$131 million on the Erie Canal Redevelopment: Villages on the banks of the outdated waterway are using generous federal grants and low-interest loans to convert themselves into tourist attractions resembling Baltimore's Inner Harbor.

THE BALTIMORE SUN

I've got an old mule and her name is Sal

Fifteen miles on the Erie Canal

She's a good old worker and a good old pal

Fifteen miles on the Erie Canal

1913, Thomas S. Allen, based on traditional American folk song

LOCKPORT, N.Y. -- Two days before opening a brand-new visitor center for his struggling Erie Canal cruise business, Mike Murphy sits on his dock and looks out at the water, nervously.

The permanently sunburned ex-policeman says he decided to put up the new building in this western New York city of 19,000 after visiting his daughter in Maryland, where he rode a water taxi from Fells Point to the foot of Harborplace.

"I'm gambling that we'll become known as the Inner Harbor of Lockport," says Murphy, 53.

Suddenly, the Inner Harbor is the model for hundreds of entrepreneurs in small towns along the Erie Canal, one of America's most famous - and most outdated - public works projects.

Now, for the first time since it was widened for barges around the turn of the century, the canal is seeing new construction and rehabilitation along its banks and walls, from a hotel in Waterford to a marina in North Tonawanda to restaurants and shops in Little Falls.

The new development is concentrated in more than 50 towns, few bigger than Lockport, that prospered during the canal's 19th-century heyday and have suffered ever since. And many of the projects resemble Murphy's: They are highly speculative, geared to tourism and backed by an unusual federal program so generous that the small town officials who benefit from the money seem overwhelmed by the government's interest.

Together, these projects represent a test of the 524-mile waterway and its hold over the American psyche. Can the canal that first opened up the West in 1825, once routinely described as the Eighth Wonder of the World, sustain this new burst of life?

The biggest booster of canal redevelopment has been Secretary of Housing and Urban Development Andrew M. Cuomo, a governor's son who is viewed as a future candidate for statewide office.

By tinkering with a HUD program for small cities, Cuomo has offered $56.8 million in grants and $74.2 million in low-interest loans to 57 canal communities.

With $2.2 million of that money, Albion will build a canal museum, a gazebo and additional boat tie-ups. Nearby Medina is building a new waterfront promenade, a pedestrian bridge and a coffee house. To the east, in Frankfort, federal money will help buy 26 boats for Crown Blue Lines, a European company that has begun building a fleet of 100 charter ships for Erie Canal cruises.

In Lockport, Murphy, who started the canal cruise business 11 years ago with a single boat, now has three tour boats and at least three sold-out tours a day, which he often spends dodging the growing number of pleasure yachts on the canal.

Tom Prindle, general manager of Crown Blue Lines, had all of his charter boats rented every week last summer.

"The Erie Canal is a tremendous untapped resource," says Prindle. "Many of the inquiries I get are from foreigners. They want to meet real Americans and see real America."

This demand, and the government's largess, has produced both joy and profound nervousness in many canal towns, where officials have little experience in handling either tourists or vast amounts of tax dollars.

Holley, a hamlet of 1,800 whose only hotel is a flophouse, got $1.9 million in grants and loans - more than $1,000 for every man, woman and child in the village.

"It certainly won't hurt Cuomo's political ambitions, but I don't see the benefit of big public investments in the canal," says Paul Blackley, a professor at LeMoyne College in Syracuse, who studies the local economy and grew up in Lockport.

"Maybe I'm missing the boat, but in a town like Holley, I think the government would be better off giving away that money to citizens in cash."

We've hauled some barges in our day

Filled with lumber, coal and hay

And every inch of the way we know

From Albany to Buffalo

From his cell in a New York debtor's prison, a flour transporter named Jesse Hawley wrote a series of essays in support of a cross-state canal that would link Atlantic ports with the Great Lakes.

Thomas Jefferson considered the idea "a little short of madness," but Empire State Gov. DeWitt Clinton disagreed. The state-financed canal, derided as "Clinton's Ditch," opened in 1825.

One hundred-seventy-three years later, with the canal's commercial shipping long gone, it is Clinton's ditch again.

The Clinton administration's program to promote construction on the canal follows a handful of state efforts over the past three years. But HUD Secretary Cuomo, who has visited New York more often than any other state, concluded that the state's funding was too stingy.

Last year, despite the lack of precedent for HUD's involvement in a state-specific program for small towns, Cuomo announced the program and granted money to 51 of the 54 localities that applied.

The secretary also arm-twisted the U.S. Department of Interior, which is contributing a study of whether the Erie Canal may be declared a National Heritage Area, and the U.S. Department of Agriculture, which is offering grants of $400,000 to $600,000 to build new fire stations, medical centers and water systems in canal towns.

"All these things HUD is doing in tiny towns where people barely knew them," says Nels Bohn, community development planner for the Ithaca Urban Renewal Agency. "It's peculiar."

In Lockport, where the world's purportedly fattest bridge, 129 feet long and 399 feet wide, spans the canal, an antique store owner named Connie Beccue has started an annual Canal Conference, where town officials discuss tourism and canal infrastructure.

In Lyons, between Syracuse and Rochester, a popular pastime is to park in back of the McDonald's off Highway 31 and stare at the passing boats.

Low bridge, everybody down

Low bridge for we're coming to a town

And you'll always know your

neighbor

And you'll always know your pal

If you've ever navigated on

The Erie Canal

While Lyons has embraced federal dollars and new development, other towns seem overwhelmed.

No place on the Erie Canal has received more money per capita than Holley. Its federal money is nearly three times the annual village budget. Since the town lacks a full-time mayor, management of that money has fallen to Ron Vendetti, a village trustee who as a dump truck driver makes less than $20,000 a year.

"This is a like a company suddenly getting all this revenue, and there was no CEO," says Vendetti, 45, who grew up on his parents' vegetable farm here. "This project is totally overrunning this town."

Village officials say HUD has offered little guidance. Holley had to hire a consultant to design a loan form for its applications because the government didn't have one. And keeping teen-age vandals from destroying the town's new gazebo and dock has put unprecedented pressure on the two-man police department.

The greatest challenge, however, has been in convincing villagers that their town, and the canal, is worth visiting.

"Most people here were brought up to fear the canal, to stay

away from it," says Marsha DeFilipps, the village historian. "It was always associated with drownings."

Among the lunchtime crowd outside Sam's Diner, the skepticism was as thick as the mud from the canal bottom.

Jim Scharping, the owner of the Holley Hotel, thinks that visitors might pay to tour the nearby quarries that supplied stone for the canal. But Edward Tipton, owner of Holley's own Freedom Travel agency, said he has never had an inquiry from tourists about visiting the canal, much less Holley.

Bernadette Catlin, a waitress, said that as a teen-ager, she used to sit by the canal and drink.

"It's a great place for a lonely beer, but more than that?" she wondered. "I'm afraid we might be wasting a lot of money."

Pub Date: 6/12/98

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