A year ago Jackson, and Gary Mayor Rudy Clay, announced plans for the Jackson Family Center on 300 acres of city-owned land, but since then work has stalled, officials told the Chicago Tribune.
The lack of movement doesn't mean the project is dead, said the man who claimed to be the local point man for Joe Jackson's group.
"The plans are moving along," said Orland Park businessman Odie Anderson. "We are in the process of hiring contractors."
But Jackson has failed to meet several conditions the city established to make sure the proposal would fly, officials said.
The Tribune said the Jackson Family Foundation was required to provide proof it had obtained federal tax-exempt status and complete a feasibility study for the project by January. Gary corporation attorney Susan Severtson said neither requirement has been met.
Joe Jackson said he hired San Jose, Calif.-based consulting firm AuCopia Global to conduct the feasibility study. A woman who answered the phone at the company's office said, "That deal is dead as a doornail," and hung up, the newspaper said.
Jackson said the museum would attract 700,000 visitors and generate $150 million annually for the former steel-producing town.
Jackson died two years ago this month from an accidental overdose of drugs allegedly administered to him by his personal doctor.
2014: The Year in Music [PHOTOS]