Real Estate Billionaires Who Stand to Profit from Amazon HQ Move, NY

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From left to right: Tom Elghanayan, Fred Elghanayan and Henry Elghanayan. CHESTER HIGGINS JR/THE NEW YORK TIMES/REDUX

These New York Real Estate Billionaires Stand To Profit From Amazon’s HQ2

Amid the news about Amazon’s HQ2 announcement—the e-commerce giant chose New York’s Long Island City and northern Virginia’s Crystal City as the victors of its nationwide search—there’s the question of who in the real estate world is jumping for joy at the new opportunities. That likely includes a trio of low-profile billionaire brothers and real estate titan Jerry Speyer.

The Elghanayan family, which was worth more than $2 billion in 2015 when Forbes last estimated their fortune, traces their wealth back to Nourollah Elghanayan, an Iranian-native who started buying land in Manhattan in the 1950s and 1960s. His three sons, Tom, Fred and Henry, expanded the family business throughout Manhattan and Queens, acquiring and developing iconic buildings such as FBI’s former New York City headquarters and the Carnegie Hall Tower. In 2009, the family split up their holdings amid disagreements over succession plans. Henry reportedly won a coin toss and chose the Rockrose name and a portfolio of development sites and residential buildings; Tom and Fred took the rest, including more than 5,000 apartment units and properties in Long Island City, and rolled them into an entity called TF Cornerstone.

Since then, Tom and Fred Elghanayan have capitalized on New York’s up-and-coming neighborhoods, building gleaming luxury rental apartment towers in Manhattan’s Hell’s Kitchen and in downtown Brooklyn. But it’s their bet in Long Island City that may prove to be the most prescient. In addition to two rental apartment towers the Elghanayans transferred to TF Cornerstone, the brothers have purchased or built four more rental buildings in the past six years, giving them over 3,000 rental units in Long Island City’s waterfront community of Queens West.

In July 2017, TF Cornerstone furthered its move into Long Island City, winning a proposal to redevelop two city-owned sites in Anable Basin, a waterfront district neighboring Queens West. Its winning bid calls for a 1.5 million square feet mixed-use project with 1,000 rental units, commercial, retail and light industrial spaces, and public park areas. Just months later, Plaxall—another family firm that manages over one million square feet of real estate—submitted plans to rezone nearly 15 acres of the Anable Basin into a mixed-use development spanning almost 6 million square feet.

Now the sketches of glass towers and open air parks have been fast tracked to reality as Amazon sets its sights on the Anable Basin. According to the Seattle company’s memorandum of understanding with New York, it has circled the Anable Basin area as its target site for HQ2. TF Cornerstone confirmed that it will partner with Amazon to build out its project. “As a family-owned company founded by Queens natives, TF Cornerstone is proud to welcome Amazon to Long Island City, bringing new jobs to the borough and preserving significant public benefits,” says Jake Elghanayan, a principal at TF Cornerstone and a son of Tom Elghanayan.

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With Amazon planning to take up 4 million square feet of office space over the next decade (and bringing on 25,000 workers), the Elghanayans are in prime position to take advantage of the increasing demand for office real estate and new apartments. With excitement already building in Long Island City, Tom and Fred’s fortune looks to be getting a boost in the near future.

But Henry Elghanayan, who runs his own firm Rockrose Development Corp., didn’t make out so badly either. The former lawyer, whose collection of development sites included several in Long Island City, erected his own luxury rentals near the One Court Square area, constructing nearly 2,500 units across three towers in the past six years. With another building due to open in 2019, and an older waterfront property that Henry received when the brothers split up, his Rockrose will be a major landlord in Long Island City with nearly 3,000 rental apartments.

Jerry Speyer, cofounder and chairman of Tishman Speyer.

Jerry Speyer, cofounder and chairman of Tishman Speyer.GETTY

Another big winner in Amazon’s decision is real estate firm Tishman Speyer’s billionaire chairman Jerry Speyer. Speyer started the real estate giant, which has developed over 167 million square feet of space from Chicago to Berlin, in 1978 with his father-in-law Robert Tishman. Son Rob Speyer is now CEO and oversees the company’s operations. While famous for redeveloping iconic skyscrapers like Manhattan’s Chrysler building and Rockefeller Center, Tishman Speyer has also become a major player in the transformation of Long Island City. The firm claims to be the area’s most prolific residential and office developer and says it will have completed construction on 3.7 million square feet in the neighborhood by end of next year.

A decade ago, the New York firm broke ground on Two Gotham Center, a 22-story office tower just a 20-minutes stroll from Anable Basin. Tishman Speyer sold the completed building to Canadian firm H&R REIT in 2011 but continued on, partnering with H&R and Qatar’s sovereign wealth fund to develop two office and retail towers named the JACX, and three rental apartment towers named Jackson Park.

To read the remainder of the article click here.

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Shady Landlords, the Sex Trade, Brothels and the Ultra-Orthodox Community Not Mentioned… though not Absent…KJ

Kiryas Joel and 2016 – to Today’s News – Nothing New

In 2016 we ran a piece on sex trafficking in Kiryas Joel, New York only to be called raving lunatics by others on the internet. We had heard first hand accounts of “sex slavery” from housekeepers being brought in to “service” the homes and guests of the homes. Many wanted to avoid any discussion of the topic publicly or even remotely publicly for fear of reprisals from their sponsors. In today’s climate, illegal immigration and cracking down has only made that problem worse. Many will not speak for fear of deportation. Imagine trading one’s body and her/his dignity for refuge. It is unthinkable.

