Reclaiming a Regional Resource:
A Progress Report on The Department of Housing
and Urban Development’s Canal Corridor Initiative
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Despite its significant human and natural
resources, the economy of upstate New York
has not shared in the prosperity produced by
a long period of national economic growth. If upstate
New York were treated as a separate state, its eco-nomic
performance would place it at the bottom of
the list of states. Over the 1992–98 period, the state’s
rate of job growth ranked 49 th among 50 states.
Although the transition from a manufacturing to a
service economy and the cost of doing business in
New York communities are often cited as the bases
for sluggish job and wage growth, a look at the full
range of trends affecting upstate New York suggests
that a more complex set of forces has hindered an
- Upstate New York communities have experienced
significant losses of employment and retail
expenditures because of military downsizing and
decreasing defense expenditures;
- Concentration and downsizing in key sectors of
the upstate economy have encouraged the con-centration
of certain major employers in urban
centers, depriving smaller communities of employ-ment;
- Deregulation of key sectors of the economy has
led to job concentration in urban centers and
higher costs for many upstate residents and
To reverse the decline of upstate economies and slow
the loss of workers and jobs to other regions of the
country, the Department of Housing and Urban
Development has undertaken the Canal Corridor
Initiative (CCI). The Initiative reflects the principles
and approach embodied in the federal Empowerment
Zone and Enterprise Community program, using
federal resources to spur private investment in
revenue generating projects in communities along the
canal corridor which includes New York’s historic
canal system and its inter-connected waterways.
The Canal Corridor Initiative was developed in
response to state and local plans for the canal region.
The vision behind the Canal Corridor Initiative
emphasizes locally initiated efforts and regional
synergy, — the encouragement of development within
a framework that will maximize benefits to the region
as well as individual communities.
The Canal Corridor Initiative was strengthened in
1998 through HUD’s partnership with the U.S.
Department of Agriculture (USDA). The HUD/USDA
partnership commits the agencies to providing grant
and loan resources, as well as expertise, for the
benefit of small communities along the Canal Corridor.
The federal resources invested in canal communities
are significant. Over the course of the three-year
program, HUD has provided $237.3 million in grants
and loans to leverage $361.1 million in investment
from the private sector and local and state govern-ment
for a total investment of $598 million. In
addition, USDA has provided $160.2 million in
assistance and leveraged $41.5 million for a total
investment of $201.5 million. Together, HUD and
USDA have provided or leveraged a total investment
of $800 million.
This study, prepared by a team of researchers in the
Department of City and Regional Planning at Cornell
University, reports on the progress of the Initiative
and evaluates its potential and realized economic
impact on the canal region. Our findings are based
on: 1) information on recent use of canal-related
tourism facilities and services; 2) a Social Accounting
Model, developed by the City and Regional Planning
Department; and 3) an evaluation of what is happen-ing
“on the ground” through case studies in four
communities that have investments in place through
the Canal Corridor Initiative.
This preliminary study, the first of two on the Canal
Corridor Initiative as an economic development
strategy for the canal communities, demonstrates the
Initiative’s positive impact on the upstate economies
through HUD’s investments. The impact of the
program is not just economic, however. Our case
studies show that the Initiative has also given new
confidence to communities who feel that their needs
have been forgotten in an era of national prosperity.
Finding #1 Tourism expenditures in the canal
region are rising and have the potential to produce
significant economic growth. The Canal Corridor
Initiatives investments create the capacity to draw
and serve visitors to the region.
Evidence from canal region agencies, hotel taxable
sales, and from our case studies all show recent
increases in expenditures in canal tourism activities.
For example, hotel taxable sales are up 12% in the
region; between 1996 and 1998, 10,000 additional
boats used a canal lift or passed under a lift bridge;
and the National Park Service reports an 18.5%
increase at their New York sites, many of which are
adjacent to the canal. Our case studies provide
further evidence of this rise in tourism activity and its
beneficial implications for canal region communities.
