In a key milestone toward the development of an 88-acre high-tech manufacturing hub on a former Buffalo brownfield site, a memorandum of understanding between New York state and the City of Buffalo has been reached.

The MOU is expected to lead to a formal contract between the state and city, with an anticipated closing on the $2.5 million real estate transaction expected by the end of the first quarter. The deal would see a large portion of the Buffalo Urban Development Corp.-owned RiverBend office and industrial park in South Buffalo used as the hub for a pair of California-based green energy firms that want to, collectively, invest $1.7 billion to develop local operations. The companies, Soraaand Silevo, announced plans to create 850 jobs at their RiverBend facilities.

At $1.5 billion, it adds up to the largest private investment in Buffalo's history considering the price tag and new jobs created.

The deal was first announced two months ago by Gov. Andrew Cuomo, who helped recruit the firms and convince them to open operations in Buffalo. New York is offering $225 million from Cuomo's "Buffalo Billion" initiative to bring Soraa and Silevo to Buffalo.

Cuomo said besides the 850 permanent jobs, construction activity alone would spur another 500 construction jobs.

"We are now poised to bring about one of the most dramatic developments in Buffalo's history," Cuomo said in a prepared statement. "With cutting edge technology, hundreds of good-paying jobs, and the attraction of dynamic 21st Century high-tech companies, RiverBend will further strengthen the city's and region's continuing economic revival."

The MOU creates a legal path to transfer the land's ownership from BUDC, the City of Buffalo's economic development arm, to Fort Schulyer Management Corp., a not-for-profit entity created by the state to manage property transactions on behalf of the SUNY Research Foundation.

Besides the agreed to sale price of $2.5 million, the deal calls for a partnership with the city to develop a "Community Development Agreement" that includes where appropriate MWBE participation consistent with established state practices; and permitting the Buffalo Niagara Riverkeeper organization access to the property for a continuing federally-funded shoreline restoration project along the Buffalo River, which flows through the development site.

Soraa is a manufacturer of green LED lighting with the highest efficiency on the market. The company will relocate its corporate R&D and manufacturing operations to RiverBend, investing $750 million and creating 375 jobs.

Silevo develops and manufactures silicon solar cells and modules, with an already established manufacturing plant in China. Phase 1 of Silevo's project, with a $750 million investment which will create at least 475 jobs, involves a 200 megawatt production facility establishing its sole North American manufacturing operations at RiverBend.  New York state will invest $225 million in Empire State Development capital to establish infrastructure at the site including water, sewer, utility and roads; construct a state-owned 275,000 square feet facility that will house Soraa and Silevo as the first two tenants; and purchase and own equipment. Neither company is receiving direct funding from the state's investment.

Additional facilities will be built over time to accommodate new manufacturing companies operating in the field of biotech, high tech and green energy. The facilities and equipment will be owned by the State University of New York Research Foundation.

A designated developer will be announced this winter and a groundbreaking for construction will occur in the spring. Occupancy of the new facilities is targeted for the second quarter of 2015.