At the time we had read accounts of what amounted to sex trafficking couched in the cover of Au Pairs from abroad. These were girls brought in to care for children, and to service men. We had been told numerous stories and even had a theory regarding one of the Leviev properties in NYC mentioned in 2016.

It is unfortunate that at the time we could not get the victims of these crimes to come forward nor could we substantiate what we believed has been happening for quite some time.

While the NY Times article mentions the difficulties in holding people accountable (particularly the Landlords) and in putting a stop to the brothels, we believe that in many cases the Landlords are not blind to what is happening within their premises. We do not think that the property managers are unaware and we have our suspicions that the network that allows these activities to continue is far better organized than the NY Times article below would have us believe. Smuggling in humans for sex trafficking, or even luring innocent victims, is much like smuggling diamonds. It probably is equally as, if not more, lucrative.

If law enforcement relied on the information obtained by the network of bloggers, it could expand its crime-fighting toolbox.    

THE NEW YORK TIMES

The New Brothels: How Shady Landlords Play a Key Role in the Sex Trade

An apartment building in Park Slope, Brooklyn in a residential area where many families live. A prostitution ring had taken over two apartments to use as brothels. The landlord was complicit, the police said.CreditDave Sanders for The New York Times

Most tenants of a drab, four-story building in Park Slope, Brooklyn, knew about the brothel in their building. Strange men buzzed their apartments at all hours, looking nervous as they headed toward the same two apartments where many residents believed sex was being sold.

Calling the landlord was useless, several tenants said.

“I thought it was strange that he didn’t seem worried about it,” one woman who lived in the building for seven years said. “It was so out in the open.”

In September, the police broke up a large prostitution ring that had been protected by seven police officers. Prosecutors said the landlord of that Park Slope building, Isaac A. Schwartz, was in on it. He has pleaded not guilty to charges of enterprise corruption and conspiracy.

Known by his nickname, “Shragie,” Mr. Schwartz not only owned four of the buildings where the ring’s prostitutes worked, but he’s also been twice included on an official list of the city’s worst landlords.

A retired detective, Ludwig Paz, was charged with being the leader of the ring, which operated brothels in several buildings in Queens and central Brooklyn, but the authorities said Mr. Schwartz also played a key role: finding locations for Mr. Paz.

In New York, gentrification has pushed prostitution indoors. Street walkers have all but disappeared. Prostitutes now advertise online, sex dates are arranged over the phone and brothels operate inside apartments in residential neighborhoods.

As a result, landlords play an important role in the sex trade. By enlisting Mr. Schwartz, Mr. Paz avoided having a landlord report his activities to the police, law enforcement officials said.

Efforts to rid the city of illegal sex have previously implicated prominent landlords, but the police have had a difficult time proving the extent of an owner’s knowledge and involvement.

David M. Hoovler, a former federal prosecutor who is the district attorney in Orange County, N.Y., said the rise of human trafficking in the United States has resulted in an increasing number of landlords willing to participate in illegal activities.

But it’s difficult to prove anything against them in court.

“You have to have evidence that links them to the actual criminal enterprise,” Mr. Hoovler said. “They actually have to have the intent to participate in it. They have to derive a profit from it.”

[A former vice detective is at the center of one of the New York Police Department’s worst scandals in recent years]

Inspector James P. Klein, the commanding officer of the vice enforcement division, where Mr. Paz worked until 2010 and where he was working when he started his secret enterprise, said the police rely heavily on undercover operations and the city’s nuisance-abatement law to shut down brothels.

But landlords are rarely charged with a crime, he said, because the police often don’t have enough evidence to show they are complicit, which results in a never-ending game of Whack-A-Mole: The police shut down brothels and massage parlors, only to see another open in the same place or nearby.

Mr. Schwartz declined to comment on what role, if any, he had in Mr. Paz’s business. Mr. Schwartz’s lawyer, Gedalia Stern, also declined to comment, as did several of Mr. Schwartz’s relatives and colleagues.

The police said it remained unclear how Mr. Schwartz, who is 44 and lives with his wife in Midwood, Brooklyn, partnered with Mr. Paz.

 

But one law-enforcement official, speaking on the condition of anonymity in order to discuss an open case, said that Mr. Schwartz spent several years “actively assisting” Mr. Paz and knew “exactly what kind of business was being conducted” in his buildings.

The former tenant in the Park Slope building, who spoke on the condition of anonymity because she feared retaliation by her previous landlord or his associates, said Mr. Schwartz’s response when she asked him why he tolerated having the sex trade in his building was, “They pay me good money.”

In one of his appearances in housing court, Mr. Schwartz said that his business was built on buying buildings in distress — or what he called “dumpsters” — and turning them “into something.” His strategy depended on receiving city money to house the homeless.

“So mainly all of my real estate is put together from shelters,” he testified in 2016.

On numerous occasions, the city paid Mr. Schwartz to house the homeless in some of his buildings, court records show, including one at 880 Gates Avenue in Bedford-Stuyvesant, where the authorities said a brothel operated.

But the brothel buildings comprised only a fraction of Mr. Schwartz’s larger portfolio. Through a network of shell companies, he owns at least 48 properties worth more than a combined $87 million, city records show. The companies all can be tied back to an entity called Pacific Management, which Mr. Schwartz still runs, with a partner, Mendy Lowy, from a cramped and cluttered office on Coney Island Avenue above a Pakistani bakery. (Ms. Lowy did not respond to several phone calls seeking comment.)