Investments through the Canal Corridor Initiative are
creating the infrastructure and services to draw
visitors, and to serve them (with restaurants, boat
tours etc.) when they arrive in the region. With
capital improvements in both public and private
enterprises, jobs are created to meet the needs of the
increasing number of visitors to the region and
Finding #2 Based on a conservative estimate of a
5% increase in tourism sectors in the region,
HUD’s investment in the Canal Corridor is likely to
yield over 17,000 additional jobs and a $447
million increase in state and local revenues.
Although, at this time, we cannot predict with full
accuracy how much tourist expenditures will increase
throughout the canal corridor communities, we have
strong indications from our case studies and other
research that the increases within tourism sectors will
be at least 5 %. A much larger job impact is likely if
the increases in tourism sectors induced by CCI
investments reach the 5% range.
This finding is based on our use of a Social Accounting
Matrix (SAM), an internationally recognized tool
used to trace how expenditures move through various
sectors of an economy. With the development of
better databases at the county level, regional SAMs
can be used to analyze and predict economic trends
in regional economies such as that of the canal region.
The Social Accounting approach provides information
on two key impacts of investment through the Canal
Corridor Initiative. First it indicates that the total
number of jobs induced by the investments is likely
to be considerably greater than the number of jobs
predicted by applicants when applying for HUD loans
and grants through the Canal Corridor Initiative.
The results of the Cornell Social Accounting Matrix
model indicate that the total of new jobs generated in
the 32 counties impacted by CCI investment in
tourism-related facilities and services will be significant.
With a 5% increase in tourist expenditures,
approximately 17,000 additional jobs will be
created in tourism related industries.
There will also be significant revenue increases for
upstate communities, strengthening their overall
economic development potential. With a 5% increase
in tourist expenditures in the canal corridor communities,
annual revenues to state and local government
will increase by $447 million. In addition, there
will be benefits to federal government revenues.
We used the SAM only to predict the additional
impact on jobs in the region’s tourism sectors (retail,
hotels, restaurants, recreation services, water and
passenger transportation) further job increases can be
expected in other sectors as a result of the expendi-tures
of people holding tourism jobs. The model
enables us to better estimate jobs produced by the
secondary expenditures of these direct jobholders and
thus, to get a better fix on the total job impact in the
region. Further specification of the model for our next
research report will enable us to extend our analysis
of the impact of CCI investments on the region.
Finding #3 Canal Corridor Initiative investments
have provided a flexible tool that has functioned as
a catalyst for economic development in canal
corridor communities. The Initiative’s overall
framework has encouraged regional collaboration
and contributed to broader economic development
goals, including the retention of manufacturing jobs.
This finding is based on a set of four case studies of
communities, which have implemented Canal
Corridor Initiative investments — Little Falls, The
City of Fulton, Oswego, and Lockport. As our case
studies indicate, all of these cities have serious
economic development needs — they have lost both
jobs and the working age portion of their population
during the 1990s.
The communities selected for case studies are, in
many respects,” best practice” cases. They are places
with a history of seeing the canal as a potential
resource for economic revitalization and with the
leadership and organizational capacity to respond to
the possibilities offered by the Canal Corridor Initia-tive.
As a consequence, they have been able to move
more rapidly to realize some of their development
goals. The case studies were also chosen because
they represent different development objectives and
different sets of development problems. As a group,
they illustrate the full range of the strategies used in
32 counties with projects supported by the Canal
Findings from the case studies indicate some
The Canal Corridor Initiative has functioned as a
catalyst for development. Although these canal
communities had plans for development, they
needed support to turn their plans into reality.
The Canal Corridor Initiative has helped move long
delayed plans “off the shelf” and toward realization.
In addition, local officials were able to think more
broadly about their development agenda, including
how to utilize improvements in public facilities and
services to attract and retain manufacturing jobs.
