In 2011, while I was trying to launch a hedge fund that would have bought defaulted mortgages from the FHA at levels attractive for them and, we thought, very attractive for us. We had an enlightened plan to fix a lot of the broken mortgages that were the detritus of the subprime collapse. It seemed both noble and profitable and our story was compelling enough to attract $1.5 billion in capital from one of the largest Wall Street firms. After securing the commitment from the head of the FHA (something our lead investor insisted on diligencing directly…and they agreed it was all green lights ahead) we started gearing up for the first auction. Just then, in early 2012, a presidential election year when Barack Obama was trying to get re-elected despite a fairly mediocre term of luke-ward accomplishments, the rug got pulled out from underneath us all due to politics. You see, it was felt that fixing a part of the FHA portfolio would crystallize and bring attention to the imbedded other losses in the FHA portfolio and that the publicity from that would be exploited by Republicans looking for anything to throw at the Obama Administration. So, a good idea that would have been good for America and many people (not the least of which was myself and my team) was suddenly thrust into the trash can. The cookie does, indeed, often crumble.
It was at that moment that I was being wooed to join an effort to bring to fruition a large public/private partnership deal to build a major NYC attraction…the New York Wheel, a 630 ft. observation wheel. For years, people have asked me how I stumbled into this after a successful, if not somewhat turbulent, Wall Street career that had spanned 37 years at that point and put me in the senior-most ranks of three bulge-bracket firms. What can I say, shit happens in life and sometimes something comes along that sounds interesting at a moment when more of the same-old, same-old feels less interesting. That’s about all I can say about how it happened, but where it led me was to almost six years of leading an effort as the CEO of New York Wheel, to build this behemoth that started as a $500 million project, grew to be a $650 million project and then failed for not being able to get it to the needed $700 million, which others have ballooned in fiction to a project that really needed $1 billion (to which I say, BS!). I’m not sure how many people could have raised $1.5 billion for defaulted FHA mortgages, but I’m pretty sure there are VERY few who could have raised $500 million and then increased that to $650 million for an observation wheel on New York Harbor…especially what with all the complexities of metallurgy, physics, engineering, and NYC politics it took to get it over numerous interim goal lines. I worked that problem with determination for six years…which is a long time in anyone’s career.
By 2018, we had $450 million “in the ground” with a 1,000-car garage built and operating, a 75,000 sf terminal building, and enough structural steel and concrete under the wheel base where four 100-ton steel footers sat awaiting deployment of the massive steel legs. Those legs had been forged in Ancona, Italy and were sitting on a dock in Brooklyn. There were 13 rim sections forged and sitting on a storage field in Turkey awaiting shipment. And there were huge ball bearing hubs on a dock in Rotterdam with 36 glass and steel high-tech capsules in process in Switzerland. Our lighting designer out of London is the same guy who does all the big lighting shows for the various Royal Jubilees and Opening Games of the Olympics. He had his plan ready and much of the lighting was already contracted and figured out (not an easy logistical task at all). But then, the 110-year old Dutch company that said they could build it…and who put up a $170 million guarantee of such (which is still in litigation), said…it could not be done. We had pushed the limits of metallurgy and physics and as the old joke goes, you could not get there from here. No one was more surprised than me at that outcome. Once a large project like this goes sideways, its hard to bring it back, so I demurred and left it to the lawyers and the billionaire construction partners who were licking their $250 million wounds to sort out the broken pieces.
It’s been seven years since then and I have moved far away both physically and mentally. I had a brief moment of angst when it was rumored that the site, still owned by the City, might be turned into a Donald Trump Library or such, since it had great views over the harbor of his home town. Other than that, I figured that Staten Island would eventually figure out something to do with this prime waterfront real estate. Today, someone sent me an article that tells me that might finally be happening.
The headline of the article reads, “2,500 new homes proposed for New York Wheel site on Staten Island”. It says that up to 2,500 new homes could be built in condominium buildings and rental apartments on the Staten Island North Shore site under a new city plan to finally reimagine the long-vacant New York Wheel site. The city’s Economic Development Corporation (the same organization…different bureaucrats… that got me started with the Wheel dream in 2011) has a plan to transform two sites in St. George, the Wheel site and the bankrupt Empire Outlets retail complex (that did get about 60-70% built, but never prospered). The plan is for a mixed-use waterfront neighborhood with thousands of apartments, open space, retail, and community amenities. It’s a bit funny to me that’s what’s happening to the site. Right when I started the project with the initial community board presentations, a hurricane came up the coast and slammed NYC as hard as anyone could ever remember. “Hurricane Sandy” hit the northeastern United States on October 29-30, 2012. It quickly got renamed “Superstorm Sandy” (some suggest that was for insurance claim mitigation reasons) because it transitioned from a hurricane to a post-tropical cyclone just before making landfall, but maintained hurricane-force winds and caused catastrophic damage. The storm surge reached nearly 14 feet in some areas…like where we were planning to build the Wheel…and caused FEMA to revise upward the 500-year flood levels by three-feet. That alone cost us a bundle to revise all the plans to accommodate that new flood standard. With $70+ billion in damage, it was the second-costliest hurricane in U.S. history at the time (after Katrina). It flooded New York City subway tunnels, knocked out power to 8+ million people, destroyed large sections of the Jersey Shore, including boardwalks and homes…and did a number (physically and psychologically on most Staten Islanders). The President of the College of Staten Island was a geologist (and eventually a good friend of mine) who was asked to opine on what should be done with the waterfront property given the impact of the storm. His comment was that the last thing that should be built there was housing, which might have to be evacuated if such a storm should hit again. interesting, given the current plans.
Another impact of that storm was to cause us to over-engineer the structural foundation of the Wheel to withstand a Force-3 Hurricane…not an inconsequential undertaking, not to mention a very expensive one. There is, imbedded in the rebar layers in that massive foundation, a time capsule I implanted for promotional purposes. Someday, some urban archeologist will discover that aluminum canister about the shape and size of a small bomb, and learn of our travails in wheel building. Until then, the proposed project includes a $400 million investment to deliver 2,500 new homes serving a wide range of income levels and life stages, more than 20 acres of public space, and over 7,500 “family-sustaining” jobs all on what would have been the Wheel site and the Empire Outlets. It’s projected to generate an estimated $3.8 billion in economic impact over the next 30 years, and restore public access to two major waterfront open spaces on the North Shore, an area is bad need of economic revitalization. The plan is the result of extensive public outreach, during which residents overwhelmingly urged the city to shift away from the previous tourism- and entertainment-focused vision and instead pursue a vibrant, mixed-use neighborhood.
I try not to live my life with regrets, but this outcome really explains why to me. My current state of mind makes me wonder what I was thinking for six years. The vision of some grand attraction that changed the city skyline pales in my mind compared to the thought of this wonderful new neighborhood which might one day exist on the waterfront where some monstrous testament to human whim might have sat. I’m glad that old vision is buried in the rebar mats and hope that the sound of children playing in a playground on the site, inspired by the harbor views, more than makes up for the millions we wasted on our folly.