On the left, current conditions of a dilapidated Rockaways shopping strip. On the right, rendering by Edelman Sultan Knox Wood/Architects LLP of new community center.
Patricia Simon stands in front of an abandoned, fire-ravaged commercial strip on Beach Channel Drive in the Far Rockaways, running through the most pressing needs of the low-income community she serves. “If you could see the residents with their shopping carts, walking (down the street on Saturdays), she says, “it’s a sight to be seen.” Simon, executive director of Ocean Bay Community Development Corp., says public housing residents and others in the Edgemere neighborhood on the Rockaway Peninsula have no choice but to trudge more than 20 blocks, or to wait for a city bus, in order to do their grocery shopping. In this U.S.D.A-designated food desert, that’s how far they must go to buy fresh food.
But help is on the way. Ocean Bay CDC and Asian Americans for Equality have teamed up to build a new state-of-the art retail center where that dilapidated commercial building now stands. The 21,000 square foot facility will include a modern supermarket, plus a pharmacy, hardware store and new headquarters for Ocean Bay CDC. Simon says the Ocean Bay Retail Center will be like “manna from heaven” for area residents.
Thomas Yu of AAFE and Patricia Simon of Ocean Bay CDC stand in front of the decaying commercial center in the Far Rockaways.
The project in the Rockaways will bring critical local services to a struggling community and also generate new jobs in an area burdened with a 14% unemployment rate. But there’s a bigger picture, too.
The collaborative venture is being partially financed through the EB-5 Immigrant Investor Program, which offers visas to would-be immigrants who invest in economic development projects.
In the last several years, the EB-5 program has been used mostly for luxury projects, rather than for its intended purpose: reinvigorating downtrodden neighborhoods. If successful, this project will help blaze a new trial, demonstrating that EB-5 can be a valuable tool for true community-oriented development.
The United States Congress will soon weigh the renewal of the EB-5 program, which was first enacted in 1990. Coverage in the national press has focused almost exclusively on aspects of the law which need to be improved. But as the debate over the legislation intensifies, it it also important to consider the good that could come from the EB-5 program.
Chris Kui, executive director of AAFE, says, “We want to be able to show that community development organizations, like ours, can really make this program successful. We want to popularize it, so that other community development projects in various neighborhoods can access the program.”
In its more than four decades serving the people of New York City, AAFE has established a strong reputation for innovation, especially when it comes to making little-known government programs work in economically-stressed neighborhoods. In 1987, Asian Americans for Equality became the first not-for-profit organization to use the Low-Income Housing Tax Credit to build affordable housing. It was a key tool used by AAFE to build more than 800 units of quality housing and was widely emulated by other groups nationwide.
A lot has changed in the past 30 years. High land prices in New York City and federal spending cutbacks have made financing community developments initiatives more challenging. But AAFE continues to look for new funding sources.
Under the EB-5 program, Congress allocates 10,000 visas per year. Foreign investors must make a minimum $1 million investment in a commercial enterprise, or $500,000 minimum if the project is located in a targeted employment area. If an independent analyst determines their investment created at least 10 jobs within five years, they are granted permanent residency. The program was not widely used until the 2008 financial collapse, when real estate developers began co-opting it for large projects like Hudson Yards in Manhattan and the Beverly Hills Waldorf Astoria. They gerrymandered target employment areas to qualify for EB-5, even though the developments were mostly in well-off communities.
AAFE began looking at the program, studying the possibilities. Says Chris Kui, “I think the original intent was correct. You can make sure the capital goes to the neighborhoods that need it. In the past few years, I think it’s been misdirected, a little bit. We want the program to be used for its original purpose. That’s a whole movement now, nationally, that people are talking about.”
In 2014, the Surdna Foundation and the Garfield Foundation commissioned a research study that revealed where EB-5 were being spent. Almost none of the 178 EB-5 projects evaluated were located in low-income census tracts. Orson Watson of the Garfield Foundation says, “The whole report (was) about identifying an unmet opportunity. We saw this as an opportunity (for community development organizations).”
The foundations then provided financial backing to AAFE to establish a regional center, an arduous 15-month process that cost approximately $250,000. The New York Renaissance Regional Center opened for business last year.
Shawn Escofferey of the Surdna Foundation explains why the search for a community development partner led to Asian Americans for Equality. “AAFE was one of the groups that rose to the top,” he says, “because they have a national reputation… They were a group that has a longstanding track record of getting deals done and has great standing in the community.”
