The fate of Staten Island’s troubled New York Wheel is taking a turn for the worst. After the city’s recent decision to reject the developer’s request for assistance to get the stalled project back on track, lead partners have told the Wall Street Journal that they are “close to abandoning their plans to build the wheel.”
Investors Lloyd Goldman and Jeffrey Feil told WSJ that unless the city changes its mind, large parts of the 630-foot-high observation wheel that have been manufactured will be sold. Some of the parts are in warehouses in Brooklyn, while others are in six foreign countries.
The New York Wheel has been in the works for at least six years and developers have already spent $450 million in construction cost so far. The city-owned site where the wheel was set to rise is now home to four 100-ton pedestals that were going to hold the legs of the giant ferris wheel. When originally announced, the project was expected to cost around $450 million, however extended delays, cost overruns, and lawsuits between the developer and former contractor Mammoet-Starneth have increased the cost to somewhere around $900 million now.
Developers had been negotiating with the city for months, in efforts of garnering support for a $380 million tax-exempt bond, however the New York City Economic Development Corporation announced that the project was too risky and public funds “too scarce and valuable to be leveraged for this venture.”
However, in an op-ed published by SI Live executive editor Brian Laline, he notes that the bond proposed by investors, a Municipal Revenue Bond program, which is a non-government obligation bond (also known as PILOT bonds), would be insured by the investors to minimize risk and the city would not be on the hook to shell out any taxpayer dollars. He acknowledges that the project is in bad shape, especially after the construction company building the wheel declared bankrupcty, however, Laline argues that the city should help it see to fruition.
It’s a mess. But a mess the major investors have not walked away from. They still are committed to seeing the Wheel built. But they also feel they have poured in so much money that now they need help. They never planned to spend the volume of money now needed. At some point, enough is enough. But remember: They are NOT asking for a dollar from the mayor.
At this point, it seems highly unlikely that the New York Wheel will become a reality, which is unfortunate, given the hundreds of millions of dollars that have already been invested into it. The city has stated that they “remain supportive” of the development, but unless they show it through actions, New York City will have to add this one to the never-built club.
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