In return for its large investment, New York wanted guarantees—and protection—built into the incentive deal. Instead of giving SolarCity cash, New York is paying for the $350 million factory and an estimated $400 million of equipment.
The state is keeping ownership of both plant and machinery to discourage SolarCity from moving, even at the end of the 10-year deal. SolarCity is expected to invest $6 billion locally, including operating costs, over the term of the deal, Kaloyeros said. Cutler said the deal requires at least $5 billion in investment from SolarCity.
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Subsidies received by Musk-affiliated companies were recentlynegatively highlighted in a Los Angeles Times piece. Musk fired back in an interview with CNBC that incentives are helpful, but not necessary, and that the incentives his firms receive pale in comparison to subsidies given to other industries, including the oil and gas industry.
The deal also requires that SolarCity pay New York $42 million for every year that the target of 5,000 jobs—including local supplier jobs and solar installer jobs across the state—isn't met, Kaloyeros said. If it is met within the four-year deadline and maintained for a decade as required by the deal, the $750 million incentive package works out to roughly $150,000 per job, or $15,000 per year, according to David Doyle, a spokesman for Kaloyeros at SUNY Polytechnic.
Since most of the positions are expected to pay from about $50,000 to $150,000 (Erie County's median family income is just over $50,000), New York state income taxes on workers' salaries alone are likely to recover less than half of that money over the initial term of the deal.
Doyle said SolarCity's package does not exclude the company from applicable state corporate income taxes. Personal and corporate income taxes will recover some of the cost of the incentives over the 10-year term of the initial deal.
"Isn't it worth it to revive Buffalo, to have the premier facility of its kind in the world, and to retain ownership [of the plant and equipment]?" Kaloyeros said. "I'd say yes."