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Sandro Rosell
FC Barcelona President
Wednesday, October 18, 2017

New York Wheel, the long awaited Staten Island attraction, faces yet another major impediment. Last week, the project’s developer fired its design and construction team, Mammoet-Starneth, delaying the project indefinitely. The developers are now searching for other contractors to complete the project.

The developer claims Mammoet failed “to meet multiple design and construction deadlines,” the Staten Island Advance reported. The delays have reportedly cost $16 million in damages and $20 million in lost profits. As per court filings, the New York Wheel has withdrawn its request for injunctive relief and a mandate that Mammoet keep working on the project. 

 The delays will not only impact Ferris wheel fans, but may prove devastating for its financiers, particularly EB-5 investors. Project investors include New York Wheel CEO Rich Marin, who is a former Bear Stearns executive, Eric Kaufman, Meir Laufer, Jay Anderson, Lloyd Goldman and Joseph Nakash. Another $206 million in funding comes from 429 EB-5 investors from regional center Canam Enterprises.  Those loans mature in February 2021.

As reported by The Real Deal, experts say that the visas promised to the investors could be threatened, with investors facing deportation if the wheel doesn’t get back on track fast.  “This is potentially a disaster for the investors,” said Jim Butler, a lawyer for Jeffer Mangels Butler & Mitchell, who represents developers on EB-5 issues. EB-5 investors generally receive temporary visas after their money is put in escrow.  Two years later, in order to receive the permanent visas, they must show that the project has been completed and the jobs have been created.

The wheel was expected to create 5,844 jobs, and if the jobs do not actualize, given all the delays, it is doubtful that the investors will receive their green cards and be permitted to stay in the country. “If their jobs are not created, that’s the end of the story,” Butler said. “It’s not like horseshoes, in that it’s close, and you tried, and it was good faith, and it didn’t work out. The jobs must be created.” Butler expects there to be lawsuits from the EB-5 investors.

The project was introduced back in 2011. Enthusiasts were optimistic that building the world’s largest Ferris wheel, was a great way to spur tourism and projected that the revenue would even top that of the Empire State Building. The initial projected cost of building the 630-foot-tall wheel was $250 million. However, the project has been continuously inundated by infighting and rising costs, with the price tag escalating to about $600 million.

By Ilana Siyance