Tuesday, June 20, 2017

Published June 8, 2016

Commentary
Photo by Diana Robinson.
Photo by Diana Robinson.

Buffalo Billion Investigation: Smearing Cuomo, Screwing Buffalo

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by   / Jun. 8, 2016 9am EST
Reporters and other experienced members of the political class know well the personality types and behavior patterns of those who surround the alpha male politician, wherever he may be. The generic term for this class is a term you all know, a two-part word that rhymes with brass and coal, and there are categories. There’s the sharp-elbow pretend tough guy, like Joseph Percoco, who worked a long time for Andrew Cuomo. There’s the smooth, mature smiler, like Todd Howe, a Cuomo family retainer from way back. Percoco and Howe have both seen their homes raided by FBI agents, which puts them in the same category as Steve Pigeon, a longtime brass-coal who combines the relentless suck-uppery, the personal nastiness, the continual name-dropping, and, withal, the ferocious, clear-sighted intelligence to quickly assess the makeup of a conflict situation and immediately side with the winner. These guys make their paydays by being useful factotums until the day that they get to be the boss. The corporate world is full of them, academia less so, but the blending of political operatives into American business that has happened very rapidly since the 1980s—since Ronald Reagan tore down those walls between campaigns and the businesses that fund them—is the tried-and-true path to dollars that former Cuomo aides have trod.
And now, they’re being headhunted by today’s star prosecutor, Preet Bharara.
But everybody take a breath.
The idea that Andrew Cuomo is going to be found to have benefited personally from a deal to bring Elon Musk’s Solar City to Buffalo is—are you ready?—stupid and naive. If you hold your breath waiting for Bharara to indict Cuomo, you will huff and puff like Carl Paladino, and look just as foolish.
Andrew Cuomo is the most aggressive, ambitious, relentless, and well-informed politician in America. Andrew Cuomo wants to be president. Andrew Cuomo is so audacious that he seeks to transform the untransformable—he wants to take New York State’s economically obsolete Upstate metros off the tit of endless real-estate and bank-driven make-work subsidies, of the sort that have made egregious cynics like Robert Wilmers rich, and instead ignite technology-driven economic growth in technologies that are not just Upstate New York’s best shot at a great transition, but America’s. Arguably, humanity’s.
To do so, Cuomo has empowered a new group of subsidy-drivers, and has bluntly bought into the new-tech game, by purchasing the love of Elon Musk for Buffalo. It doesn’t matter if the solar panels and LEDs made at Riverbend are made by people or by robots, and just designed and sold and installed by people: This is a well-thought-out bet of significant public funds for a potentially transformative return. 
Cuomo has placed similar bets on Department of Defense contractors for Rochester, for a cluster of Syracuse-area firms that are involved in tradable sectors, and he has utilized the immense ego, drive, competence, and cut-out tactics of the Greek guy, Alain Kaloyeros, who runs the nanotechnology operation in Albany.
Andrew Cuomo has given Buffalo a shot at a new industry that is currently, now, this year, in front of our faces, changing the way that energy is generated, distributed, and utilized.
The last place on earth that anybody in their right mind would locate a fabrication plant for solar panels or for light-emitting diodes (the other transformative technology that hasn’t penetrated laymen’s consciousness) is Buffalo, New York.
Buffalo has no comparative advantage—except the one that Andrew Cuomo’s ambition created for us. He wants to defeat huge forces—including Saudi manipulation of oil prices and Chinese manipulation of the marketplace for elements called “rare earths” that are required for manufacturing solar panels, plus the anti-American, pro-Exxon actions of Republicans in Congress, who willingly endorse trillions of federal spending on oil-company wars and subsidies but attack mere tax credits for low- or no-carbon alternative energy.
And Cuomo also has to deal with how stuff works, and has worked, in Upstate New York for decades.
