Aug. 2 (Bloomberg) -- It takes David Sylvaria about two hours to pilot the Grande Mariner, a 184-foot cruise ship, almost 20 miles along New York’s Erie Canal.
“This is slow going no matter what,” Sylvaria said one afternoon last month as he steered the ship from Little Falls east to Canajoharie. “I wish we could gun it, believe me.”
The canal’s progress from a dying 19th century shipping lane to an economic-development engine has moved just as slowly. Since Governor Mario Cuomo’s administration in the early 1990s, the state has spent tens of millions of dollars to turn the canal, which opened the U.S. Midwest to the Atlantic Ocean, into a tourist destination to revive the upstate economy.
A still-unfinished pedestrian trail along the 363-mile waterway has taken more than 10 years to build, longer than the canal itself. Plans to redevelop a canal harbor in Syracuse languished for decades.
A consultant’s report in May found that Canal Corp., the New York Thruway Authority subsidiary that runs the waterway, has no “meaningful strategy” to make money from it. The state spends as much as $90 million a year, primarily from tolls, to operate the canal and takes in only $2 million in revenue, Chicago-based Navigant Consulting Inc. said.
As Thruway officials prepare to raise truck tolls 45 percent, critics including the American Trucking Associations and New York Farm Bureau say the canal is sapping funds that can be used to offset the increase.
“The Canal Corp. is a significant reason why we’re looking at a toll increase,” Brian Sampson, executive director of Unshackle Upstate, a Rochester-based business group, said in a telephone interview. “The canal is such a part of our history that we should never walk away from it, but let’s be honest about what it is: At this point, it’s a tourist attraction.”
Tom Madison, Thruway Authority executive director, said the agency is looking at public-private partnerships to get more revenue from the canal system. Including the Champlain, Cayuga-Seneca and Oswego canals, the network covers 524 miles (843 kilometers).
“Historically, we’ve disposed of Canal Corp. land here and there,” Madison said in a telephone interview. “We’re talking about rolling together parcels of property and really doing more proactive marketing of the property.”
The brainchild of Governor De Witt Clinton, the Erie Canal, known as “Clinton’s Ditch,” opened in 1825, eight years after workers with shovels and pickaxes began building the waterway from Buffalo to Albany. It opened up the Midwest by allowing goods to move from New York City up the Hudson River to the Great Lakes. New York state issued bonds to pay for the $7 million construction, one of the first municipal debt sales.
In 1903 state voters approved spending $101 million for a new, deeper and wider canal, which is the waterway in use today. Commercial traffic reached its peak in 1951 and dwindled to 9,107 tons in 2010 and 6,150 tons last year, when Tropical Storm Irene hit. Thirty years ago, the canal handled 600,000 tons a year. The state constitution requires that it be kept navigable.
Democrat Andrew Cuomo, Mario’s son and the current governor, showered $237 million on canal towns while serving as U.S. secretary of Housing and Urban Development under President Bill Clinton. Then, as now, the goal was to help revive an upstate region where the poverty rate rose to 13 percent in 2008 from 11 percent in 2000, according to a 2011 report by Cornell University.
A 25-mile section of the canal was shut yesterday in western New York after a bank partially collapsed near Albion, a town of 6,000 residents about halfway between Rochester and Buffalo. Before going to visit the site, Cuomo said at a press conference in Batavia that New York remains committed to maintaining the waterway.
“The state has the resources to take care of the problems,” he said.
Economic activity from the canal amounts to about $380 million annually, said Brian Stratton, director of canals, citing a 2002 study by Eric Mower and Associates, a marketing and communications firm based in Syracuse.
Part of the state’s plan is to make the Erie Canal as appealing as Germany’s Rhine River, Stratton said. From 2000 to 2010, boating on the canal declined 23 percent to 99,343 vessels, according to the Thruway Authority.
“We’re really looking at the model established in Europe, where smaller but similar vessels cruise through the Rhine and other great areas,” he said. “We want to take that very successful model and bring it here to a very significant history corridor along the Erie.”
On board the Grande Mariner, retirees from Alabama, Massachusetts and Florida marveled as Sylvaria, the 35-year-old captain, maneuvered into Lock 17, near Little Falls. As the lock emptied, the ship descended more than 40 feet (12 meters).
It was the 12th day of a 16-day voyage that took passengers from Chicago, through the Great Lakes and connected with the Erie Canal near Buffalo, according to the website for Blount Small Ship Adventures, which operates the vessel. The trip, which cost $5,000 per person, ended in Narragansett Bay, Rhode Island, near the company’s headquarters.
Farther east along the canal system near Albany, the town and village of Waterford won a $1.5 million grant and a $3.6 million loan from HUD in 1997 to build a visitors center and improve a stretch of the Champlain Canal.
Fifteen years later, the village has seen the storefronts on Broad Street, its business district of about 20, go from being half-empty to about 85 percent occupied, said Russ Vandervoort, the village treasurer. Colleen Coloney, who has owned the Broad Street Café for 17 years, said the improvements bring in customers.
“We see new faces every week and people who come back and say, ‘Hi, do you remember us from last year?’” Coloney said.
Still, some parts of the canal’s redevelopment have struggled. In 2002, Governor George Pataki, a Republican, announced a five-year, $35 million plan to finish building the 348-mile Erie Canalway Trail for bikes and pedestrians. In July, Canal Corp. said it would complete a section of the asphalt trail near Lyons in western New York this year, which would leave about 25 percent of the trail still unfinished.
In Syracuse, after failing for decades to develop a former barge terminal, Canal Corp. last year transferred 34 acres surrounding the Inner Harbor to the city for free.
Within a year, Syracuse selected a local developer, COR Development Co., which plans to transform the area into a neighborhood with apartments, a hotel, shops, and a satellite campus for the Onondaga Community College. COR will pay $2.8 million, which will be used to clean polluted land. After the cleanup, the remainder of the funds will revert to Canal Corp.
Stratton said the Syracuse project is an example of how state officials can work with private industry and local governments to develop Canal Corp. property.
“The value is not in the sale of the land,” Stratton said. “It’s in the economic activity that’s generated after.”
Canal Corp. has received about $1 million from land sales in the last five years, according to R.W. Groneman, a spokesman.
The cost of maintaining a system that’s become a living museum -- the brass levers used to lift the locks are 100 years old -- has business groups pushing Cuomo to reconsider the canal’s position under control of the Thruway Authority.
Unshackle Upstate, the New York Farm Bureau and the American Trucking Associations were among more than a dozen groups that suggested such a change in a July 24 letter to Cuomo that cited the Navigant report.
It was Navigant that recommended a toll increase. If the increase doesn’t happen, the authority may face a downgrade on its A+ credit rating just as it’s planning to sell toll-backed bonds to build a new $5.2 billion Tappan Zee Bridge over the Hudson River, Standard & Poor’s and Moody’s Investors Services said in June. The 3.1-mile bridge 20 miles north of New York City carries 138,000 vehicles each day, 40 percent more than its design intended.
According to the report, the Thruway Authority has considered closing portions of the canal, selling land and developing public-private-partnerships for recreational development projects.
“However, to date, no meaningful strategy has been pursued,” the report said.
Bill Kupper, a retired television ad salesman who lives in Sarasota, Florida, was among the more than 60 passengers on the Grande Mariner. He wasn’t concerned about operating costs. He saw the canal as a piece of American history.
“It became like the pyramids or the Great Wall of China,” Kupper said. “That’s how it stood in the world.”
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