From Little Falls:
“The projects would not have happened without CCI
funding. A lack of funding commitment from the City
has limited the scope of projects in the past or
prevented them. Except in emergency situations, it is
difficult to get the City to address its infrastructure
needs, particularly in the Central Business District”
From The City of Fulton:
“If CCI had not come along this (development) would
not have happened. We would have lost Sealright (a
Fulton manufacturer). You would have had to turn
off the lights. CCI helped us pull together a package
that saved manufacturing jobs and led to downtown
“Without CCI our commercial projects wouldn’t have
happened or would have occurred too slowly or at an
insufficient size to really make a difference. This is
important because our goal with these projects is to
create a critical mass of activities that keep tourists in
Lockport for longer stays.”
The Canal Corridor Initiative has proved to be
flexible and adaptable to local needs.
Our case studies indicated that one of the most
valued dimensions of CCI was its responsiveness to
local needs and respect for the assessment of local
officials regarding their development priorities.
From Little Falls:
“This is not a typical we-think-you-should-do-this-and-
here’s-the-money-to-do-it program. They’ve been
receptive and very good about being flexible and
The Canal Corridor Initiative has created a sense
of regional synergy that stretches across the
The Canal Corridor Initiative fostered a regional
development vision that incorporated efforts across
communities. This vision helped sell the economic
development investments locally and created the
sense of being part of an effort that would have a
much greater impact because of its regional scope.
“This is one thread that ties us all together...this is a
From The City of Fulton:
“The big difference here was that someone thought
enough about the canal to make a comprehensive
plan possible. It made our City proposal a more
valued project. We got everybody to buy —in because
it wasn’t just Fulton getting money to straighten its
The Canal Corridor Initiative has made upstate
canal communities visible as good places to live
and do business.
The Canal Corridor Initiative has created a feeling of
excitement and forward motion in communities that
felt their economic development needs were being
neglected. All of the case study communities see the
opportunity to turn canal-focused improvements into
a broader revitalization agenda.
From the City of Fulton:
“People are seeing hustle and bustle in the down-town.
We love to see the UPS truck double-parked,
RECOMMENDATIONS FOR FUTURE DEVELOPMENT
The Need For Expanded Regional Partnerships
However successful the Canal Corridor Initiative has
been, it will only reach its full potential if a full range
of public and private sector partners is engaged to
contribute to rebuilding the region’s economic vitality.
Our interviews with community representatives and
other informants knowledgeable about the upstate
economy indicate how the positive contribution of
the Canal Corridor Initiative could be enhanced by
the active commitment of upstate resources, includ-ing
colleges and universities, foundations, and business groups. These organizations could magnify
the revenue-generating investment by providing
technical assistance, regional planning and coordina-tion
and professional expertise.
As with the Canal Corridor Initiative, these efforts
should be rooted in local agendas and build regional
cooperative action from the locality outward.
Particular areas that would benefit from the involve-ment
of local and regional institutions include:
The Coordination and Professionalization of
Heritage Tourism Sites
Heritage and cultural tourism are key to the develop-ment
plans of many canal communities. Museums
are popping up everywhere. There is a need for local
communities to coordinate their efforts to enhance
the overall impact of individual projects.
Building Public and Private Development
Local capacity needs to be built in the private sector
to develop entrepreneurial skills (such as business
plan preparation) and in the public sector to integrate
land use and economic development plans and to
deal effectively with complex loan applications.
Efforts to Relate Tourism Development to a
Broader Economic Development Plan for
Upstate New York
CCI is playing a critical role in Upstate New York’s
movement toward a more prosperous future. For that
future to be assured, a broadened regional economic
development partnership is required. As the Mayor of
the City of Fulton put it, “We can do something about
job creation if we put our heads together collectively.”
This report is the first of two to be prepared by the
Department of City and Regional Planning on the
impact of the Canal Corridor Initiative and its role in
upstate New York economic development. A second
report will be issued in February 2000. The second
report will include: 1) a revised Social Accounting
Matrix utilizing more recent data on the canal region
counties; 2) an expanded set of case studies of
communities implementing Canal Corridor Initiative
investments; 3) expansion of the model to include
USDA investments; and 4) a more thorough examina-tion
of how institutions in the canal region can
support economic development efforts.
Content Archived: January 20, 2009