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Selection of developer in Buffalo project draws questions

Gov. Andrew M. Cuomo participates in the "topping

Gov. Andrew M. Cuomo participates in the "topping off" ceremony of the new, 1.2 million-square-foot SolarCity GigaFactory, which will manufacture solar panels at the RiverBend site in South Buffalo, Aug. 4, 2015. Credit: Office of Governor / Philip Kamrass

ALBANY -- The selection process that awarded a state contract to build a $900-million solar panel factory in Buffalo to a major campaign contributor of Gov. Andrew M. Cuomo included some actions that have drawn questions and the interest of federal investigators, according to records and interviews.

The State University of New York Polytechnic Institute, which handled the bidding process through a subsidiary, has been subpoenaed by U.S. Attorney Preet Bharara seeking records involving the deal, said a source close to the situation.

The bidding process for the centerpiece of Cuomo's Buffalo redevelopment plan began in October 2013 in a search for a single developer in the Buffalo area, according to the legal notice seeking bids. Nine companies expressed interest.

The selection process ended in January when LPCiminelli Inc. of Buffalo was chosen. That occurred after SUNY Polytechnic decided late in the process to carve off a $55-million slice of the "Buffalo Billion" project to the only other surviving bidder, McGuire Development of Buffalo, which also has been a contributor to Cuomo's campaign, leaving LPCiminelli as the lone bidder.

Winning in western NY

Cuomo made his "Buffalo Billion" a major issue in his re-election campaign and winning western New York, after losing parts of it in his 2010 campaign, was a high priority.

One person close to the process said concerns by some of the developers seeking to handle one of the biggest public projects ever to hit western New York began early in the process.

The request for proposals wasn't published in the New York State Contract Reporter, billed as the state's "official source of contracting opportunities" where "all state agencies, authorities, state universities and public benefit corporations advertise bid opportunities valued at $50,000 or more." Instead, it was announced in a legal ad in the Buffalo News and the description of the project was vague, making it difficult to produce a proposal, said the person close to the process who spoke on the condition of anonymity.

He said contractors also grumbled privately that the state's request for proposals required 50 years' experience in mixed-use buildings, classrooms, high-tech laboratory space and "advanced clean-room infrastructure" for a lab in the Greater Buffalo area with an emphasis on nanotechnology, medical and green energy facilities.

Only LPCiminelli appeared to meet that standard, according to Buffalo-area press accounts.

After some of the companies were rejected or dropped out and some of the remaining companies complained, the requirement was changed to 15 years. State officials said it was a typographical error.

Last week, SUNY Polytechnic issued what it called a statement of facts that the request for proposals from developers "for the Buffalo Billion was open and transparent."

"As a public SUNY institution, all funding and contracts to SUNY Poly and its expenditures are subject to the same approvals, rules, regulations, and oversight as any other New York government agency," said Jerry Gretzinger, vice president of strategic communications and public relations.

He said there is "transparent review and oversight by all appropriate state agencies, including the New York State Division of the Budget, Empire State Development, the State University of New York, the New York State Comptroller, and the Attorney General."

He said this week that SUNY Polytechnic officials "followed every rule, regulation, and law at every stage of the process and have been completely open and transparent . . . there are layers of state oversight, internal and external audits, public hearings, public board meetings, and public votes."

Process was atypical

A review of records and interviews by Newsday, however, shows this bidding process was different than for typical state construction projects. Cuomo has pushed to get construction projects underway faster to save time and state money and more immediately spur job growth in some projects, including the "Buffalo Billion."

SUNY Polytechnic, which can operate separately from SUNY's central administration, used its nonprofit economic development arm, Fort Schuyler Management, to handle the bidding. Fort Schuyler isn't a public agency and isn't subject to the oversight of state agencies.

Fort Schuyler's board of directors has seven members, including SUNY Polytechnic president Alain Kaloyeros, who makes $800,000 annually as a state employee heading Cuomo's high-tech jobs initiatives. The board also includes Office of General Services Commissioner RoAnn Destito, who was appointed by Cuomo, and the senior vice president of the SUNY Polytechnic Institute.

In addition, the funding comes through the Empire State Development Corp., a public authority in the Cuomo administration, rather than from the State Legislature or SUNY, which requires oversight and approvals from the comptroller and other independent agencies. Some agencies disputed that they approved or reviewed the contracts.

"The State University of New York and its affiliated schools are subject to different thresholds and rules than state agencies when it comes to the contract review process," said Jennifer Freeman, communications director for state Comptroller Thomas DiNapoli. "We do not review or approve contracts or spending by Fort Schuyler."