Mr. Schwartz has twice ended up on the Public Advocate for the City of New York’s list of the worst landlords. Eight of Mr. Schwartz’s buildings were on the city’s watch list last year, racking up more than 500 violations for problems such as water leaks, bulging walls and inadequate light and ventilation, officials said. Court records show that Mr. Schwartz and his companies have been sent to housing court more than 150 times recently.

One of those proceedings involved Sven Britt, a musician who four years ago moved into an apartment in a high-rise at 2007 Foster Avenue that Mr. Schwartz purchased a decade ago, property records show.

 

Within a few months, a gas leak in the unit prompted National Grid to shut off the gas, Mr. Britt said. Then came a bedbug infestation. After that, Mr. Britt said, came a series of ceiling collapses so severe that he could see “daylight through the roof.”

But Mr. Britt noticed what appeared to be an even bigger problem: a brothel in the building.

Law enforcement officials said it can be difficult and expensive to investigate landlords like Mr. Schwartz who are suspected of profiting from prostitution, in part, because it is largely a cash business.

Mr. Hoovler, the Orange County district attorney, said his office spent months investigating a hotel chain in New Windsor, N.Y., after its managers agreed to give discounted room rates to an undercover police officer posing as a prostitute. Investigators pored over hotel and banking records and conducted wiretaps to confirm the hotel managers knew about the prostitution.

“We were able to show not only links to money, but we were also able to show the links between the people,” said Mr. Hoovler. Eventually, two company officers pleaded guilty to a misdemeanor charge of permitting prostitution, and the corporation pleaded guilty to promoting prostitution and paid a $1,000 fine.

 

The authorities in New York City followed a different strategy in the 1970s during a campaign to push pornography and prostitution out of Midtown Manhattan. Rather than seeking indictments, the city went after landlords through their mortgages, taking advantage of standard clauses that allowed banks to foreclose on properties where illicit activity was taking place, said Sidney Baumgarten, a lawyer appointed by Mayor Abraham Beame during that era to lead the Midtown Law Enforcement Coordinating Committee.

The city identified more than 450 illicit establishments between 59th Street and The Battery at Manhattan’s tip, Mr. Baumgarten said. The businesses were popular with landlords because they commanded higher rents and rampant official corruption during that time made them difficult to snuff out.

“You had a lot of people who were interested in keeping things going on this way,” Mr. Baumgarten said. “I tend to think that a lot of it is still going on.”

Little in Mr. Schwartz’s history indicated he would eventually be accused of being involved in prostitution. At Mr. Britt’s housing court trial, Mr. Schwartz described himself as the hard-working son of a bakery owner from upstate New York.

He also said he had helped run a contracting firm, Powerful Electric, with his brother-in-law before he started in real estate. Powerful Electric, based in Brooklyn, is still owned by the brother-in-law, Shalom Seelfreund. He declined to be interviewed.

Mr. Schwartz had another side job too — as a good Samaritan. He joined the East Midwood Volunteer Ambulance Corps in 2006, and served three years as an emergency medical technician. The president of the corps, Yakov Hornitzer, said Mr. Schwartz stood out as a dedicated worker who took many shifts and attended classes to enhance his knowledge of medicine. Three years later, Mr. Schwartz took the test to become a full-fledged paramedic and joined the Hatzolah ambulance service in Carnarsie.

A few years after that, he was tied to a bizarre kidnapping ring in New Jersey. He and his real estate partner, Ms. Lowy, signed two $1 million bonds securing the release of a pair of Orthodox Jewish men — one of them a rabbi — whom federal prosecutors charged with abduction and assault.

For hefty fees, the government said, the defendants would snatch reluctant husbands from the streets, would tie them up and beat them and sometimes shock them with Tasers until they agreed to divorce their wives.

Lawyers for the men, who are now in prison, said they did not know how Mr. Schwartz and Ms. Lowy knew their clients.

To read the remainder of the article click here.

The California Bank Backing Hasidic Developers…. AND 199 LEE AVENUE

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199 LEE AVENUE, GLOBAL PROPERTY ASSET MANAGEMENT, SECTION 8 HOUSING, 421A TAX ABATEMENTS, LIQUIDITY AND THE TAGWORDS FOR THE  MONEY THAT FINANCES HASIDIC DEVELOPERS

199 Lee Avenue is really little more than a building with thousands of PO Boxes. Most of the PO Boxes represents another company. Most if not all of which are Hasidic owned and some of which are the actual registered addresses for assorted companies which may or may not be real companies.

In fact, 199 Lee Avenue was also tied to the late Menachem Stark and properties that he owned.

We think it no coincidence, however, that in 2016 there was an investigation into the PO Boxes and some of the connected LLC’s; an investigation that appeared to end with Kushner and the White House, though the article below suggests that to credit Kushner in the White House is a stretch. Perhaps.

We will say this. It is not the first time 199 Lee Avenue has been on our radar and will likely not be the last. But rather than try and tell you to entire story again, we have highlighted the relevant passages of the articles below in Red. That should tell it all.

We believe that the authorities, Federal and State Tax authorities, the SEC (think REIT’s) and the FBI should still be paying attention, not only to 199 Lee but to a number of connected addresses, some of which are listed below. Please pay attention to the below wherein it states that the Hasidic communities are some of the largest recipients of Section 8 Housing. We also presume that Medicare and Medicaid go hand-in-hand with that, a logical conclusion. But if you take a look at he numbers, particularly as they stand today, it simply does not make logical or reasonable sense. 

