Feb 26


State stonewalling on IBM project

Four floors state spent millions of dollars to ready are up for lease; company and state officials refuse to say what's going on.
Reporting, analysis and commentary
by Jim Heaney, editor of Investigative Post

Several years ago, the Cuomo administration spent $55 million of state taxpayer money to buy, renovate and equip seven floors of a downtown Buffalo office building to bring IBM to town. The payoff, we were told, would be 500 good-paying software engineering jobs and the start of a technology hub with all sorts of spin-off development.

Now, four of those floors at Fountain Plaza are available for lease, raising all sorts of questions about IBM’s commitment to Buffalo. Has it pulled out? Working on a Plan B? None of the above?

IBM isn’t saying. Neither is the Cuomo administration.

In a list I’ll detail in a minute, bureaucrats across state government have refused to release public documents and have otherwise dummied up, unwilling even to return phone calls to say “no comment.”

The Cuomo administration, it seems, is on total lockdown regarding a Buffalo Billion project. Again.

I haven’t gotten this bad a runaround since my initial reporting in 2014 on the dirty deal involving the awarding of the contract to oversee construction of the SolarCity factory in South Buffalo. My initial reporting back then focused on the state’s lack of transparency involving the deal. One thing led to another.

Five years later, the Cuomo administration is up to the same no-good. They appear to have learned nothing, despite the indictments and convictions.

The deal to bring IBM to Buffalo was engineered by Alain Kaloyeros (remember him?) before he was convicted on corruption charges related to awarding LPCiminelli the contract to develop SolarCity’s (now Tesla) solar panel manufacturing plant in South Buffalo.

IBM was going to be the anchor tenant of what a Cuomo press release said would be the “Buffalo Information Technologies Innovation and Commercialization Hub” that would “train IT professionals, educate new IT staff through partnerships with the State University of New York (SUNY), and develop next generation IT software needed to drive state-of-the-art discoveries in the areas of molecular research, genomics, energy efficiency development and defense.”

Sounds pretty good, huh?

Heaney discusses his story on WBFO

The Fort Schuyler Management Corp., a state-controlled nonprofit that Kaloyeros headed, bought and renovated the seven floors and agreed to purchase equipment and software for use by IBM. The company was to pay rent of $1.7 million a year, with annual increases of 3 percent. IBM agreed to create 500 jobs, with one internal memo saying the jobs would pay an average of $70,000 a year.

What taxpayers got for their money was a call center and other low-paying jobs with most employees making not much more than minimum wage.

Investigative Post, in a February 2018 story, reported “IBM’s Buffalo office has been mired in dysfunction and disappointment … It’s not just that the project isn’t living up to its billing as a high-tech hub; its performance as a call center has been dismal, too.”

Then, as now, company and state officials refused to talk. We reported two years ago: “Executives here and downstate refused to comment, ignoring repeated phone calls, emails and in-person visits from Investigative Post. State economic development officials declined interview requests and provided only limited information.”

A previous story in November 2017 that first detailed the problems prompted Howard Zemsky, then president of Empire State Development, to tell state Assembly members that
officials were pushing IBM to create more high-tech jobs in Buffalo.

“The kinds of jobs that we’re going to see at the IBM center are not going to continue to be call center jobs,” Zemsky said.

Fast-forward to today. Four of the floors are on the market. Have been for months.

Presumably, they’re empty. It’s anyone’s guess what’s happening on the other three floors. Perhaps call center activity.

So, what’s the deal?

Apparently, it’s none of my damn business. Or that of the tax-paying public.

I originally assigned the story to a reporter who has since left Investigative Post. In a draft she filed before departing, she wrote: “Although CBRE (the Realtor) and IBM have tried for a year to find tenants, both companies remained tight-lipped, declining to discuss the property or any details of the lease availability with Investigative Post for this story. Indeed, ESD and Fort Schuyler have also declined to comment.”

In addition, Fort Schuyler has yet to provide a copy of its contract with IBM, along with any subsequent amendments, three months after we filed a Freedom of Information request. (It must be a long walk to the filing cabinet.)

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I picked up the story several weeks ago and have likewise received the silent treatment.

IBM’s corporate media center failed to return multiple phone calls. Neither did the governor’s press office. Ditto for Fort Schuyler and CBRE, the real estate broker handling the leasing. Empire State Development refused my requests for an interview.

I understand. They’re upset because my previous reporting exposed the corruption at the heart of the SolarCity project. And also at the heart of Andrew Cuomo’s administration.

But wouldn’t you think they would have learned their lesson from the way they (mis)handled the SolarCity situation?

The first story, which broke the SolarCity scandal, focused primarily on the state’s lack of transparency involving the project. I wrote in December 2014 that “I have never, in my nearly four decades as a reporter, encountered such heavy handed tactics to thwart the release of information.”

“The state-affiliated non-profit corporation managing that work has refused to release contracts and other documents to Investigative Post that detail, among other things, how the contractors were selected and the amount they’re getting paid …

“Meanwhile, a second state-affiliated non-profit heavily censored the contracts of five companies that have been recruited to establish operations in Western New York using Buffalo Billion funds…

“And Kaloyeros, who has not hidden his displeasure over my pursuit of documents, sent me an email last month in which he declared he does not “respond to perceived threats and terrorism.”

In hindsight, I have two questions for the Cuomo stonewallers: How did that work out for you? And, why are you repeating the same mistake again?

The stonewalling doesn’t stop with the IBM project. Steve Brown of WGRZ reports state and Tesla  officials won’t provide information on vast shipments of materials from the company’s South Buffalo plant to a suburban facility.

Investigative Post

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