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The disappearance of the New York Wheel marks one of the biggest failures of the EB-5 of all time.
The project was undermined by cost overruns and internal conflicts
A rendering of the New York Wheel (Credit: Perkins Eastman)
The New York Wheel is officially dead, ending an ambitious project that has been tainted by years of delays, cost overruns and infighting.
Project spokeswoman Cristyne Nicholas announced the decision on Tuesday. The news was first reported by Staten Island Advance.
"After years of planning, the developers of the New York Wheel announced with great disappointment that the dream of building a world-class attraction in Staten Island would not be realized," Nicholas said in a statement.
The former mayor of New York City, Michael Bloomberg, unveiled for the first time the idea of a Ferris wheel at Staten Island in 2012, and the project quickly became a pole of choice. 39 attraction for immigrant investors EB-5 working through the Canam Enterprises regional center. The project finally attracted 412 investors with a $ 206 million loan that was due to expire in 2021, according to the Canam website.
This makes the New York Wheel one of the biggest failures of the EB-5 in the history of the program. The fraud scandal over the Jay Peak Resort in Vermont exceeded the same amount.
Canam said in a statement to the Advanced that the company believed that the costs borne by the project to date still meet the criteria for creating jobs allowing its investors to obtain permanent residence unconditionally in the United States.
"Canam, as it has always done in the past, will consider our investors in their respective immigration processes," said President and CEO Tom Rosenfeld. "This project was about to be completed and already met all the requirements defined by the EB-5 program."
Reaz Jafri, partner and head of immigration at the law firm Withers Bergman LLP, said that the failure of the New York wheel could be a cautionary tale for investors in the EB group -5.
"It can be a kind of sad reminder to EB-5 investors that when it comes to choosing a development, think carefully about what you are investing in," he said. . "The real estate is very entertaining. If you see a 40-story commercial tower under construction in Manhattan, it's pretty safe. A concept that is growing in Staten Island, not so much. "
The project initially had an expected completion date of 2016 and an estimated price of $ 450 million, but that number then increased to about $ 900 million. Work on the project was halted last year after contractor Mammoet-Starneth left the site while the ground would not support the wheel.
The promoter dismissed them shortly afterwards and Mammoet-Starneth then filed for bankruptcy in December. In May, the two parties reached an agreement that gave them 120 days to find a way to move the project forward and finally decided that the project would have a final deadline, January 7, 2019, to be on track.
However, by the end of September, investors Lloyd Goldman and Jeffrey Feil had announced that they were about to give up the New York wheel because the city would not support a bond issue. exempt from tax. The Economic Development Corporation argued that public funds were too scarce and precious to be invested in the project.
"The New York wheel was an ambitious undertaking," said EDC spokeswoman Stephanie Baez in a statement. "Although developers have not been able to secure the necessary funding for this project, the city is committed to working with the community and local stakeholders to determine potential uses of the wheel site."
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