ignorant, apathetic electorate combined with corrupt media, trained by Marxist professors at major colleges. Where is Dick Cady when you need him?
Actually, this program doesn't violate the U.S. Constitution. Article I, section 8 gives Congress the power to regulate immigration into the United States. It's apparently working as desired, since a lot of would-be immigrants are investing substantial sums in these projects. Of course, one can question the wisdom in this type of policy, but the constitutionality seems sound.
LamLaw: Programatic, auctioned access is not legitimate "immigration," it's transactional cover for oath violators abusing the public trust in favor of self enrichment.
Responsible representation wouldn't suggest that America needs "investment" from the Chineese or Saudis. Counterfeit immigration suggests there's no market for this investment from those seeking credible, non-sugared return.
The evidence shows after nearly 8 years of Obama-Clinton that the EB-5 program is nothing more than a public auction awarding green cards to the highest bidders. This should surprise nobody. Remember when the Clintons auctioned off seats on foreign trade missions to the biggest campaign contributors and accepted millions of dollars in illegal campaign contributions from Chinese nationals? We could ask Ron Brown how that turned out for him, but he's six feet under now so he couldn't live to talk about it, along with the female associate they found murdered in the stairwell of his executive office building in Washington shortly thereafter.
Thank you for telling this truth, AA. And there is substantial evidence that Ron Brown ALSO was murdered.
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