Canal Corridors Initiative (CCI) Program Description

Summary:
CCI awarded grants and loan guarantees to communities along the Erie Canal (and connecting waterways) for economic development projects.

Purpose:
The 524-mile New York State Canal System was once a major economic link between the Northeast and the Midwest. As other transportation took over the canal's role, the industrial and commercial base of many cities in the region suffered. These cities experienced declining populations, urban decay, and high unemployment. CCI's goal was to revitalize the economies of these communities by attracting commercial investment and tourism.

Type of Assistance:
HUD promoted development along the corridor through two existing programs. First, it provided direct grants from New York's Small Cities Community Development Block Grant (CDBG) program. Second, it provided Section 108 loan guarantees to assure repayment of notes issued by local governments to raise money for approved projects in the canal area. HUD awarded grants of up to $900,000 for each canal-related development project.

Eligible Grantees:
Counties and cities along the New York State Canal System (and connecting waterways) that were not eligible to receive CDBG entitlement funds could apply for CCI funding.

Eligible Customers:
CCI primarily benefited low-income residents of the counties and cities along the canal. In general, under regulations for the two programs comprising CCI, grantees must use at least 70 percent of funds for activities in which either the majority of people who benefit are low- and moderate-income or the majority of the residents of the neighborhood that benefits are low- or moderate-income.

Eligible Activities:
Grantees may use CCI funds for development projects related to the New York State Canal System. Eligible activities (for fiscal year (FY) 1997 only) included purchase and rehabilitation of property; economic development activities; housing rehabilitation; and the purchase, construction, rehabilitation, or installation of public facilities. Examples include: new marinas, parks, trails, restaurants, retail stores, businesses, and restored historic sites. After FY 1997, grantees can only use CCI funds for the repayment of any amounts due on debt guaranteed by Section 108 loan guarantees. Each activity must meet one of the national CDBG objectives (i.e., it benefits low- and moderate-income persons, eliminates slums or blight, or meets urgent needs).

Application:
This program was only authorized for 1 year. To receive CDBG funds, applicants developed and submitted a Consolidated Plan that contained strategies and activities to redevelop areas around the canal. HUD made preliminary commitments for Section 108 loan guarantees and then negotiated agreements with the selected recipients over succeeding months, resolving issues such as the nature and amount of security to be required and the permissible uses of the loan funds.

Funding Status:
The nonentitlement CDBG program allocated almost $56 million for New York State for FY 1997 from which the CCI projects were funded. HUD also expected to make $80 million in Section 108 loan guarantee commitments for CCI projects.

Technical Guidance:
As a CDBG-related initiative, CCI was authorized by the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.). Program regulations are at 24 CFR Part 570. The Office of Block Grants at the HUD Office of Community Planning and Development (CPD) administered the program. Contact: Mr. Joseph D'Agosta at (212) 264-0771.

For More Information:
Community Connections (www.comcon.org) (1-800-998-9999) distributes Canal Corridor Initiative: Unlocking the Past for New York's Future (www.comcon.org/programs/cccanal.html) (1996 CD1058 and CD1065).