 

It’s 1999. AOL is how most people receive email, and computers everywhere could soon succumb to the Millenium bug. It’s also the year when a new lender emerges and quickly gains a reputation for catering to wealthy clients with “complicated” personal finances. Its name? Bank of Internet.

Flash forward to 2018. The bank has rebranded to BofI Federal, emerged unscathed from a Securities and Exchange Commission investigation, and has made a major bet on a niche corner of New York commercial real estate — backing projects from some of Brooklyn’s most prolific Orthodox Jewish developers. It does this mostly by acquiring senior notes on loans originated by other funds.

Lately, the bank has been in the headlines for a pair of real estate loans tied to Kushner Companies, as ProPublica reported. At Toby Moskovits’ Bushwick office redevelopment at 215 Moore Street, BofI refinanced the last-known Brooklyn development loan held by Kushner Credit Opportunities Fund, a debt vehicle Kushner Companies founded in 2016. At One Journal Square in Jersey City, BofI put up funds to finance Fortress Investment Group’s $57 million bridge loan to Kushner Companies. That two-tower project has been plagued by problems, both political and financial, and it’s unclear if the company will be able to see it through.

In an interview with The Real Deal, Gregory Garrabrants, BofI’s CEO, said it was misleading to draw any connection between his firm’s business with Kushner Companies and the fact that the SEC investigation was dropped.

“There’s a political agenda behind talking about Kushner,” Garrabrants said. “I don’t know Mr. Kushner, but I don’t have to because we know Fortress.”

Deep Brooklyn

Though BofI, a San Diego-based company with $8.9 billion in assets, has long been active in single-family lending in New York, it only recently got into commercial real estate. Sources said it started to appear as a financing option in “warehouse lending,” in which a bank issues a loan to a warehouse owner and funds that loan with debt from a secondary lender, such as BofI. Essentially, it’s a way for lenders to issue loans without having to use their own money. This type of deal is often referred to as loan hypothecation, in which the original loan is the collateral for the debt a lender seeks from a bank.

“It’s more of a West Coast thing,” said David Eyzenberg, a debt broker, on the hypothecation structure. “Where we really got to know [BofI] was in providing leverage to hard-money lenders.”

The bank’s services have been especially appealing to developers in Brooklyn, specifically the middle-market investors and luxury rental builders hailing from the borough’s ultra-Orthodox communities, according to an analysis of property records by TRD. The analysis found that of Bofl’s 10 largest loans backed by real estate in the last three years, eight were tied to assets owned by Brooklyn developers, including a number from Williamsburg’s Hasidic community.

Hasidic developers commonly prefer to finance in smaller loan increments over several stages, allowing them to revise design plans or recapitalize with additional partners and then restructure the financing, sources said. The approach stands in contrast with Manhattan’s development giants, which traditionally shoot for a large institutional loan up-front.

Charles Kushner, Toby Moskovits, 215 Moore Street and 61 Adams Street

“There is a certain type of sponsor turning to this bank for land and development deals, which have a higher cost of capital and are harder to finance,” said an investor familiar with the bank who requested anonymity. “And so the bank has largely been serving as a bridge lender to the same players.”

The list includes prominent Hasidic builders such as Simon Dushinsky’s Rabsky Group, Abraham Leser’s Leser Group, Cheskie Weisz’s CW Realty and Zelig Weiss’ Riverside Developers. Public records show Dushinsky has the most debt on BofI’s books, with more than $80 million spread across three loans.

The model means BofI has little to no interaction with the sponsors themselves. Scott Barone, whose firm Barone Management secured $15.8 million from BofI via Emerald Creek Capital in 2016, said he “never had any actual dealings with them.”

Sources identified Sal Salzillo as one of the main point people leading lender financings on development deals for BofI in New York. However, Salzillo left in March for Sandhills Bank, a South Carolina-based bank owned by the Kalikow real estate family. He could not be reached for comment.

Garrabrants wouldn’t reveal the names of his New York real estate team members and said the firm does not target any specific community for its business.

“There’s no specific marketing or any kind of specific targeting of any particular group of borrowers,” he said.

The wide web

In 2016, the SEC started hitting the bank with subpoenas, after a whistleblower filed a lawsuit in 2015 alleging the bank might have been lending illegally to certain foreign nationals  in possible violation of federal money laundering laws. The suit also alleged the bank failed to fully disclose certain loan practices to regulators. The SEC dropped its investigation in June 2017 without taking any legal action. Garrabrants attributed the lawsuit and subsequent inquiries to the machinations of angry short sellers who watched the bank’s stock continue to climb. In a January 2017 earnings call, he called the allegations “fake news.”

But some have questioned whether the SEC dropping its investigation and the bank’s lending to a major Kushner Companies development project is too much of a coincidence. Jared Kushner joined the White House last January as a senior adviser, and although he has resigned from company positions, he still retains ownership in much of the company portfolio. Garrabrants dismissed these questions as part of a “tin-hat conspiracy” and said the SEC cleared the investigation months before it began talks with Fortress — Kushner’s lender at One Journal Square — about acquiring the senior interest in the loan.

Kushner Companies has faced a series of challenges at the project and it appears unlikely that Jersey City Mayor Steven Fulop, a Democrat, will grant the company building permits or tax abatements, though he denies it has anything to do with opposition to the Trump administration. Garrabrants was critical of Fulop, but said BofI will make money in the deal regardless. If Kushner Companies can’t build it or if it defaults, someone else will get the project done, he said.

