More dubious Buffalo Billion dealings

Editor’s note: This story has been updated to reflect new developments as of Sept. 22, 2016. 

The close relationship between EYP Architecture and Engineering and (currently suspended) SUNY Polytechnic President Alain Kaloyeros was further described by state attorney general Eric Schneiderman in a complaint unsealed today.

State investigators allege that EYP, referred to as “Architect-1” throughout the complaint, was described as SUNY Poly’s “in-house architect” by a former employee of Columbia development, whose president has been charged with collaborating with Kaloyeros to rig bids for a project to build SUNY Poly housing. The employee told investigators that EYP had been involved in “virtually every major SUNY Poly building project.”

EYP rented office space from SUNY Poly, as did several other companies who regularly did business with the college and its affiliated development corporations. The state’s complaint quotes a former employee of one of those development corporations as saying that Kaloyeros tied companies’ contract awards to their leasing space from SUNY Poly.

EYP’s lease agreement with the SUNY Poly-affiliated Fuller Road Management Corp. includes a clause tying the amount of rent the company would pay to the amount of work it would receive from Fuller Road. The state’s complaint says this agreement placed EYP at a “competitive advantage” in receiving work from Fuller Road and represents a “formalizing” of the development corporation’s intent to grant EYP increased business in exchange for steering business their way.

Elsewhere, the complaint describes how Kaloyeros insisted that EYP be added to a project underway, even though the developer had already chosen a different architecture firm. The second architecture firm was eventually fired after EYP’s president demanded that they be taken off the project, the complaint alleges.

EYP is not named in the complaint and has not been charged with any wrongdoing.

================================================================

Original story, published May 5, 2016: 

Questionable dealings by officials managing the Buffalo Billion didn’t begin or end with the selection of a politically wired developer to oversee the construction of the SolarCity plant in South Buffalo.

In fact, before LPCiminelli started developing the SolarCity facility, the state-affiliated development corporation managing the Buffalo Billion awarded a $20.3 million contract to design the plant to an architecture firm whose president, Thomas Birdsey, sat on the board of a closely related entity.

Both development corporations were controlled by Alain Kaloyeros, the so-called nanotech guru and Gov. Cuomo’s point person on upstate economic development projects.

It wasn’t the first time EYP Architecture & Engineering had been chosen by the development corporations to work on major projects. Since 2013, the firm has been awarded work on at least five projects across upstate, both during and after its president’s stint on one of the development corporation’s boards.

“For any non-profit, it’s a huge red flag for self-dealing and corruption to have board members doing significant business of any kind whatsoever,” said John Kaehny, executive director of good government group Reinvent Albany.

Meanwhile, the law firm of Whiteman Osterman Hanna has been collecting fees from both the state-affiliated development corporations and the companies they were doing business with.

In the case of the Buffalo Billion, the firm has represented both LPCiminelli, as lobbyist, and the Fort Schuyler Management Corp., which has overall responsibility for the SolarCity project, as attorney.

The law firm’s government relations subsidiary is headed by Todd Howe, a longtime Cuomo associate currently under scrutiny from U.S Attorney Preet Bharara as part of a wide-ranging investigation.

SUNY Polytechnic Institute spokesman David Doyle told Politico NY earlier this week that the school had no direct relationship with Howe, but that he is “one of a number of individuals at Whiteman Osterman & Hanna’s law firm who are assigned to assist SUNY Poly in legal, business, and strategy matters.”

“There’s all sorts of overlapping ties and roles in the SUNY Poly empire. Everywhere you turn it seems you bump into the same set of consultants and companies,” said E. J. McMahon, president of the Empire Center for Public Policy.

This story is based primarily on federal tax filings and documents obtained by Investigative Post under the state Freedom of Information Law from the Fort Schuyler Management Corp. and its sister organization, the Fuller Road Management Corp.

Bharara is conducting an investigation into a number of economic development projects involving Kaloyeros and the two development corporations. The U.S. attorney first started looking into the awarding of the SolarCity development contract to LPCiminelli and has recently expanded the probe to include payments to Joseph Percoco, one of Cuomo’s closest aides, by two companies who received work from the development corporations.

The governor’s lawyer announced Friday that the administration would conduct its own review of the Buffalo Billion, saying the federal investigation had “raised questions of improper lobbying and undisclosed conflicts of interest by some individuals which may have deceived state employees … and may have defrauded the state.”

Officials for EYP, Whiteman Osterman Hanna and SUNY Poly, which speaks for the Fuller Road and Fort Schuyler Management Corps., did not respond to calls and emails seeking comment.

A lawyer for SUNY Poly said in a previous press statement: “Based on our own investigation, we have seen no evidence of impropriety by anyone at Fuller Road or SUNY Poly.”

Sister development corporations

The two development corporations were set up by SUNY Poly, the nanocollege founded by Kaloyeros, to handle its real estate and construction projects.

Fort Schuyler has been administering state funds for the Buffalo Billion, as well as projects in Syracuse and Utica. Fuller Road performs a similar role for projects in the Capital Region and in Rochester. Fort Schuyler was created by the SUNY Research Foundation and the SUNY Institute of Technology, now SUNY Poly; Fuller Road by the Foundation and the University at Albany.

The two entities share several staffers and board members. For example, Fuller Road President Walter G. Barber was also chairman of Fort Schuyler, according to both organization’s 2013 990 forms. And until February, Kaloyeros sat on both boards and was regarded as their guiding force.

