I’ve written a lot over the years about New York’s economic development programs, including the “Start-Up New York” system of tax-free zones and the state’s effort to bring manufacturing jobs to upstate cities by building factories – including a big facility in Buffalo.
These were both pushes by former Gov. Andrew Cuomo, a current candidate for New York City mayor. Now, current Gov. Kathy Hochul is grappling with what to do about them going forward.
Let’s start with the Buffalo factory, which the state leases to Tesla for $1 a year. Taxpayers spent $959 million to build and equip that facility under a promise that SolarCity – which was bought by Tesla in 2016 – would make the Queen City a hub of solar panel manufacturing. The company promised to spend a certain amount of money and employ a certain number of people in exchange for using the factory we built for it.
The arrangement has been controversial from the start. Several people, including Cuomo donors, were convicted in a bid-rigging scheme related to the facility’s construction. (Their convictions were later overturned by the U.S. Supreme Court; a new trial is pending and might never happen.)
The contract with SolarCity has been amended a dozen times, loosening the job requirements. Tesla mostly uses the factory to make the chargers for its automobiles – not the solar roofs that were originally intended. The state had to scrap tens of millions of dollars of solar-panel making machines we bought for Tesla. In 2018, officials wrote down the value of the facility by $884 million.
“It’s become Buffalo’s version of the Springfield Monorail,” state Sen. Sean Ryan, a Democrat who’s running for mayor of Buffalo, told me last week. (Shame on you if you don’t get the reference, but otherwise, this video will explain.)
Amid reports of layoffs at the factory, Tesla and the state began negotiating last year on a new lease arrangement. They’ve reached a tentative agreement that would lengthen the lease for five years, increase Tesla’s rent, unlock new spending by the company but reduce its statewide employment requirements (while upping the number of jobs in Western New York).
At a time when Tesla CEO Elon Musk has taken a major role in the Trump administration, some Democrats in New York say the state should hit the brakes before moving forward.
“Is this who you really want to be in bed with?” Assemblyman Pat Burke, a Buffalo Democrat who represents the plant, told me. “We already lost a ton of money. Are we going to lose more money? We don't have the answer for that, but I don't know if the answer is to get into another bad deal.”
Unions who have long thought the plant was a boondoggle are also upset. And after my report aired, the New York Times wrote that two Manhattan lawmakers are introducing legislation that would direct the state to scrutinize and possibly claw back subsidies to Tesla.
Cuomo spokesman Rich Azzopardi defended the project, saying it “turned a radioactive brownfield into a plant that has employed thousands of people in what has been one of the hardest hit economic regions of New York for years.”
Tesla spokespeople didn’t respond to my requests for comment, but they said in a letter to the state that they’re committed to making the Buffalo factory “a world-class advanced manufacturing center.”
And state officials said they were playing the hand they were dealt as best as possible. Since all the money went to Tesla up front, there aren’t any new subsidies on the table.
“Put aside what happened in the past and our efforts to sort of continue to right that ship. Right now, we have an asset that we need to make the most out of,” Kevin Younis, the chief operating officer of Empire State Development, told me. “We are getting a substantially enhanced commitment from them without additional state resources.
Click here to read my article on the Tesla plant, and listen here to a conversation I had on WXXI’s “Connections with Evan Dawson.”
Another major Cuomo initiative, Start-Up NY, is set to expire at the end of the year – and lawmakers aren’t excited about Hochul’s slimmed-down replacement proposal – called Catalist (and nicknamed “Start-Up light” by at least some in the administration.)
Assemblymember Al Stirpe, a Democrat from Syracuse who chairs the chamber’s economic development committee, said he didn’t think Start-Up had much of an impact and was oversold by an extensive ad campaign. He said he would rather focus money and attention on other types of economic development incentives rather than enact Catalist.
“It's an odd type of incentive compared to other incentives we give people,” Stirpe said. “Reducing property taxes and giving them grants to fund specific things that they're going to be developing – those things seem to work fine, and we don't know why we need to have this little odd cousin on the side.”
Click here to read my entire story about it.
BUDGET LATEST: There is no New York state budget, one week and counting after the deadline. Top lawmakers say negotiations are still held up over changes to the state’s discovery laws. (Basically, the state of play is similar to what I wrote two weeks ago.)
Lawmakers have seemingly agreed to a “bell to bell” ban on students using cell phones in schools, as my colleague Jon Campbell reported. And as I wrote on Friday, Hochul’s push to restrict masking in public is facing resistance from lawmakers.
I broke down the state of play with David Guistina on WAMC’s “Capitol Connection” last week. You can listen here.
THE QUESTION: In which New York city was toilet paper invented?
Know the answer? Drop me a line at jimmy.vielkind@gmail.com. Or just write with thoughts, feedback or to say hi.
THE LAST ANSWER: Henry Ford and Thomas Edison were on-hand for the groundbreaking of a Ford factory in Green Island, which was powered by a hydroelectric station that is still operating!