“With respect to any kind of hurdles that arise as a result of any kind of issues related to some of the things that I’m sure people who are motivated in certain in manners put in place,” Garrabrants said in a statement apparently directed at Fulop, “hurdles in respect to [Kushner] in particular, and essentially punish him for his political affiliation, those are more difficult.”

However, he continued, “If we ended up with an ownership interest. … There will be people lining up to make sure that we don’t lose money on that project.

 

THE REAL DEAL ARTICLE TO FOLLOW:

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Fort Greene Residents to Sue Over High-Rise to Preserve Brooklyn Neighborhood

Fort Greene Residents To Sue City Over High-Rise Plans

An attorney for Preserve Our Brooklyn Neighborhoods will file suit to stop a proposed 13-story building from going up on South Portland.

 

FORT GREENE, BROOKLYN — Fort Greene residents plan to sue the city over a new development planned to go up on South Portland Avenue.

Grassroots organization Preserve Our Brooklyn Neighborhoods will file suit against the New York City Planning Commission in a last-ditch attempt to prevent a 13-story high rise from going up at 142 South Portland Ave., organizer Sandy Reiburn told Patch.

“Our low-rise and historic communities are being appropriated by rapacious development,” Reiburn said, “fueled by a mayor who asserts he’s configuring 300,000 new ‘affordable’ apartments, no matter how unaffordable nor how many generations of New Yorkers will be displaced.”

The property belongs to the Hanson Place Seventh Day Adventist Church, which first sought community support for the 50-affordable-unit complex in November 2017 by arguing the building would bring much-needed affordable housing to the neighborhood.

“They want what the lord wants,” developer Michael T. Rooney of MDG Design, the company commissioned to design the building, told residents in November. “They’re pleading with the neighborhood to stand with them on this.”

Developers initially presented plans that called for 75 percent of the units to be priced at or above the area median income, with rents for a three-bedroom apartment topping out at $3,150-per-month.

The City has since committed $50 million to subsidize the development under the mayor’s controversial Mandatory Inclusionary Housing program, which allows developers to construct larger buildings if a percentage of the units are affordably priced, said the group’s attorney Jack Lester.

Lester told Patch he will file an Article 78 later this week that argues the development “obliterates local zoning while not producing increased affordable housing as promised.”

 

TO READ THE ARTICLE IN ITS ORIGINAL CONTENT FORM CLICK HERE.

Creative Map-Making and EB-5 Funds…. How Grants to Help the Poor are Making Jared Kushner Richer(er)

http://longisland.news12.com/story/35560404/kushners-used-creative-mapmaking-to-gain-visa-tied-funds

Creative Kushner mapping underscores holes in visa program

NEW YORK (AP) – The Kushner Cos. engaged in a bit of creative mapmaking to qualify one of its buildings in a booming New Jersey waterfront neighborhood across from Manhattan for a federal visa-for-investment program targeting struggling areas.

Emails obtained by The Associated Press show that the family of President Donald Trump’s son-in-law Jared Kushner placed its 65 Bay Street building in Jersey City in a map stringing together two dozen other areas, some with high unemployment.

The map was included in a 2015 application to the EB-5 visa program that allows overseas investors to obtain U.S. residency in exchange for investments of $500,000 or more in rural areas or those with high unemployment.

The maps are legal, and many other developers engage in the practice. But the practice is one of the reasons the EB-5 visa program has come under criticism from both Democrats and Republicans.

James Yolles, a spokesman for the Kushner Cos., declined to comment. The Kushner property is co-owned with developer KABR Group. KABR has not responded to voicemail and email requests for comment.

The special maps were reported earlier by The Washington Post.

The building at 65 Bay Street has licensed the Trump name from the president’s company, and is better known as “Trump Bay Street.” It received millions from wealthy overseas investors through the EB-5 program.

The Kushner Cos. was recently pitching to potential EB-5 investors in China for another Jersey City property. Called One Journal Square, it is a planned 79-story two tower complex in a struggling area of the city. The company is seeking 300 wealthy Chinese to invest a total of $150 million.

Jared Kushner’s sister, Nicole Kushner Meyer, created a stir in March after reports she had mentioned her brother, a senior adviser to Trump, in a presentation in China. Marketing materials for the event also cited the Kushner family’s “celebrity” status.

The Kushner Cos. said Meyer’s intention was not to use the connection to the White House to lure investors. Jared Kushner stepped down as CEO of the Kushner Cos. when he joined the White House. His lawyer has said that he has sold his stake in One Journal Square.

To handle the mapmaking for Trump Bay Street, the Kushner Cos. turned to Evans, Carroll & Associates, an economic consultancy in Boca Raton, Florida.

On May 6, 2015, Evans emailed the New Jersey Department of Labor & Workforce Development requesting that it review a proposed map stretching over two dozen census tracts. The map formed an odd shape, with some relatively low unemployment areas separated by a few miles to high unemployment ones.

By the end of the month, came New Jersey’s reply: The areas included in the map, called a Targeted Employment Area, had an overall unemployment rate of 9.8 percent – high enough to qualify for the EB-5 program.

The unemployment rate for the single census tract that includes 65 Bay Street was not mentioned in the emails, but has typically been much lower, according to Dave Evans of Evans, Carroll & Associates. Evans said the unemployment rate last year for the census tract that includes 65 Bay Street averaged 1.3 percent.

