SolarCity’s $750M tax gift shrouded in secrecy

By Tori Richards | Watchdog.org

New York taxpayers are footing the bill for a massive $750-million SolarCity manufacturing plant with a promise that the company will spend $5 billion there on product and development, but when a local TV station tried to find out contract details, they were told it was confidential.

Buffalo, N.Y., station WIVB-4 received the contract through a Freedom of Information request, but most of the pages were blacked out. The resulting document looks like something reporters would receive from the CIA.

New York state officials told the station the heavy redactions reflected trade secrets in the document.

“The disclosure of specific, heavily negotiated terms relating to the financing of the project … would have significant impact on the ability of both parties to negotiate effectively with others in the future and would likely cause substantial competitive injury,” the state claimed.

The TV station alsowas told that SolarCity had to approve disclosure of key information.

Critics wonder why the state is subsidizing a private company.

“You have to ask yourself, if they are going to make $5 billion here, why can’t they invest $750 million of it if their product is so promising?” said Nick Loris, a senior policy analyst with the Heritage Foundation, specializing in the energy industry.

Loris also said the public has a right to know how tax dollars are being spent.

“I can see proprietary information kept secret, but when you sign up for public money, you are also signing up for a transparent process that shows how you are going to spend that money,” Loris said.

New York Gov. Andrew Cuomo attended the Sept. 23 groundbreaking of the SolarCity’s 1.2-million-square-foot factory, saying it will come online in 2016. What he didn’t say is that the state will own the facility and charge SolarCity just $1 a year in rent for the first 10 years.

When complete, the facility – Cuomo called it a GigaFactory – will be the largest of its kind in the Western Hempisphere and part of SolarCity’s plan for global domination of the solar market.

The company was hit hard earlier this year when the U.S. government decided to slap imports of Chinese solar panels with tariffs of up to 35 percent. Most of SolarCity’s panels come from China. SolarCity says its New York plant will alleviate that problem.

The New York project marks one of the largest government investments into a solar company since the failed Solyndra. That company received $561 million in federal loan guarantees and California tax breaks before going bankrupt in 2011.

SolarCity paints an upbeat picture for investors. But its business model confronts at least one hard reality: The sunsetting of tax breaks on ownership of solar installations. The U.S. Treasury Department is investigating allegations that SolarCity inflated sales costs to gain additional government rebates.

“You have to wonder, if their company is so desperate to take taxpayer money, why are they in existence in the first place?” Loris asked.

At its height, SolarCity’s stock was $86.14 in February and is now trading at $54.44. An analyst’s report on the Wall Street site SeekingAlpha.com says the company lost $148 million in shareholder equity during the past quarter. Its assets are listed at $4.1 million.

A report titled “Rich States, Poor States” by the American Legislative Exchange Council studied the economic prosperity of all 50 states and two lists were compiled: a 2014 economic outlook and economic performance. New York ranked 50th and 35th, respectively.