By JAMES FINK
jfink@bizjournals.com | 716-541-1611

Plans for the $325 million Canal Side project in downtown Buffalo took a giant leap forward - and, on other fronts, the agency overseeing the development said construction on significant portions of the complex could begin this fall.

Officials of Erie Canal Harbor Development Corp. said $105 million allocated from New York Power Authority is enough to begin work on the latest Canal Side phases. The money, approximately $8.4 million to be allocated over 20 years, will serve as key development seed dollars. The bulk of it will be spent on infrastructure around Canal Side.

A public offering of the tax-exempt bonds is expected to be made by September, said Steve Matlin, counsel, Empire State Development Corp. The harbor development agency is an affiliate.

"The bonds are critical funding for the Canal Side project," Matlin said.

The funds come on top of a $300,000 allocation that was awarded from National Grid, which may make another allocation later this year.

The NYPA and National Grid allocations were approved by Erie Canal Harbor Development directors Tuesday, just hours before a formal signing event was staged at the Canal Side site with NYPA, state, local and harbor development officials.

"It's one thing to talk about money," said Buffalo Mayor Byron Brown, a director of Erie Canal Harbor Development. "It's another thing to actually have it."

Jordan Levy, ECHDC chairman, said the allocations were milestones for the oft-discussed project.

Canal Side, nearly a decade in planning, will feature more than 1.1 million square feet of retail, restaurant and entertainment space, plus at least two hotels, Class A office space and a network of replica Erie Canal waterways. Bass Pro, with a proposed 150,000-square-foot store where Memorial Auditorium once stood, will anchor the retail portion of the project.

Developers estimate Canal Side will create more than 1,000 new jobs while generating $9.5 million in annual sales tax revenues and $1.2 million in new, annual sales taxes.

"This is another step," Levy said. "Obviously, it has taken longer than any of us hoped. This is going to be part of the fabric of the community for many years to come."

Tom Dee, ECHDC president, said bids from the four short-listed contractors are due by Aug. 6. He hopes to have an agreement with the selected firm in time to start construction by October. That work will cover the Bass Pro store and a three-level, below-grade parking ramp underneath the store, an adjoining parking ramp, some of the canal infrastructure and a 33,000-square-foot Canal Side Hall indoor marketplace.

Larry Quinn, ECHDC vice chairman, said the final development between the state agency and Bass Pro is "pretty locked in and not too far away." The formal signing is due within a few weeks.

In the meantime, Benderson Development Co. is in discussions with several local and national restaurants and retailers regarding a Canal Side location. Talks are under way with at least two hotel chains.

"We could see the project completed within a two-year period," Quinn said. "That's something we never dreamed of. The level of private-sector investment is maybe three or four times more than we expected."

Meanwhile, the Public Accountability Initiative maintains that the level of public support and investment in Canal Side - and specifically, the Bass Pro store - will not produce the anticipated results. The nonprofit group doubts it will create the number of jobs predicted and says it will drain already-limited public-sector dollars.

"Bass Pro is not a surefire thing," said Andrew Stecker, a Public Accountability Initiative analyst. "The obession with Bass Pro from Day One was improper and unwise."

Representatives of his group and ECHDC met July 13 to discuss the project.

"Very little, if any, of the NYPA dollars is going for Bass Pro," Quinn said.