Discussions about merging Fuller Road and Fort Schuyler are ongoing.

Between them, the two development corporations have awarded EYP Architecture and Engineering work on at least five projects since 2013. EYP has a good reputation within the industry.

At least one of those – a contract to design the $191 million ZEN Building on SUNY Poly’s Albany campus – was given by Fuller Road to the company while its president sat on the corporation’s board of directors. The building, which contains offices and laboratories, generates its own energy from renewable resources.

Between July 2013 and June 2014, Fuller Road paid EYP $9.9 million, according to the organization’s 990 form filed with the Internal Revenue Service.

For almost all of that time, Birdsey, the company’s president and CEO, sat on Fuller Road’s board. Fuller Road’s IRS 990 form for 2013 notes the conflict of interest, but says that “fees were negotiated at arm’s length and are at fair market value for this type of service.”

Birdsey recused himself on at least three votes regarding the ZEN building, meeting minutes show. His resignation from the board was announced at a meeting in May 2014, minutes show. He had been a board member since at least July 2011, according to tax records.

Buffalo Billion contract

EYP was also selected for the $20.3 million design contract on the massive Riverbend project in Buffalo by Fuller Road’s sister organization, Fort Schuyler.

While it’s unclear whether Birdsey still held his board seat at the time EYP signed a formal contract with Fort Schuyler, it’s likely the selection process and contract negotiations took place while he was still serving on Fuller Road’s board. The “contract date” on invoices EYP submitted to LPCiminelli is May 9, 2014 – two days after the Fuller Road board was informed of Birdsey’s resignation.

Fort Schuyler also chose EYP to provide design services for two projects near Syracuse, a $90 million factory for LED manufacturer Soraa and a $15 million film production hub. The timing of those decisions with regard to Birdsey’s tenure on the Fuller Road board is unclear.

Fuller Road continued to award EYP contracts after Birdsey left the board. The company was chosen as the architect for new SUNY Poly student housing on which construction has yet to begun, according to the Albany Times Union.

The Wall Street Journal reported Wednesday that the company has been subpoenaed by the state Attorney General Eric Schneiderman in connection with that project, as part of an investigation into possible bid-rigging. A spokeswoman for EYP said the company did not believe it was the target of the AG’s investigation.

EYP has a longstanding relationship with SUNY Poly and has partnered with the college on several research initiatives. The company has been a tenant of SUNY Poly since 2011, when the company relocated its headquarters from downtown Albany to SUNY Poly’s campus.

The process Fuller Road and Fort Schuyler used in selecting EYP in each case is unclear, as officials did not respond to phone calls and emails from Investigative Post seeking clarification.

Contracts awarded by Fort Schuyler and Fuller Road are not subject to the same oversight as state agencies.

“They are considered private not-for-profits and we do not review their contracts,” said Jennifer Freeman, a spokeswoman for State Comptroller Tom diNapoli.

But, in response to an Albany Times Union story published last September, David Doyle, a SUNY Poly Vice President, said: “SUNY Poly and our related entities follow New York state government’s well-established and legally defined procurement procedures — to the letter.”

For architecture or engineering services, state law requires state agencies to award contracts to the most qualified firm and negotiate cost afterwards, Freeman said.

“Cost is a factor but qualifications are weighed first,” she said.

Encouraging competition is also important. “You are seeking as many qualified firms as possible,” she said. “You want to get all the bids possible for a fair procurement that is in the best interest of the state.”

Law firm on both sides

Birdsey still sits on the board of trustees of SUNY Poly’s Children’s Museum of Science and Technology, along with top SUNY Poly officials, two current Fuller Road board members, and Richard Leckerling, a partner at law firm Whiteman Osterman Hanna.

Fuller Road reported paying Whiteman Osterman Hanna $330,000 for legal services between July 2012 and June 2014, according to the organization’s form 990s.

Fort Schuyler did not record any payments to the law firm, but meeting minutes show that Leckerling attended at least two of its meetings in 2014 and was sent notices of the times of board meetings.

The law firm has also been registered as SUNY Poly’s lobbyist with the state’s Joint Commission on Public Ethics since 2013.

Doyle, the SUNY Poly vice president, told Politico NY earlier this week that the college’s relationship with Whiteman Osterman Hanna dates to 2007 and that the firm “provides services in assisting in establishing contacts and partnerships in the private sector and between the private and public sector.”

The firm has also recently registered as lobbyists for two companies that have received work from the two development corporations: LPCiminelli and COR Development. In each case, the relationship was only registered this year, although it is believed to go back at least several years.

LPCiminelli spokesman Kevin Schuler said the company had an existing relationship with the law firm for over three years, but registered with JCOPE to comply with updated lobbying regulations.

Howe’s interactions with COR also appear to go back further than the lobbying filings suggest. He attended a meeting in November 2013 with the president of COR Development, Fuller Road board member William Eimicke and representatives from the state Division of Homes and Community Renewal to discuss procuring a state contract, records show.

Sources say Howe has also done work for engineering firm CHA and EYP, although Whiteman Osterman Hanna has never registered as their lobbyists.

According to press reports, Cuomo last week banned state officials from contacting Howe or his firm, a subsidiary of Whiteman Osterman Hanna.

Whiteman Osterman Hanna were retained by Fort Schuyler last year after Investigative Post and WGRZ sued in state Supreme Court seeking the release of documents under the FOI Law. The suit was dropped after Fort Schuyler posted the documents on its website.