SolarCity shakedown?

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Gov. Andrew Cuomo last fall pledged $225 million to build and equip a clean energy hub along Buffalo’s waterfront. It was good enough for Silevo, a solar panel manufacturer, and Soraa, the makers of high-efficiency light bulbs.

It apparently isn’t good enough for SolarCity, however, which bought Silevo in June. Cuomo has subsequently suggested it’s going to take a richer incentive package to bring SolarCity into the fold and press reports indicate at least two other states are in the hunt for the solar panel plant that is penciled in for Buffalo.

Given the track record of SolarCity Chairman Elon Musk, it’s likely going to cost New York a whole lot more than $225 million. Musk is also chairman of Tesla Motors, which earlier this month squeezed Nevada for $1.3 billion in subsidies for a battery manufacturing plant in Reno. The goodies are similar to what New York doles out in its Start Up NY program – essentially a tax free existence for 10 years.

I weigh in on the situation in my latest column for City & State, which is available online and in the current edition of its statewide print magazine.

Greg LeRoy of Good Jobs First, who has been following the Tesla deal, told me Musk-owned companies have displayed “a real skill to get a state to overspend on a trophy deal.”

I wrote for City & State:

The $225 million deal on the table in Buffalo is “generous, there’s no doubt about it,” LeRoy said. “I would urge the state to be cautious as to what else it does.”

Musk has the governor right where he wants him, however.

As he has done with all of the Buffalo Billion projects, Cuomo has raised expectations with his chest beating over SolarCity’s purchase of Silevo. The announced projects do have the potential to generate investment and employment in the long run, but thus far they have in fact produced only a handful of jobs, nearly three years after the governor announced his Buffalo Billion initiative.

Cuomo faces re-election in November, and while Republican Rob Astorino doesn’t pose much of a threat, the governor clearly wants to have a deal with SolarCity to tout. More precisely, he doesn’t want to have to explain his failure to deliver.

So overpay he might.

What’s the harm? Well, Western New York needs to expand its tax base to relieve pressure on homeowners and businesses. Recruiting companies who pay little or no taxes is at cross-purpose with that objective.

As I wrote for City & State:

It will be interesting to see what kind of deal Cuomo strikes with SolarCity. Yes, it would add jobs. But at what cost to the public treasury, and at what burden to the local taxpayer?

You can read the full-column here.

If you want to learn more about the Tesla deal in Nevada, Good Jobs First has produced this analysis. They’re a first-rate outfit whose work is worth paying close attention to.