While alliances were being formed on a national level, AAFE and Ocean Bay CDC were building a bond in the Rockaways. Our affiliates, Renaissance Economic Development Corp. and Community Development Fund, were on the ground in the aftermath of Hurricane Sandy to provide small business rebuilding and home repair loans. The community was hard hit by the storm. To this day, there are many vacant parcels and abandoned homes, buildings that have never been fixed. The neighborhood suffered from years of disinvestment long before the big storm hit.
Scenes from the abandoned commercial strip in the Rockaways that will soon be transformed.
The devastation of Sandy led to a comprehensive community planning initiative. Funded by Local Initiatives Support Corporation (LISC), it was a collaboration among Ocean Bay CDC and AAFE, as well as Hester Street Collaborative, a Manhattan-based organization that specializes in community-driven urban planning. During many public meetings over the course of several months, residents of public housing developments in the area and other residents identified top priorities for their neighborhood. The final report, issued in December of 2014, Rockaways: Community Planning + Envisioning, called for an emphasis on employment services, youth activities, healthy food and banking.
In March of 2015, the New York City Housing Authority selected AAFE and Ocean Bay CDC to develop a commercial and community center on land NYCHA owned on Beach Channel Drive. The facility was a key recommendation of the community visioning report.
Thomas Yu, AAFE’s strategic development officer, notes that the two not-for-profit organizations were thinking along the same lines. It was clear from the outset that local hiring for the project would be a top goal. “It was serendipitous,” he says, “because the Ocean Bay CDC folks came to us and said, ‘We heard about this EB-5 program and we want it here.’”
An early rendering by Edelman Sultan Knox Wood/Architects LLP of the Rockaways community center.
The facility will include a Key Food grocery, as well as a pharmacy and hardware store. There’s space for a restaurant, an amenity for local residents who say there’s scarcely anyplace in the neighborhood to sit down for a meal. In addition to Ocean Bay’s neighborhood services office, the site will offer CDFI financial literacy courses through a partnership with Renaissance Economic Development Corp. and Ocean Bay CDC. The ultimate goal is to establish a credit union in the building. There will also be a plaza area, which Ocean bay CDC will program with local events such as job fairs.
The building is being designed by Edelman Sultan Knox Wood/Architects LLP, the same firm handling the renovation of the New York Aquarium. The site will be raised above the floodplain and the building will serve as a disaster resource center, complete with rooftop solar panels and power generators. The area is a brownfield site, so the partners are working with the NYC mayor’s office, NYCHA and the federal Department of Housing and Urban Development on a comprehensive environmental cleanup plan.
Yu says the total cost of the project is $12 million, and about half of the financing is expected to come from EB-5 investments. An economic report confirmed that construction jobs, as well as permanent jobs, will more than fulfill minimum federal requirements. New Market Tax Credits will also be used to finance the project.
The project will provide the neighborhood with desperately needed local services and jobs. But the new facility will also serve as an invaluable community hub and help stimulate other economic growth in an under-served swathe of the Rockaways.
The collaboration will take Ocean Bay CDC, which has already done so much in service to its local community, to a new level. “In AAFE’s early years,” explains Thomas Yu, “more established organizations came in and mentored us, as we were getting involved in community development projects, and then they passed the baton.” Now AAFE has the opportunity to help another organization grow. Patricia Simon, Ocean Bay’s longtime leader, agrees. “AAFE was built from the ground up,” she says “We’re a small community-based organization just getting our feet wet in development. They have an ‘Each one, teach one’ philosophy.”
According to Chris Kui, the EB-5 program will be used to help AAFE finance its own projects, but also aid other groups. The Surdna Foundation and the Garfield Foundation, he says, “made it clear that they want us to help finance projects by other community development organizations and to help support them in their local areas.”
Shawn Escofferey of the Surdna Foundation is eager to see the early results in AAFE’s first EB-5 funded projects. “I think we need more positive stories,” he says. I think this experiment is worthwhile if we can direct some of these investments to truly low-income communities. We hope there are ways to use the AAFE model and replicate it across the country.”
Kui knows that critics in Washington are pointing to the misuse of EB-5 in high-income neighborhoods. But he believes shortcomings in the program can be addressed and that there’s a significant upside for communities in desperate need of help. “The program exists,” he says. “From our perspective, EB-5 utilized correctly, could have a very positive impact. We do want foreign investment. We want new immigrants to invest in our communities, to make a positive impact.”