New York Banks On A Solar Factory To Ignite Buffalo's Economy
How much does $1 billion buy these days? The city of Buffalo is about to find out.
New York state is funneling $1 billion in cash and tax incentives into the region. Fully half of the "Buffalo Billion," as it's known, is going to one place: a massive solar panel factory, rising on the site of a demolished steel factory in South Buffalo. With an additional $250 million from other state sources, the solar project is getting a total of $750 million from New York.
"There's nothing nearly this big in the U.S.," says Steve James, senior vice president for operations at SolarCity, the company that will lease the finished factory from the state. Until now, SolarCity bought all its panels from China. But James says that will change when this million-square-foot factory opens late next year. "We really sharpened our pencil," James says, "and made sure that every aspect of it — the whole supply chain — is low enough cost to be very competitive globally."
The state is betting that James is right and that SolarCity is going to turn Buffalo and western New York into a hub for advanced manufacturing and renewable energy.
The goal of the Buffalo Billion is to stoke an economy that's just started to grow again after half a century of decline. Real estate prices are going up. Millennials are moving into the city. And for the first time in years, giant construction cranes are rising into the sky.
"The outlook for Buffalo is a lot different than it was five years ago," says Howard Zemsky, a local real estate developer and the president of Empire State Development, the state agency that's in charge of the Buffalo Billion.
On a recent tour of the city, Zemsky showed off a construction site on the Buffalo Niagara Medical Campus near downtown. There, stood one brand medical new building, across the street from another that's still under construction — thanks in part to millions of dollars from the Buffalo Billion.
"For a town that would've been easy to bet against after 40 years of decline," says Zemsky, "I think it's had a huge impact on Buffalo and western New York."
But to skeptics, it's a risky bet.
"It better pan out. If it doesn't, boy, that's a lot of money that didn't work," says James Allen, executive director of the Amherst Industrial Development Agency in Buffalo's largest suburb. Allen wishes more of that money was going to help startup companies get off the ground.
"If you look at Silicon Valley, you look at Austin, you look at Research Triangle, they grew organically," Allen says. "We're trying to do something that's never truly worked, which is try to lure a company in that's so wonderful that it's going to attract new, other companies to the area."
Betting On Solar
New York state is betting on a company that has so far had trouble turning a profit. And Wall Street is nervous about what happens to SolarCity when the federal tax credit for consumers to buy solar panels expires next year.
But Zemsky defends the state's investment. "We own all the equipment, we own the facility, which is really where most of that money goes to," Zemsky says. "So in the worst case scenario, the state is left with an amazing asset."
There are also questions about how the contracts for these huge construction projects were handed out. Preet Bharara, the U.S. attorney in Manhattan, reportedly issued subpoenas about those contracts earlier this year. That inquiry added to concerns that the state's investment won't be shared equally with everyone in Buffalo.
"It's a billion, but for whom?" asks Charley Fisher, a former Buffalo city councilman and community leader on the city's east side, which is largely African-American and low-income. Fisher wants to make sure everyone in the city has a shot at the new jobs. "It could be that a billion dollars could come here," says Fisher, "and if we're not careful, the disparities won't change."
The Buffalo Billion does include more than $30 million for job training. And SolarCity's Steve James says the company will need to hire a lot of different skill sets. "Everything from people right out of high school, two-year degrees, four-year degrees, Ph.D.s," James says. "There will be a few people like me coming from the outside, because we don't have the experience here. But almost everyone is gonna be local."
SolarCity has committed to hiring 500 people in the factory and a total of 5,000 in the state. But the folks who live near the factory in South Buffalo are skeptical.
"They're gonna hire top notch people. They're not just gonna hire people off the street for anything," says Jack Sengbusch, who's been living in South Buffalo since there was a working steel plant on the SolarCity site. "Back in the day, most of the people lived in South Buffalo that worked in this place," he recalls. "Businesses were going. Nothing was shut down. Now you look at it today, it looks like a ghost town."
Sengbusch says the solar panel factory is a good start. But it's going to take a lot more to replace what South Buffalo — and the rest of the city — have lost.
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Transcript
KELLY MCEVERS, HOST:
The state of New York is spending a billion dollars in the city of Buffalo and surrounding areas. The economy there is just now starting to grow after half a century of decline. Supporters of the Buffalo Billion, as the plan is known, are calling it a possible national model for struggling cities, but other people say it's an expensive and risky way to create jobs. NPR's Joel Rose reports from Buffalo.
