Investigative Post: The hidden perks of the Buffalo Billion contract

May 24, 2017

New York State spent more than $600 million building a factory for SolarCity at the RiverBend site in South Buffalo. You might be surprised at what some of that money went for.

For Buffalo, the groundbreaking ceremony at RiverBend was meant to be a fresh start.

"RiverBend was what made us great in the first place and this facility is about what’s going to make us great in the future," said Gov. Andrew Cuomo, at the time.

For several executives at LPCiminelli, the company chosen to build the factory, it was also a chance for a free lunch. They ate at Cabaret Restaurant, behind Shea’s Performing Arts Center downtown. That afternoon, LPCiminelli picked up the tab, but ultimately, state taxpayers footed the bill. Several months later, the company included the cost of the meal in its reimbursable expenses on the project.

That wasn’t a one-off. Under the state Freedom of Information Law, Investigative Post obtained the company’s expense records for the first year of construction. They include thousands of dollars on meals, including lavish dinners, and entertaining business guests, and even $4 for an e-book one executive bought on Amazon, “The Five Dysfunctions of a Team Summarized For Busy People.”

Investigative Post showed some of the receipts to Sam Magavern, executive director of local good-government group the Partnership for the Public Good.

"If your company wants to have nice dinners, fine. But you pay for that. You don’t bill that directly to the taxpayers. That just seems crazy," Magavern said.

One week in March 2015 the company billed for lunch Monday, Tuesday, Wednesday, Thursday and Friday. Taxpayers picked up the tab for everything from takeout at Mighty Taco to catered meals at the job site, topped off with a pub lunch.

"Just normal common sense tells you that shouldn’t be part of contracting with the state of New York," Magavern added.

Normally, it isn’t. The state agencies that usually handle public construction projects don’t pay contractors for these kinds of things.

But this project was different. Instead of one of those agencies, it was managed by a state-affiliated non-profit, Fort Schuyler Management Corporation. Fort Schuyler said it didn’t have to follow the usual rules.

"They kind of transformed into an economic development entity that was off the books," said John Traylor, a top deputy in the state comptroller’s office. His department usually reviews state contracts, but not Fort Schuyler’s.

"So it was a way to to really remove a lot of the oversight where tax dollars were involved."

LPCiminelli said in a statement that under the terms of their contract, all the meals and entertainment expenses were allowed. They said Fort Schuyler reviewed all the receipts before paying them and didn’t raise any concerns.

Last year, three of the company’s top executives and key state officials were charged with rigging the bids to build the factory to ensure that LPCiminelli would be awarded the contract. In light of that, state lawmakers are now contemplating a bill that would ban non-profits like Fort Schuyler from being used for state contracting in the first place. After last year’s corruption scandal, Cuomo promised reforms, but he opposes this legislation.

Buffalo Assembly member Crystal Peoples-Stokes chairs the Assembly committee considering the bill.

"Those allegations have been made. Those issues are in court and I suspect that people would like to try to figure out ways to prevent that from happening again," said Peoples-Stokes.