Dive Brief:
- A spokesman for the New York Wheel, the Staten Island Advance reported, has announced that developers for the beleaguered waterfront attraction in Staten Island's North Shore area estimated to cost as much as $1 billion will not move forward with construction. The judge in previous contractor and designer Mammoet-Starneth's bankruptcy case gave the Wheel team until Jan. 7, 2019, to hire a new construction and design team and to secure the necessary financing or risk the rights to about $68 million worth of the project's building components that Mammoet-Starneth has in storage.
- The Wheel's developers used $450 million of private investments to build a 325,000-square-foot, 950-space garage and surrounding infrastructure that allows motor coach turnarounds and provides pedestrian access to the waterfront. These achievements fall well short of the 630-foot-tall structure that the team projected would be the centerpiece of the area's more than $1.6 billion of new development.
- Wheel officials looked to New York City to finance a portion of the project with tax-free bonds, but Mayor Bill de Blasio reportedly dismissed the possibility, expressing doubt that the Wheel was economically viable. The project did, however, use $206 million of foreign investor funds through the U.S. Citizenship and Immigration Services' EB-5 visa program. The project's EB-5 facilitator, CanAm Enterprises, said that "the costs incurred to date support enough EB-5 Program-qualifying jobs to meet the USCIS job creation requirements for the unconditional permanent residency for all of our 412 investors in the project."
Dive Insight:
If the Wheel had been able to fund the project, American Bridge and Arup Group were in line to take over design and construction.
The Wheel project is an example of the risk that EB-5 investors take when they put the required $500,000 to $1 million into a U.S. project in order to get priority processing of their green card applications. Although some might have the money to spare, the money represents a true investment and many are no doubt counting on making a decent return or at least getting the principal back when their chosen projects are complete.
Construction on the Wheel has been stalled since 2017, so there shouldn't be as much work in securing the site as there would be if the project were still active. This is good news for the Wheel team, as shutdown operations can be extensive and expensive. The process includes tasks like terminating temporary office, equipment and storage rental agreements and arranging for those items to be picked up; installing a fence or adequate barriers to prevent trespassers and passersby from wandering onto the site and getting hurt; and terminating subcontractor and vendor agreements.