Bharara is investigating the lobbying activities by LP Ciminelli, the giant construction firm founded by the late Frank Ciminelli and run by his elder son Louis. One may whine and gripe and cry “no fair” all day long about the fact that LP Ciminelli has been getting New York State contracts for years and years and years. One may decry the fact that son Lou was Republican Governor George Pataki’s appointed chair of the New York Power Authority, and that son Paul was Democratic Governor David Paterson’s appointment to the New York State Economic Development Corporation, while both LP Ciminelli Construction and the separate firm Ciminelli Development Corporation were building dorms at UB, doing the entire $1.4 billion rebuild of the Buffalo Public Schools, building dorms at Buffalo State College, building the new County Home and Infirmary on ECMC’s campus, and now building the Conventus lab/office space right next to the Ciminelli project called the downtown campus of the UB Medical School—not more than two miles from the Buffalo River, on whose banks LP Ciminelli is building a factory for Elon Musk’s firm Solar City.
The Ciminellis do business with whoever is in power in Albany. But it’s either stupid or naive to think that LP Ciminelli Construction is not capable of or could not have won the bid for this work, or that they used only political grease and not demonstrated expertise in high-technology construction in order to get the Solar City gig.
Decades of banker, lawyer, developer profits from public subsidies
But let’s get back to the brass-coals, for they believe that they are irreplaceable, unique, necessary, and operating within the First Amendment to the US Constitution, which guarantees their right to speak with, give money to, and endeavor to influence our elected representatives.
Go to elections.ny.gov, punch in the name, make the date range January 2000 and January 2016, and you’ll find that various individuals surnamed Ciminelli have given well over $500,000 to New York State officeholders. Search in the corporation file for companies with Ciminelli in the name and you’ll find an additional $150,000 in donations to mayors, members of Congress, Political Action Committees, governors, and more.
There’s your First Amendment in action. You betcha.
There is no question that this money buys this group of families and individuals access to political leaders. The only question is whether the firms, and the politicians, are so foolish as to overstep the bounds. The answer is simple: Until the prosecutor from the Southern District of New York proves a case against LP Ciminelli, or against one of the brass-coals who lobbies on behalf of the firms doing state-funded work, there is no illegality. It’s just how the system works, and has worked, for a very long time—since the enactment of the New York State Constitution, actually.
The difference that Andrew Cuomo has engineered, however, is monumental: He has instructed his economic development apparatus to reduce its decades-old practice of shoveling state subsides into make-work real-estate development projects, and to instead redirect some of those funds into supporting industrial ventures that actually pass a cost/benefit analysis test.
The mechanism Cuomo created to make this change was bitterly resisted by the old guard of the finance and real estate gang that has run the Buffalo metro from the day Robert Wilmers and his investor group purchased First Empire of America, holder of M & T Bank Corporation. In the story that everybody in Buffalo has long known, Wilmers and former Buffalo News publisher Stanford Lipsey, plus 16 of their business associates in the so-called Group of 18, cobbled together the Buffalo Niagara Partnership out of the Greater Buffalo Development Foundation and the former Chamber of Commerce to advance the interests of the 18. They held sway over political fundraising, issued an annual agenda—not so much a wish-list as a set of commands to public officials to go fetch specific pots of public money for specific projects benefiting specific members of the Group of 18—and that’s how business was done in the Buffalo area. No outsiders needed. It was a thug state here, but awfully polite.
Cuomo upset that structure by creating regional economic development councils, including one here. Rather than relying on direction from Wilmers et alia, Cuomo invited the Brookings Institution and McKinsey and Company to town. He expanded the membership of his new council to include the Buffalo Niagara Partnership, but included many, many more individuals, interest groups, and independent leaders—individuals emboldened by the presence of Howard Zemsky, whose family fortune had had precisely zero to do with the Buffalo system of state-subsidized patronage supervised by the Group of 18, often known as the Gang of 18.
In 2012, the empire struck back. The then-president of the Buffalo Niagara Partnership tried to hijack Cuomo’s regional economic development councils in a bold but unsuccessful move to get Cuomo’s new commitment of state subsidies squarely into the hands that had been steering the subsidy ship here for decades.
