The next time visitors come to visit you for a tour of New York City, the New York Wheel may be on their list of places to see – or not.
Let’s take a quick look at how it all began… The idea for a New York Wheel began in 2008, when Meir Laufer, CEO of Plaza Capital Management, a small Financial District-based developer, first visited the London Eye and had a dream to create something similar in New York. Laufer pithed the idea around and eventually caught the attention of investor Eric Kaufman, a developer and a former top broker at Colliers International.
Not everyone agreed that the project was a good idea, but an exclusive construction deal with Mammoet-Starneth, the engineering firm behind the London Eye, was achieved. This agreement enticed deep-pocketed investors, including those with EB-5 visas. According to the US Government website, the program is for entrepreneurs that are eligible to apply for a green card if they make the necessary investment in a commercial enterprise in the United States, and plan to create or preserve 10 permanent full-time jobs for qualified U.S. workers. According to the Real Deal, the program is facing a major backlog in applications, resulting in up to 15-year wait times for visas.
By 2010 a site for the New York Wheel was searched for and with the help of NYC & Company, the city’s official marketing arm, as well as with the city’s Economic Development Corporation, Staten Island was finally agreed upon. In September 2012, then-Mayor Michael Bloomberg unveiled the plan to the public.
The project’s challenges are long, and here are just a few: The current estimated cost is over $600 million, which is more than twice the original figure. Vicious infighting has ripped apart the working dynamic of the development team. All of these challenges have resulted in public officials and government agencies suddenly going quiet when they had given support to the project for the past three years.
In May, the engineering company, Mammoet-Starneth, walked off the site after saying the soil could not support the structure. (Some reports say they were fired.) In December, the contractor filed for bankruptcy and in February, the developers agreed to pay $460,000 to help cover storage costs for some parts of the wheel.
In addition to a new management structure and the amount of money it will need to continue, the Wheel is one of many EB-5 projects across the U.S. mired in controversy that has left investors in limbo. Regional center Canam Enterprises has raised $206 million from 412 EB-5 investors for the project, according to the firm’s website.
So where does it all stand? A deadline was set for September 5th, and pushed back to September 11th, to see if the Wheel will keep rolling or if the project will have a permanent end. If it does end, it would be seen as one of the largest EB-5 failures. Maybe Hollywood will dive in and make a movie about it all.