STATEN ISLAND, N.Y. -- A high-stakes feud over project delays and work payments between the New York Wheel's developer and the project's designer and builder has tumbled into federal court, potentially jeopardizing the planned $580-million tourist attraction.
Mammoet-Starneth, the designer and builder, had suspended work on May 26 and threatened to terminate the contract, according to New York Wheel's civil complaint, filed on May 30 in Manhattan federal court. The company alleged New York Wheel Owner LLC, the developer, had failed to make required payments, the complaint said.
The developer maintains Mammoet has not submitted accurate and appropriate documentation, required by the contract, for reimbursement as the project progresses, according to the court filing.
Over the course of more than two years, Mammoet has resorted to "self-inflicted delays and extortionate attempts to extract additional payments totaling more than 50 percent of the agreed contract price" of $145 million, alleges New York Wheel's civil complaint.
The developer has increased the contract amount by $20 million to keep the project rolling, the complaint contends.
New York Wheel alleges it has suffered more than $16 million in damages resulting from Mammoet's delays and $20 million in lost profits and other damages due to the designer's breach of contract.
YET TO RULE
District Court Judge Jesse M. Furman has yet to rule on New York Wheel's request for a preliminary injunction and temporary restraining order.
In a letter to the court, Borough President James Oddo said losing the Wheel in St. George would have "disastrous consequences" for surrounding development aimed at sparking a renaissance of the North Shore waterfront.
With the linchpin project hanging in the balance, the parties more recently agreed to a 30-day truce effective June 12, consenting to take the dispute to mediation, Randy M. Mastro, a lawyer for New York Wheel wrote Furman.
If the matter can't be resolved by then, the two sides will appear before Furman on July 17 for a hearing. The temporary agreement includes a seven-day grace period through July 19.
During the mediation period, Mammoet has agreed to advance work required for a necessary Buildings Department permit, including coordinating special inspection and remediation of the Wheel legs, continue off-site work and pay subcontractors, Mastro wrote.
Buildings recently told the Advance special inspections had identified "a minor problem with a weld" on the Wheel's legs, which the developer had reported. The issued was being addressed, Buildings said in a statement.
Work on the Wheel was originally expected to be completed as of October 2016, said the complaint.
Initially planned to open at various times in 2017, the Wheel's roll out has since been re-scheduled for April 2018.
Perched above New York Harbor, the massive observation wheel is designed to be more than 600 feet high and hold up to 1,440 people in 36 pods, or capsules. It is expected to attract more than 3.5 million visitors a year, said New York Wheel's court papers.
"The developer has honored all of its contractual obligations and is committed to getting this unique project completed to the benefit of all stakeholders, public and private," said Cristyne Nicholas, spokesperson for The New York Wheel.
"While it is not uncommon for contractors to engage in such tactics, we are confident that this issue will get satisfactorily resolved, through negotiation or through the court action that the developer has filed," Nicholas said. "The developer intends to continue to do everything possible to keep this one-of-a-kind project moving forward."
A lawyer for Mammoet referred all inquiries to a Netherlands-based company spokesman.
The spokesman said Mammoet doesn't comment on issues pertaining to customers or stakeholders.
Based on the complaint, it appears relations between the two sides have been tense from the get-go.
TENSE RELATIONSHIP
The complaint alleges Mammoet has failed to meet a number of deadlines, to include submitting engineering drawings and plans and obtaining required Buildings Department permits.
Those delays have not only set back the project, but forced the developer to jump in and pick up the slack, the complaint contends.
Among other things, New York Wheel has overseen the construction of the embeds to link the Wheel to its pad, said the complaint. The developer was also obliged to erect a temporary construction dock to receive components at the site and install lighting protection, said the complaint.
To ensure project completion, New York Wheel said it proposed, in March 2016, to increase Mammoet's contract by more than 50 percent, but Mammoet refused.
The Wheel contends Mammoet declined because it knew it "would not have been able to meet the scheduling milestones the parties had negotiated."
Mammoet has "boxed itself in and made its intentions clear: It simply does not want to perform the agreement any longer unless it receives far more money than the contract price," alleges the complaint.
In a June 2 letter to the court, Oddo said its crucial for the project move forward.
The Wheel, he said, is the keystone in the rejuvenation of the North Shore waterfront, featuring the Empire Outlets mall, under construction next to the Wheel; Lighthouse Point, a residential and commercial development under way on the other side of the Wheel at the old U.S. Coast Guard site, and Urby, a residential development a short distance away in Stapleton.
"We anticipate the results of this development will be nothing less than the transformation of the impression of Staten Island and the revitalization of the North Shore," wrote Oddo. "The Wheel will be an attraction unlike any other in New York City, and it promises to give visitors to Staten Island the most unique views of New York Harbor and the Manhattan skyline available."
Losing the Wheel, he wrote, would deal a crushing blow to those plans.
"It would likely lead to the lost opportunity of hundreds of jobs, as well as having collateral consequences," Oddo wrote. "The harm is not quantifiable or recoverable."