Fast-forward to today: What the old group desperately wants is for Cuomo to fail, which will advance and amplify their anti-statist mantra, which is the official line of the Buffalo- Niagara Partnership: unshackle upstate. Unshackle Upstate New York, they say, because what holds Upstate New York back from economic development is the state taxes, state regulation, union work rules, etc. The stage-whispered instruction remains the same: Just let us handle it the way we always have—create and maintain excess inventory in real estate, make everybody around here report to us, and a bunch of us will profit handsomely even as the region sprawls, its population shrinks, and its fiscal dependency grows.
Except for the Solar City project, Cuomo has not upset the Group of 18 and its generational successor entity, the 43x79 group, so named after the latitude and longitude of Buffalo. The public is still footing the bill for what is, by the numbers, the greatest make-work project in Buffalo—the Buffalo Niagara Medical Corridor, essentially a subsidy to Kaleida (run by the Group of 18 and its successors) to shrink down to about two-thirds the workforce it had just a decade ago, but to do so at great public expense. The previous make-work project needn’t have been make-work at all: It was the reconstruction of the Buffalo Public Schools so that refreshed and state-of-the-art buildings in the urban core could be repurposed to serve the shrinking regional school population. Of course, Wilmers et alia succeeded in killing the regionalization of schools, and Paladino et alia succeeded in expanding the number of school buildings by using the Buffalo News to scream, incessantly, wrongly, about the need for charter schools. (But that’s another discussion.)
Cuomo could not dethrone all the members of the Group of 18 or of the 43x79. He did not get in the way of their plan to consolidate three of Kaleida’s campuses into one, on High Street, though he alternately quailed and scoffed at the price-tag. He went along with the plan to move the UB medical school from upper Main Street to the Main-High corridor—not to add to the medical school, not to expand its programs, or to improve its research funding in the wake of massive tightening of NIH, NSF, and other non-growing federal resources—but just to build it new buildings.
But Cuomo did something else:
He invited Elon Musk in.
He invited new technology and new industry in.
He brought in the guy who is transforming the electric automobile from a rich person’s plaything into a mass-market, battery-powered challenge to the global political-economic hegemony of oil producers, even as Elon Musk’s ventures in batteries, solar panels (Buffalo) and LED lighting (Buffalo) could be paradigm-shifters in household, office, warehouse, and public-structure energy and lighting.
Cuomo and his Western New York Regional Economic Development Council did indeed use the political structure that we know so well, including those brass-coal lobbyists, and he used the wired local construction people who are actually qualified to do the work—even though, guys, is there nobody else in the universe but Ciminelli who could possibly have done this particular job? The Greek guy in Albany made that call.
So perhaps Bharara will indict a few hangers-on, thus advancing the story that New York State is somehow uniquely overstocked with the typical brass-coal who  populate whole ZIP codes in Washington.
But let’s be clear: Cuomo is ambitious, as ambitious as Lyndon Johnson. If you want to understand the difference between the massive drive to achieve versus the small-time conniving chiseler who wants a new Town Car, read Robert Caro’s four-volume biography of Lyndon Johnson, The Years of Lyndon Johnson, especially that scene in the second volume, the scene wherein Johnson is tempted by the Brown & Root construction firm to take a fee, a plum, a little sugar, in return for helping them get the contract for a big dam project.
Johnson did help the project, and the result was a transformation of the rural economy of his huge home state of Texas, and certainly a massive enrichment of the already-rich Brown & Root firm, which has long since been a subsidiary of Halliburton, the defense contractor that gave us Dick Cheney. Working to create the economic transformation got Johnson into the United States Senate, which is how he got to be vice president, and then president when John F. Kennedy was assassinated.
Wrecking Cuomo’s Riverbend technology-manufacturing project will probably not be the outcome of whatever indictments may or may not come of the current federal investigation. But should you catch yourself reveling in any schadenfreude at the fate of any Albany brass-coals, consider: For 30 years, the Group of 18 enriched itself, gorged itself sleek and fashionable, on Albany’s handouts. They gorge still. They’d love to see Cuomo fail in his attempt to reboot this region’s economy with a tradeable sector that doesn’t need local bankers, developers, or suckers-up.

Bruce Fisher is visiting professor at SUNY Buffalo State and director of the Center for Economic and Policy Studies.

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