JOEL ROSE, BYLINE: Fully half of the Buffalo Billion is going to one place. It's billed as the largest solar panel factory in the Western hemisphere rising on the site of a demolished steel plant in south Buffalo.
So is there actually a factory on this scale doing this anywhere in the country?
STEVE JAMES: Maybe there's some that are 50 percent bigger in China, but there's nothing nearly this big in the U.S.
ROSE: That's Steve James of SolarCity, the company that will lease the finished factory from the state. It looks like a bunch of empty big-box stores squeezed together. Until now, SolarCity bought all its panels from China. James says that will change when this factory opens late next year.
JAMES: You know, we really sharpened our pencil and made sure that every aspect of, you know, the whole supply chain is low enough cost to be very competitive globally.
ROSE: New York state is betting that James is right, that SolarCity is going to turn Buffalo and western New York into a hub for advanced manufacturing and renewable energy. The state is funneling cash and tax incentives into those industries and more with the goal of jumpstarting the modest turnaround that's already happening here. Real estate prices are going up, millennials are moving into the city, and for the first time in years, giant construction cranes are rising into the sky.
HOWARD ZEMSKY: The outlook for Buffalo is a lot different than it was five years ago.
ROSE: Howard Zemsky is a local real estate developer and the president of Empire State Development, the state agency that's in charge of the Buffalo Billion. We're standing on the Buffalo Niagara Medical Campus near downtown, between a brand-new medical building and another one that's still under construction, thanks in part to millions of dollars from the Buffalo Billion.
ZEMSKY: For a town that would've been easy to bet against after 40 years of decline, I think it's had a huge impact on Buffalo and western New York.
ROSE: But to skeptics, it's a risky bet.
JIM ALLEN: It better pan out. If it doesn't, boy, that's a lot of money that didn't work.
ROSE: Jim Allen is an economic development expert in Buffalo's largest suburb, Amherst. He wishes more of that money was going to help startup companies get off the ground.
ALLEN: If you look at Silicon Valley, you look at Austin, you look at Research Triangle, they grew organically. We're trying to do something that's never truly worked, which is try to lure a company in that's so wonderful that it's going to attract new - other companies to the area.
ROSE: But New York state is betting on a company that has so far had trouble turning a profit, and Wall Street is nervous about what happens to SolarCity when the federal tax credit for consumers to buy solar panels expires next year. But Howard Zemsky of Empire State Development defends the state's investment.
ZEMSKY: You know, people will say, well, what happens if things don't work out for SolarCity? Well, we own all the equipment and we own the facility, which is really where most of that money goes to. So I mean, in the worst-case scenario, the state is left with an amazing asset.
ROSE: There are also questions about how the contracts for these huge construction projects were handed out. U.S. Attorney Preet Bharara reportedly issued subpoenas about those contracts earlier this year. That inquiry added to concerns that the state's investment won't be shared equally with everyone in Buffalo.
CHARLEY FISHER: It's a billion, but for whom?
ROSE: Charley Fisher is a former Buffalo city councilman and a community leader on the city's east side, which is largely African-American and low-income. Fisher wants to make sure everyone in the city has a shot at the new jobs.
FISHER: It could be that a billion dollars could come here and if we're not careful, the disparities won't change.
ROSE: The Buffalo Billion does include more than $30 million for job training, and SolarCity VP Steve James says the company will need to hire a lot of different skill sets.
JAMES: Everything from people right out of high school, two-year degrees, four-year degrees, Ph.Ds. There'll be a few people like me either coming in from the outside because we don't have the experience here, but almost everyone is going to be local.
ROSE: SolarCity has committed to hiring 500 people in the factory and a total of 5,000 in the state, but the folks who live near the factory in South Buffalo are skeptical.
JACK SENGBUSCH: They're going to hire top-notch people. They're not just going to hire people off the street for anything. That's my opinion.
ROSE: Jack Sengbusch has been living in South Buffalo since there was a working steel plant on the SolarCity site.
SENGBUSCH: Back in the day, yeah, most of the people lived in South Buffalo that worked in this place. Businesses were going. Nothing was shut down. Now you look at it today, it looks like a ghost town.
ROSE: Sengbusch says the solar panel factory is a good place to start, but it's going to take a lot more to replace what South Buffalo and the rest of the city have lost. Joel Rose, NPR News, Buffalo.
MCEVERS: And tomorrow on Morning Edition, Joel looks at another driver of Buffalo's turnaround, the city's fast-growing refugee population. Transcript provided by NPR, Copyright NPR.
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