In order to qualify for EB-5 financing, a building needs to be in a Targeted Employment Area with unemployment 150 percent above the average U.S. rate.

Critics have faulted the EB-5 program for failing to bring investment into poor communities as intended. By gerrymandering together rich geographic areas with poor ones, developers have managed to win approval from economic development authorities for luxury projects in Manhattan, California’s Beverly Hills and Miami’s South Beach.

Earlier this year, Evans, Carroll & Associates emailed New Jersey state officials for Kushner’s One Journal Square project, too.

To read the article in its entirety click here.

 

Gerrymandering Human Lives – How Jared Kushner and “Cos” Stripped the Poor to Build for the Rich

 

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Kushner tapped program meant for job-starved areas to build a luxury skyscraper

http://www.latimes.com/business/la-fi-kushner-eb5-20170601-story.html

Jared Kushner and his real estate partners wanted to take advantage of a federal program in 2015 that would save them millions of dollars as they built an opulent, 50-story residential tower in Jersey City, N.J.’s booming waterfront district, just across the Hudson River from Lower Manhattan.

There was just one problem: The program was designed to benefit projects in poor, job-starved areas.

So the project’s consultants got creative, records show.

They worked with state officials in New Jersey to come up with a map that defined the area around 65 Bay Street as a swath of land that stretched nearly four miles and included some of the city’s poorest and most crime-ridden neighborhoods. At the same time, they excluded some wealthy neighborhoods only blocks away.

The tactic — critics liken it to the gerrymandering of legislative districts — made it appear that the site was in an area with extraordinarily high unemployment, allowing Kushner Cos. and its partners to get $50 million in low-cost financing through the EB-5 visa program.

The move was legal, and other developers have used similar strategies in recent years, often aided by state officials who welcome the infusion of cash. But it illustrates how Kushner — who ran his family’s real estate company before he became a senior advisor to President Trump — and his partners exploited a loophole in a federal program that prominent members of both parties say has been plagued by fraud and abuse.

On the south side of Jersey City, which has some of the most entrenched poverty in the New York City region, many people interviewed one day last week were surprised that their neighborhood’s troubles were part of the reason that 65 Bay Street got cheap financing.

“That’s very sad,” said Pastor Shyrone Richardson of the World Outreach Christian Church in the struggling Bergen-Lafayette section of Jersey City. “Unfortunately, the people who are benefiting from this are not the people in this area.”

Richardson’s church is in a five-block area where nearly one in five were jobless and there were three fatal shootings in 2015, according to an analysis of crime and census data.

His neighborhood seems a world away from the gleaming office towers and trendy cafes that surround 65 Bay Street. The Jersey City waterfront saw a building boom after 9/11 that transformed the area into one of the hottest real estate markets in the New York metro region, drawing residents from Manhattan and Brooklyn.

Apartments in the Bay Street building, marketed as Trump Bay Street, rent for up to $4,700 a month and offer sweeping views of Lower Manhattan. A nearby commuter train shuttles passengers to the World Trade Center within minutes. The area within a roughly three-block radius around the building had an unemployment rate of just 2.6% in 2015, according to census data.

Under the EB-5 program, a wealthy foreigner can get a fast-track visa granting U.S. residency by investing at least $500,000 in a project in a “targeted employment area.” To qualify, the area must have an unemployment rate at least 1½ times the national average. For developers, the terms of the investment are more favorable than a bank loan.

The Trump administration is considering whether to adopt changes that would prevent EB-5 gerrymandering. Kushner has said he will recuse himself from any discussions on the program.

Kushner Cos., meanwhile, is rushing to raise $150 million in low-cost financing through EB-5 for a separate project in Jersey City: a pair of luxury towers in an area called Journal Square. Kushner’s sister caused a stir this month when she mentioned her brother in a pitch for the project to investors in China.

For that project, too, the company is linking the development to blighted neighborhoods miles to the south while excluding adjoining neighborhoods that have lower unemployment rates, records show.

An executive at U.S. Immigration Fund-NJ, a firm helping Kushner Cos. raise EB-5 money for both projects, defended the practice. Mark Giresi, chief operating officer, called it a “common sense” approach that reflects the broader economic reality of each project’s surroundings. He also said jobs created by the project could be filled by workers from the depressed areas only miles away.

“In large urban markets like Jersey City these types of real estate development projects create much-needed jobs, particularly in the construction industry across areas of the city that cover multiple census tracts,” Giresi said in a statement. Census tracts are government-defined neighborhoods, sometimes as small as a few blocks.

Giresi said the Bay Street project created more than 1,280 construction and other jobs and that 1 Journal Square is projected to create 6,600. Under the program, each $500,000 investment must create at least 10 jobs.

The program’s critics say that cobbling together multiple census tracts to push up the average unemployment rate too often benefits developers and areas that do not need the government help. They point to EB-5 projects in prosperous areas of Manhattan, downtown Washington and in Beverly Hills.

“Many of these affluent-area projects would have been built and jobs created without the infusion of EB-5 capital,” said Gary Friedland, a scholar in residence at New York University’s Stern School of Business. “Consequently, deserving projects can’t be built and the resulting jobs are lost because the projects are deprived of the essential capital to proceed.”

The government caps the number of EB-5 visas it issues each year, and most of the resulting investment goes to high-profile projects in prosperous areas.

A spokeswoman for Kushner Cos. declined to comment, as did Jared Kushner’s spokesman.

