Better oversight of state contracts needed

Solar power development, when given a helping hand by government, can be an important part of our nation’s renewable energy mix. It also can be a costly one that can burn up taxpayer dollars if not monitored properly. As the Biden administration distributes billions for solar power projects nationwide, it might look to Buffalo to learn a few lessons about what can go wrong. 

New York State’s nearly $1 billion investment in Elon Musk’s solar-panel factory in Buffalo once promised slews of high-paying jobs meant to revitalize a Rust Belt portion of the state. Back in 2013, then-Gov. Andrew M. Cuomo announced the arrival of Musk’s new facility with great flourish. Musk’s vision involved a huge factory that would make solar-shingled roofs for homes. The state agreed to cover the cost of land and construction for the new factory, which it would own and lease to Tesla, now the parent company of Musk's SolarCity firm.

The state also purchased some $240 million of solar manufacturing equipment. SolarCity was already in the solar panel leasing business for homeowners, who used government tax credits designed to promote clean alternative energy to replace fossil fuel sources.

But a few years later, it became painfully clear that the “Buffalo Billion,” as the Tesla project and other related efforts became known, wouldn’t live up to its billing. Few of the anticipated jobs developed. And a state comptroller’s audit found only 54 cents of economic benefit for every state dollar invested in the project.

Recent news reports about the failings of the Buffalo factory underscore the lack of adequate oversight by state officials. Cuomo and others too easily bought into the dream of a private entrepreneur like Musk — now one of America’s richest people thanks to his Tesla auto firm — without insisting on a deal that provided adequate safeguards for Musk’s company to live up to its promises. 

The lessons from Buffalo suggest that Empire State Development, the agency overseeing the Tesla subsidies, should have better tracked performance at the Buffalo facility to spot problems early on. Public-private arrangements should also have clear milestones of progress to ensure that deals like this one, intent on boosting the Buffalo economy, achieve their goals. In the event of failure, state contracts must also have better “clawback” provisions to recover as much taxpayer money as possible from underperforming private partners. And full oversight of state contracts should be restored to the state comptroller.

The circumstances surrounding the Buffalo plant’s construction led to the bid-rigging conviction of Cuomo’s top adviser on the project, SUNY professor Alain Kaloyeros, and close Cuomo aide Joe Percoco. Their criminal cases were ultimately vacated by the U.S. Supreme Court. Nevertheless, the scandal tarnished Cuomo’s reputation as an ambitious builder, before he was forced to resign in 2021 amid sex harassment allegations.

The lessons of Buffalo remind us that federal and state projects must be subject to vigilant oversight. If not, we will lose billions more.