Photonics company pulls out of plan to come to Rochester

February 02, 2018 12:00 AM

Another photonics company won't be moving into Eastman Business Park.
In a much celebrated announcement, the New York Governor Andrew Cuomo said the Avogy would fuel economic growth in the region. But now, Avogy is now out of business, declaring bankruptcy before ever relocating to Rochester.

News10NNBC, however, discovered Avogy's CEO now has another deal with the state to bring a new business to another city.

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In March 2016, Cuomo announced that two photonics companies, Photonica and Avogy were relocating from California to Rochester.

"Avogy, Photonica:  between the two companies, a $1.6 billion investment, 1,400 new jobs coming to Rochester," Cuomo said in 2016.

Nearly two years later, News10NBC investigated and found that not one job and not one nickel has come to Rochester. Within a year, New York State had nixed its deal with Photonica, determining the company was incapable of moving forward.

Avogy had a product: small electronic charging devices. But News10NBC has learned that Avogy has gone out of business and filed for bankruptcy.

"When there's a failure there, that's disappointing," said 138th District Assemblyman Harry Bronson. "But even more so, the concern for me is if there's a failure, do we have claw back provisions to those contracts."

Fortunately, the state never invested the $40 million it pledged to Avogy. But the hope of hundreds of new Rochester jobs is gone.  

Meanwhile, there's news of another project just down the Thruway in Syracuse.

The state originally built a high-tech factory for $90 million to lure a business that planned to manufacture LED light bulbs. The company, Soraa, walked away from the project with no penalty. Now the state is spending an additional $15 million to retrofit the facility for a new tenant called NexGen.

 "Turns out NexGen, the CEO of NexGen, is the same CEO of the failed Avogy," said 50th District State Senator John DeFrancisco.

Dinesh Ramanathan, the CEO of Avogy, put together new management and new investors and re-formed as NexGen. Ramanathan did not respond to several of News10NBC's requests for comment.

"Anybody with half a brain is gonna say, 'wait a minute,'" DeFrancisco said. "Even though the state ended up not investing any money in Rochester, certain representations were made."

News10NBC caught up with DeFrancisco recently at a public hearing about the NexGen deal where he raised his concerns.

Brett Davidsen: "Why should taxpayers trust that NexGen will do what it says it's gonna do?"
John DeFrancisco: "I don't think the taxpayers should."

This week at a state budget hearing, lawmakers questioned Empire State Development President Howard Zemsky.

Zemsky acknowledged to News10NBC that there are risks in any deal, but said that he's confident that NexGen will succeed.

Brett Davidsen: "So why should taxpayers trust that this same owner is going to deliver this time around for NexGen?"
Howard Zemsky: "Avogy was really, at the time, in fairness to Avogy, they've conducted themselves very professionally."

"They reconstituted their business plan," Zemsky said. "Good for them. That happens in the tech space. You're talking about a dynamic industry with a lot of competition, a lot of technological breakthroughs."

The Avogy, Photonica and Soraa deals were all done by the development arm of SUNY Polytechnic Institute, whose former president is now facing corruption charges.

Empire State Development was forced to take over many of the SUNY Polytechnic projects.

Brett Davidsen: "Some would say it's throwing good money after bad."
Howard Zemsky: "No. No. It's a way of really activating that site through good productive use for the benefit of economic development."

DeFrancisco said he's willing to support the NexGen agreement, once he's convinced the state has a way to re-coup its investment if the deal goes south.

"There's gotta be information provided to the public as to what the real deal is so people can complain if there's not enough security, or there's not enough skin in the game, or there's not enough protections for the taxpayers," he said.

Empire State Development said taxpayers will be protected in this deal.

NexGen has pledged to create 290 jobs in Syracuse and will invest $40 million dollars of its own money.

Empire State Development said the $15 million state grant comes with financial penalties if NexGen fails to meet its job projections.


Brett Davidsen

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