Jared Kushner has sold his interest in 1 Journal Square but maintains an ownership stake in 65 Bay Street. The KABR Group, a partner in the luxury tower on Bay Street, also declined to comment.

Kushner’s prominence is drawing renewed attention to the practice, which has been the subject of years of debate in Congress and furious lobbying by the real estate industry. In interviews along Martin Luther King Drive in Jersey City last week, there was a common reaction.

“It’s like we’re being used,” said Helen Gathers, a registered nurse who has lived in Jersey City for 38 years.

Down the block, Laville Penn, a 54-year-old who was released from prison in early 2016 after a drug possession conviction, was looking for employment. He had been searching for steady work in construction for more than six months, he said, but had found only temporary day jobs.

Now, hoping to pick up some hours, he stopped by a lot where a friend was doing contract demolition work. Penn said the high-rises built in Jersey City are typically union jobs. “It’s difficult to get into the union if you don’t have certification or experience,” he said.

The EB-5 program was initiated in 1990 to help attract foreign investment to rural and poor, urban areas that have trouble drawing conventional financing or investment.

But developers are free to string together an endless number of contiguous census tracts until they reach the unemployment threshold. In the years since the Great Recession, this has often meant finding the nearest poor area and drawing a line to it.

Documents obtained from New Jersey through a public records request show just how easy that was for Kushner Cos. and KABR Group as they sought to build the Bay Street tower.

On May 6, 2015, Michael Evans, a consultant working on behalf of the project, sent an email to an official in the New Jersey Department of Labor asking that the Bay Street area be deemed an area with high unemployment. Individual states are responsible for reviewing unemployment data and issuing letters certifying that projects qualify for the federal program.

Evans wrote that such an area could be created by combining 26 census tracts in Jersey City that stretch more than two miles to the northwest and three miles to the southwest.

“The client as always is in a great hurry so if you can e-mail me the letter as soon as it is finished it would be appreciated,” Evans wrote. Evans did not respond to a request for comment.

There was a problem, though. The census tracts weren’t contiguous — and didn’t include the the project itself.

Three weeks later, the state, wrote back that the project qualified under a different but similarly attenuated configuration that achieved the same goal. New Jersey’s state website says it will help developers “perform a special tabulation for the area” of their project using census data.

The state-approved map strung together 16 census tracts that went nearly four miles to the southwest, crossing the New Jersey Turnpike and heading south to the Bergen-Lafayette and Greenville areas. Together, those neighborhoods had an average unemployment rate that edged just higher than 9.3%, the qualifying rate at the time.

That probably saved Kushner and his partners millions of dollars.

Developers typically pay only 4% to 8% interest annually on money raised through EB-5, experts said. Conventional financing can carry an interest rates of between 12% and 18%. On the $50 million for Bay Street, that difference amounts to millions of dollars annually over the life of the loan.

On Jan. 5 of this year, a little over two weeks before Trump was to take office, another consultant working on behalf of Kushner Cos. got in touch with New Jersey state officials again. This time, it was about 1 Journal Square. The census tract where it is located had an unemployment rate of 2.9% in 2015, but the consultant suggested adding five neighborhoods to triple that unemployment rate.

The approval came four days later, records show. Kushner’s sister went to China in May seeking the $150 million in EB-5 financing.

The Trump administration will decide in the coming months whether to enact rules, proposed by the Obama administration, limiting the census tracts that can be considered for EB-5 eligibility to only those directly adjacent to the tract containing the development.

The proposal is being considered by Secretary of Homeland Security John Kelly. Under the proposed rules, neither the 65 Bay Street tower nor the proposed 1 Journal Square project would be in a “targeted employment area.”

http://www.latimes.com/business/la-fi-kushner-eb5-20170601-story.html

The Jared Kushner Chronicles – a Rabbi’s Analysis – Where is Kushner’s Charity?

Preface:

We would like to post a disclaimer. Today is Shavuot and it is conceivable that re-posting this on a Chag Regalim when we are not supposed to be working is not something that the author of the piece would have wanted. Suffice it to say, we are some observant and some not so. We do, however, respect those who are observant and keep the chagim and Shabbat. To that end, we are posting but have had this done by the non-Jews among us.

As another note, our decision to repost Rabbi Arthur Waskow’s piece is in no way indicative of any support for this site or its contents. He may one day write a piece condemning us. Should he ask us to take his article down, we will do so without hesitation. Therefore we request that you, our readers, kindly not make any assumptions or come to any conclusions with regard to the respected Rabbi’s writing or this site. We highly value his commentary here. Whether or not he thinks highly of our site is an opinion only he can voice.

Finally, many of the people named in our previous posts, utterly destroyed by Jared Kushner and his companies can be found by searching their names online. Should you feel like giving Tzedukkah or passing something kind forward, we invite you to send them money to help support their lives. Jared Kushner and his companies have filed hundreds of lawsuits against people whose major misfortune was signing a lease with those companies. There are too many to help and it is solely Kushner and his unconscionable companies who should be helping them. However, since Kushner’s greed seems to make that unlike and given that some of these people are in dire straights. If you have something to give, please do so.

To view his piece in its original form. Please see the Shalom Center: https://theshalomcenter.org/torah-vs-jared-kushner

Chag Sameach.

LM

https://theshalomcenter.org/torah-vs-jared-kushner

The Torah vs. Jared Kushner

Tonight we enter the festival that has come to mean standing again, each year, at Sinai. What does it mean for us to do this seriously, taking Torah deep into our lives, challenging ourselves to live by its deepest teachings?

