Noon: Donor gets pricey Solar City contract
When New York’s Governor Andrew Cuomo gushed over SolarCity’s new solar panel factory in Buffalo, the audience, likely, didn’t grasp the recently-revealed meaning of his words: “It is such a metaphor — a symbol of everything we’re doing.”
The 1.2 million square foot building is looking more and more like another political promise of help for one of the poorest cities in the state that ends up enriching cronies without ever achieving any potential for the people.
New corruption charges reveal the pay-to-play model linked to Cuomo’s upstate “Buffalo Billion” economic revitalization plan — and the promised jobs look like they will never materialize.
Back on January 5, 2012, Cuomo announced a $1 billion five-year economic development pledge for Buffalo. It was to be the governor’s banner economic initiative with the SolarCity factory as the cornerstone and a pledge of 1,460 direct factory jobs.
On Sept. 22, two of Cuomo’s closest aides — along with several others — were charged in corruption and fraud cases involving state contracts worth hundreds of millions of dollars. Addressing the press at his Manhattan office, U.S. Attorney Preet Bharara asserted: “that pervasive corruption and fraud infested one of the governor’s signature economic development programs. Companies got rich, and the public got bamboozled.”
One of the companies that received the lucrative contracts was LPCiminelli — run by “Cuomo mega-donor” Louis Ciminelli. He allegedly offered bribes to Cuomo confidante Todd Howe — who has admitted to pocketing hundreds of thousands of dollars from developers to rig bids on multimillion-dollar state contracts linked to Buffalo Billion projects.
Ciminelli received the $750 million contract to build the SolarCity plant. The Buffalo News cites Bharara as saying: “the state’s bidding process for the factory being built for SolarCity at RiverBend in South Buffalo turned into a criminal enterprise that favored LPCiminelli, where company executives were given inside information about how the deal was to be awarded.”
Part of Cuomo’s deal with SolarCity requires the company to meet a timetable of job-creation quotas. Even before the building was complete, however, the company slashed its job commitment from 1460 to 500. With the state’s $750 million investment, that works out to $1.5 million per manufacturing job.
Even the 500 jobs will only materialize if the plant actually starts production. SolarCity’s future is, as Crain’s New York Business puts it: “uncertain.”
Amid the company’s myriad problems are the facts that it has never been profitable, nor does it have manufacturing experience.
In February 2014, SolarCity’s stock price peaked at about $85 a share. Today, a share is less than $20. Crains reports that it posted a $251 million loss in Q1 2016 and a loss of $230 million in Q2.
Then there is the manufacturing angle. Originally, the Buffalo plant was going to manufacture high-efficacy solar panel modules developed by Silevo — a company SolarCity bought in 2014. Crain’s reports that it will instead produce complete solar roofs. Something it says “Dow Chemical recently abandoned after five years because it could not find a way to make a profit on the technology.”
Whatever the plant builds or manufactures, getting it operating will be expensive — even with the New York taxpayers owning the building and equipment — and will drain scarce cash from SolarCity at a time when its financing costs have increased.
The Buffalo Billion project is a “symbol” of the political promises and crony corruption that takes taxpayers dollars to reward political donors and then walks away when the jobs don’t materialize.
The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc., and the companion educational organization, the Citizens’ Alliance for Responsible Energy. She hosts a weekly radio program: America’s Voice for Energy — which expands on the content of her weekly column.