Exclusive: Inside story of smaller N.Y. Wheel in the works for St. George - SILive.com

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STATEN ISLAND, N.Y. -- CanAm Enterprises, which is a sponsor of EB-5 regional center projects, believes the plan to build a smaller version of the New York Wheel -- about 420 feet high -- on the St. George waterfront will likely happen by early 2025, the Advance has learned.

The initial N.Y. Wheel project reached its demise on Oct. 23, 2018, when its principals announced they would not follow through with the construction of the 630-foot-high tourist attraction, whose cost had snowballed from an original estimate of $250 million to close to $1 billion. Before the project was abandoned by its major investors, about $200 million was invested to build infrastructure on the site, including the Wheel’s giant pedestals and a largely-complete terminal building and parking garage.

The EB-5 program allows foreign investors to be connected to a project in exchange for help facilitating their green cards. While CanAm Enterprises has been involved with the Wheel project since its inception, it has been working since 2019 with consultants and the state and city -- including the city Economic Development Corporation (NYCEDC), which oversees the city-owned land on which the project would sit -- to upstart the smaller Wheel.

“We are grateful to be working closely with borough, city and state officials and remain fully committed to the completion of this project,” said Tom Rosenfeld, CanAm’s president and CEO.

“CanAm’s investment of time and money into the Project is consistent with our decades-long practice of prioritizing the immigration and financial interests of our investors. We are grateful and protective of the trust that has been placed in CanAm, and we take our responsibility to our investor families very seriously,” he added.

NYCEDC said that, as the landlord of the grounds, the agency has conceptually approved the smaller Wheel project and will continue to work with CanAm to have it come to fruition. Any changes from the original project will be subject to NYCEDC approval, according to the agency.

However, NYCEDC said the smaller Wheel proposal is “more feasible” than the original project. The smaller Wheel would be less costly due to its size and the fact that there are several observation wheels of this size already in existence to serve as models, according to NYCEDC.

CanAm has been paying for monthly upkeep of the site -- payments that have totaled $3.6 million so far.

‘POST-PANDEMIC COMEBACK’

CanAm is touting the project as a “poster child” for New York’s post-coronavirus (COVID-19) pandemic comeback.

“The Wheel will support hundreds of construction and permanent jobs, and it will be a great symbol for New York City’s post pandemic comeback,” said Rosenfeld.

CanAm said it has benefited from the knowledge of the initial N.Y. Wheel’s major investors, and has now taken the reins of the project. And since early 2019, CanAm has been evaluating whether a restructuring and development of a smaller Wheel project was economically viable. Although the pandemic put the project development on hold, CanAm is now moving forward with the smaller Wheel, which is expected to take about three-and-a-half years to complete.

Part of the reason the new project has been deemed feasible is because of the cooperation of the original developer and the $200 million of usable, well-maintained infrastructure already in place.

Borough President James Oddo, who has long been a proponent of the project, said it makes sense to pursue a smaller wheel.

“The original Wheel project failed because they were told they could build this attraction for a few hundred million dollars, and the project was steaming headlong toward $1 billion. The notion in a pre-COVID world that tourists would come and spend money here is still valid,” he said. “To me, because we are frozen in time because of COVID, I think it makes sense for us to continue to allow this group the time it needs to take a legitimate shot at building this London Eye version of the Wheel.”

THE NEW PROJECT

The new project promises to be a wheel more similar in size to the London Eye, which is 443 feet high, said CanAm.

And the new Wheel will cost $28 per ride, according to CanAm, which is less than the original Wheel, which would have been at least $35 per ride.

The projected yearly ridership for the new Wheel would be 1.2 to 1.8 million people, as compared to the previously projected 3.5 million annual riders the initial project promised, said CanAm.

Dubbed “shovel-ready” by CanAm, the new Wheel project is a multifaceted development that will transform eight acres of waterfront property into a major NYC tourist attraction. In addition to an observation wheel, the project includes acres of community open space, subsidized public parking, a terminal building, a 12,000-square-foot public playground, outdoor event space and public infrastructure improvements, according to CanAm.

JOB CREATION

Construction of the project promises to create 550 permanent and high-wage union construction jobs: 250 direct construction, 50 design and 250 operations jobs, according to CanAm.

CanAm said it has already been in talks with a reputable developer, who completed “preliminary due diligence” and is very interested in potentially financing and developing the project.

N.Y. WHEEL HISTORY

New York Wheel LLC entered into a Uniform Land Use Review Procedure (ULURP) with the city of New York, its various agencies and the general public in May 2013. The original sponsors of the N.Y. Wheel, who invested more than $456 million -- $206 million of which was a secured EB-5 loan -- withdrew from the project in January 2019. The project fell apart shortly after the request for the issuance of $380 million in private sector, tax-exempt PILOT Bonds to complete the project (whose cost was approaching $1 billion), was rejected by the city.

The original New York Wheel, which was intended to be the world’s tallest observation wheel, proved to be an extremely complex and daunting design, engineering, fabrication and construction undertaking, according to CanAm.

EB-5 INVESTORS

When the initial project was abandoned, there was a question as to whether the EB-5 immigrant investors would lose their green cards as a result of the project’s demise.

CanAm said the more than $450 million spent on the original Wheel project has fulfilled the requisite indirect new job requirements for all Wheel EB-5 investors, who continue to have their conditional and permanent residency applications approved by United States Citizenship and Immigration Services.

And CanAm is confident that the remaining Wheel investors will also have their immigration applications approved.

CanAm said it is pursuing two separate tracts to maximize the return of investors’ capital:

• Development of a smaller Wheel.
• A lawsuit against the initial Wheel’s former contractor, Mammoet in conjunction with Feil Group, investors in the initial project.

CanAm said its sole motivation is to fulfill its commitment to its investors. CanAm touted its track record, which includes sponsoring 61 projects and raising more than $3 billion from more than 6,000 investors. To date, it has fully repaid $1.75 billion to 3,500 investors.

PARTS AUCTION

An auction of the Wheel parts was held in January 2019 in the Wilmington, Dela.-based law offices of Richards, Layton & Finger, where there were multiple bidders vying for the pieces, according to court documents filed in Delaware Bankruptcy Court.

Among the parts said to be auctioned off in court documents were Wheel legs, maintenance elevator parts, A-Frame braces, capsule parts and spoke cable assemblies.

CanAm said that while many parts, like the legs, were auctioned off, they would not have been of use for this smaller project, due to the difference in size.

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February 19, 2021 at 05:30PM
https://www.silive.com/news/2021/02/exclusive-inside-story-of-smaller-ny-wheel-in-the-works-for-st-george.html

Exclusive: Inside story of smaller N.Y. Wheel in the works for St. George - SILive.com

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