What would it mean to bring Torah to bear on one rich, powerful, and unjust Jew –- Jared Kushner?

Through the last 2,000 years or so of Jewish history, generations of rabbis have defined themselves – our selves – as heirs of the Prophets, not of the priests. Heirs of the Prophetic commitment to challenge unjust and destructive behavior, to reinterpret Torah for the sake of renewing life as the world around us and within us changed.

When Jews lived in self-contained communities, social if not physical ghettos, that degree of social control was workable for the sake of life-giving, justice-living Torah. But as we – for good reason!  — left such social ghettos, the ability of the rabbis or of the community as a whole to rebuke and end destructive and unethical behavior dwindled. So that lifts up the question: What could the Jewish community of today do about such behavior?

I want to lift up a perfect example of how Torah values are trampled underfoot even while the semblance of piety is claimed.  A story of one man who at this moment holds great power and exemplifies in his own person the “kleptocracy” – rule by thieves – that now afflicts us:

The New York Times Magazine of May 23 featured an article entitled “Jared Kushner’s Other Real Estate Empire.”  It describes in stomach-turning detail how Kushner’s real-estate firm, using several shell companies to hide its ownership from public view, has become an oppressor of the poor.

His companies have used false and brutal behavior toward low-income people who are tenants and even former tenants of the Kushner-owned properties, to extract money from them that in fact they don’t owe, ruining their families and their lives.

Since they can’t afford the lawyers who could defend them, they sink deeper and deeper into debt, disaster, and despair.

It seems to me that this behavior by a very high-profile Jew who claims not only the ethnic identity but the religious conviction is exactly what my grandmother called a chillul hashem.

Chillul,” from the same root as “challil,” the hollow flute,  means  hollowing-out — in this case, hollowing out God’s Name.. Since one of the mystics’ metaphors for God is “Tree of Life,” the “hollowing” is an especially powerful imagery.

A person who seems on the outside to be celebrating a living, thriving Sacred Tree of Life has hollowed out all the life-juice within.

The seemingly pious behavior of a seemingly pious Jew actually shatters Torah —  not in the private and self-contained way of a Jew who decides to eat pork; rather, in a way that shatters decency and justice in the public sphere, for many victims.

I urge you to see the article for yourself at —

<https://www.nytimes.com/2017/05/23/magazine/jared-kushners-other-real-estate-empire.html?hp&action=click&pgtype=Homepage&clickSource=image&module=second-column-region&region=top-news&WT.nav=top-news>

Kushner’s behavior teaches a vile version of what Judaism and the Jewish people are. When Jews lived in self-contained communities, such an ethical and religious violation could be confronted, rebuked, perhaps punished, even healed by repentant self-correction.

Now it is harder. But perhaps it is still possible. I recall the moment when a small group of rabbis in Northern California called themselves  ”the Redwood Rabbis.” With help from The Shalom Center, they challenged a Jewish corporation-owner whose business was logging magnificent 2,000-year-old redwood trees to make paneling for rich people’s basements. The corporation’s own annual report said that redwood paneling without knots sold better, and it came only from ancient trees.

We gathered on Tu B’Shvat, the RebirthDay of the Trees and of the sacred Tree of Life, to “trespass” on his land to rebuke his killing of these sacred trees of life. We placed a critical ad in his home-town Jewish newspaper just before Yom Kippur to call him to do tshuvah.

We voted inside and demonstrated outside when his stockholders gathered for the annual corporate meeting.

And finally, reluctantly, he sold the groves of ancient redwoods to the California and American governments to be protected.

If rabbis then could see the destruction of these trees as a violation of Torah, what could we say now about acts that cruelly destroy the  lives of hard-working human beings? Could we challenge Mr. Kushner in similar ways? If we did, would we risk encouraging anti-Semitism? Or would we risk it more by keeping silent?

Tonight we face the Festival of Shavuot and read the Book of Ruth. It celebrates two people: a penniless foreigner, an immigrant from a despised and hostile nation, a woman unprotected by a man – and  a wealthy landholder who not only obeyed but affirmed the Torah’s command to make sure the poor and the immigrant had dignity and a decent livelihood. Could any teaching be more clear about the malfeasance of Jared Kushner?

Since the NY Times article on Kushner’s domestic business cruelties, there have emerged claims he may have negotiated with the Putin government of Russia in clandestine ways. And Politico has published an article suggesting his connections with the Lubavitch Chabad organization are intertwined with Chabad’s specially cozy relationship with Putin, in a way to benefit him and his father-in-law both financially and politically.

<http://www.politico.com/magazine/story/2017/04/the-happy-go-lucky-jewish-group-that-connects-trump-and-putin-215007>

These allegations may or may not be accurate. They merit close study. But the cruelty of his business dealings in Baltimore and elsewhere is clear, already proved.

Most American Jews have made clear that they do not view Mr. Kushner or his kleptocratic and authoritarian bully of a father-in-law as heroes.

But the established “major” organizations have so far not rebuked such behavior by rich Jews, nor have the rabbis who might be thought to be the guardians of Torah.  What more might we do to stand again at Sinai and to clarify what Judaism ought to be, in actual practice?

Blessings that we come to live more fully in a a world that as the ancient Rabbis taught, can stand up straight only if it stands upon three pillars: Emet, Tzedek, v’Shalom: Truth, Justice, and Peace —

Arthur