Neither does SUNY. "SUNY System Administration issues guidelines for approval of SUNY Poly contracts, but is generally not involved in approving contracts for SUNY affiliated entities," said SUNY spokesman Casey Vattimo.

SUNY Polytechnic spokesman David Doyle said the comptroller's office, attorney general's office and SUNY would provide oversight and checks and balances of spending after the contracts were chosen. He said Empire State Development and Cuomo's budget division "control the money" and provide checks and balances on the process.

Blurring lines in the process

A coalition of good-government groups said the use of the SUNY Polytechnic and its Fort Schuyler nonprofit arm blurs the lines of responsibility and accountability in deciding which companies get big contracts.

"It's been reported that this has been a black-box process," said Blair Horner, legislative director of the New York Public Interest Research Group, referring to a device in which the inner workings are cloaked. "The governor's office has to explain why they did it the way they did it."

Neither the federal prosecutor nor SUNY Polytechnic would confirm or comment on the subpoena. The companies didn't return calls requesting comment for this story. "To our knowledge, neither SUNY Poly nor any of its employees are the target of any investigation," Gretzinger said in a statement.

SUNY Polytechnic hired a criminal defense firm in July under a $1.5 million state contract, comptroller's records show. SUNY Polytechnic wouldn't comment.

Cuomo said he "totally" supports Kaloyeros and knew nothing about a federal probe. "You can have investigations, but that does not mean there's any 'there' there, or that anyone did anything wrong," he said.

Cuomo was asked if the public should be concerned when winning bidders in contracts also make big campaign contributions.

"It hasn't been a problem for the past 100 years," Cuomo said, noting such contributions from interests doing business with government are legal and common. But the former attorney general added: "Anyone who takes a bribe should go to jail."

Doyle said Fort Schuyler was used because it efficiently handles SUNY Polytechnic's real estate and property management and is allowed under federal law. He said SUNY Polytechnic had to use a nonprofit under tax law to purchase land.

The CEO of LPCiminelli Inc., Louis P. Ciminelli, contributed more than $96,500 to Cuomo's political campaigns for governor, state Board of Elections records show. That includes $25,000 contributed four weeks before the company was notified it won the 2014 contract in Cuomo's "Buffalo Billion" project, according to state Board of Elections records.

Ciminelli relatives contributed another $10,000 to Cuomo's campaign. Cuomo's lieutenant governor candidate in 2014, Kathy Hochul of Buffalo, received $2,000 from the Ciminellis, half of it from the address of L.P. Ciminelli Development Corp., records showed.

McGuire Development gave $35,000 to Cuomo's re-election campaign in 2014, months after it won the smaller award. The losing bidders and those eliminated for reasons that included responding late to a conference call contributed far less to Cuomo's campaign or nothing, according to state Board of Elections records.

Ciminelli, who was once chairman of the New York Power Authority under Republican former Gov. George Pataki, has landed several state contracts since Cuomo became governor. LPCiminelli was chosen as general contractor for renovation of the Empire City Casino at Yonkers Raceway and at Tioga Downs. Each is part of Cuomo's push to increase jobs and state revenue through "racinos" at race tracks.

Other LPCiminelli projects include construction at Ralph Wilson Stadium after Cuomo made a deal with the Buffalo Bills to remain in Western New York and another after Cuomo found a way to provide a needed winter home for the famed Maid of the Mist tour boats at Niagara Falls.

Ciminelli also was once chairman of the Buffalo Niagara Partnership and of the business organization called The 43 X 79 Group, which contributed $25,000 to Cuomo's re-election campaign. Ciminelli didn't respond to a request for comment. His attorney told The Buffalo News neither the company nor its principals are targets.

His brother, Paul, had been a member of the Empire State Development Corp., which provided funding for the project. Doyle said Paul Ciminelli, when he was a director on the board, abstained from every vote on the "Buffalo Billion" project.

Paul Ciminelli runs Ciminelli Real Estate and operates the Key Center office building that is also part of the "Buffalo Billion" plan. Paul Ciminelli contributed $9,000 to Cuomo in his 2010 campaign, and his real estate firm gave Cuomo $1,000 in 2009.

In the Fort Schuyler narrative of the bidding process, the "post award project updates" state it has directed McGuire Development to develop an IT Innovation and Commercialization Hub in Key Center, a downtown office building. Key Center's website said it is "exclusively managed and leased by Ciminelli Real Estate."

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