Central New York still waiting for investment to pay off
It’s been two and a half years since Gov. Andrew Cuomo resigned, but the former governor’s speculative, wasteful investments continue to haunt central New York.
Just before Christmas, thes semiconductor company Nexgen Power Systems closed its doors and laid off its employees. Syracuse.com’s Rick Moriarty and Brad Racino reported that Nexgen could not persuade venture capital investors to keep the company going any longer while it struggled to produce gallium-nitride microchips in a high-tech factory in Dewitt.
Nexgen is the building’s second tenant to fail. The first, a startup company called Soraa, never even moved in. The Soraa deal was the Cuomo administration’s original sin.
New York state spent $90 million in taxpayer money to build the factory for the manufacturer of LED lightbulbs. Soraa was supposed to create 250 manufacturing jobs, plus spur another 170 spinoff jobs at vendors and suppliers.
Soraa backed out of the deal after state officials declined to spend tens of millions of dollars more to equip the factory. That’s when we all found out that Soraa’s job promises were not enforceable, that it had invested none of its own money, and that it faced no penalty for simply walking away.
The building next door also turned out to be a terrible investment of taxpayer dollars. New York paid $14 million to build a “film hub” that was supposed to attract big-name TV and movie productions to the region. The state ended up selling the film hub to Onondaga County for $1. It’s still in use but never lived up to the hype.
At the time he announced them, Cuomo’s investments in Soraa and the film hub, together known as the CNY Nanotechnology Hub, made little sense. What did nanotechnology have to do with films, or with Syracuse?
That only became clear later, during a series of federal corruption trials. The projects were handed to a Syracuse construction company that made big donations to Cuomo and colluded with a disgraced lobbyist (who pleaded guilty to felonies) to land the contract. The convictions didn’t stick — but the damage was done.
To salvage its investment in Soraa, Empire State Development enticed Nexgen — a startup with no track record and no customers — by paying another $13 million to furnish the factory. The company committed to create 290 jobs by the end of 2025. This time, the company received aid on condition of meeting specific hiring targets, which the company mostly met, the state says. Nexgen still failed.
Now, New York is marketing the building for a third time. Conditions may be more favorable for success. It has cleanroom facilities — and that should be attractive to companies that want to be near Micron and its proposed $100 billion chip fab in the town of Clay.
Some still don’t believe Micron will deliver on its promises to bring thousands of direct jobs, and tens of thousands of spinoff jobs. You can draw a straight line from that skepticism to the failed nanotech projects in Dewitt.
But the comparison doesn’t hold up. Soraa/nexgen and the film hub were busts because Cuomo’s “If you build it, they will come” strategy got it exactly backward. New York state made huge bets with taxpayer money on companies without a history of performing, without proven technologies and without enough of their own money at risk.
By contrast, Micron has a long track record, proven expertise in memory chip manufacturing and a pledge to invest $100 billion of its own money in the Clay complex. Yes, the company also is in line for billions in federal, state and local taxpayer incentives, depending on how much it builds. For example, New York state’s offer of $5.5 billion in tax credits will go to Micron only if they hire all the people they say they will — not before.
State taxpayers, the Central New York economy and the people who lost their jobs continue to wait for the benefit from that failed investment. New York, it seems, learned its lesson from the failed projects in Dewitt.