Investigative Post’s Buffalo Billion reporting

Gov. Cuomo’s signature Buffalo Billion initiative was mired in corruption and bid-rigging, according to a federal complaint unsealed Thursday.

The complaint alleges what has long been suspected: the RFP for Buffalo developers to build the $750 million factory for SolarCity was designed with one company, LPCiminelli, in mind.

SUNY Polytechnic president Alain Kaloyeros, lobbyist Todd Howe, and executives at Buffalo-based LPCiminelli worked together to “secretly tailor” the required qualifications for a developer in Buffalo so that LPCiminelli would be guaranteed to win the work, according to the complaint.

A similar pattern of collaboration is alleged to have taken place between Kaloyeros, Howe and principals at COR Development in Syracuse; bid-rigging charges are also expected to be brought against Kaloyeros and Albany developer Joseph Nicolla by state attorney general Eric Schneiderman.

Investigative Post has been covering the Buffalo Billion from the start.

In December 2014, Jim Heaney broke the news that the Request for Proposals for a developer to work on Buffalo Billion projects had originally included a requirement that seemed to seriously limit the competition:

Something caught my eye in the request for developer qualifications, a requirement that limited the pool of respondents to those based in Buffalo who have been in business for at least 50 years.

Fifty years? That struck me as an awfully long time. 

Who would meet such stringent criteria? My preliminary research indicated only one company met the criteria – LP Ciminelli, whose president, Louis Ciminelli, just so happens to be one of Cuomo’s biggest campaign contributors in Western New York. He has contributed $96,500 to Cuomo’s campaign during his two races for governor.

I called Kaloyeros to quiz him about the 50-year requirement. What’s the 50 years all about and do you realize only one company appears to qualify?

The 50-year requirement was eventually removed from the RFP and blamed on a “typographic error.”

But the federal complaint unsealed today casts serious doubt on that explanation, with prosecutors arguing that Kaloyeros was known “to closely edit the language of all RFP’s prior to publication and was not known to miss errors or changes.”

The complaint includes emails between LPCiminelli executives joking about 15/50 change, with company vice president Kevin Schuler writing to his boss: “50 was a bit obnoxious.”

The complaint alleges that LPCiminelli officials worked with Kaloyeros and Howe to draft the RFP so that it would be perfectly tailored to the company’s experience and qualifications.

LPCiminelli officials pushed for the RFP to emphasize the use of minority and women-owned businesses, an area they believed gave them an advantage over their competitors, according to the complaint.

But the SolarCity’s project commitment to diversity was called into question after Investigative Post broke the news that the minority hiring goal at the SolarCity factory was lowered from 25 to 15 percent:

Buffalo’s African-American community is starving for jobs, while the ongoing construction of the SolarCity plant in South Buffalo is employing hundreds upon hundreds of construction workers.

Yet state officials agreed to cut the project’s diversity hiring goal – included on state contracts to ensure minorities get a fair share of work – from 25 to 15 percent.

That’s lower than on other high-profile publicly funded projects, such as the Buffalo schools reconstruction program and the University at Buffalo Medical School. It’s also significantly lower than the 25 percent minority workforce goal that was stipulated in the sales agreement that transferred the land from the city to the state and touted in several press releases by Gov. Andrew Cuomo.

That change attracted criticism from minority community leaders and prompted protests at the site.

The Fort Schuyler Management Corporation, the state-affiliated non-profit in charge of administering the Buffalo Billion, had originally argued that it was a private entity and not subject to the state’s Freedom of Information Law. It took the filing of a lawsuit by Investigative Post and WGRZ for Fort Schuyler to start to release the documents requested – related to the selection of the Buffalo developer – on its website.

Using documents obtained under subsequent FOI requests, Investigative Post reported that LPCiminelli wasn’t the only politically connected company getting lucrative contracts from SUNY Poly and its affiliated development corporations:

Albany-based firm EYP Architecture and Engineering had been awarded a $20.3 million contract to work on Riverbend while the company’s president sat on the board of the Fuller Road Management Corporation, also controlled by Kaloyeros.

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.”

The complaint unsealed today largely absolves Fort Schuyler’s board of directors or management of any wrongdoing, saying that Kaloyeros “manipulated the process” by which developers were chosen.

But critics say using Fort Schuyler, and its older sister, Fuller Road, as economic development vehicles raises questions about transparency and accountability.

Earlier this week, Investigative Post reported that the development corporations aren’t subject to state procurement rules:

The development corporations say they follow the procurement policies of their parent organization, the Research Foundation for the State University of New York – but only as “guidelines.” And, in fact, the way they do business is sometimes out of step with the procurement practices of the Research Foundation and other state entities.

The development corporations have often failed, for instance, to ensure the minimum level of competition the Research Foundation requires. In at least three cases the development corporations awarded contracts to companies who were the lone bidder.

Howe has pled guilty to federal corruption charges and has been cooperating with prosecutors. The other eight defendants were arrested this morning and the three LPCiminelli executives charged are scheduled to appear in federal court in Buffalo later today, according to a statement from the U.S. Attorney’s office.