Canalside's transformation into a major downtown attraction has come with a hefty price tag.
Erie Canal Harbor Development Corp. over the past three years spent $4.8 million to operate the waterfront area, such as putting on a free summer concert series, maintaining the ice rink, subsidizing food stands, hiring security and making repairs. Money came from the New York Power Authority through an agreement struck with the state waterfront agency in 2010.
The net operating loss of $1.4 million budgeted for the 2016-2017 season was less than the nearly $1.7 million loss the previous year, and $1.6 million the year before that.
The agency's goal is for Canalside to become self-sufficient, said Tom Dee, Erie Canal Harbor's president. He hopes to reach that break-even point in five to seven years.
Dee described the operating losses as "operating costs" necessary to build up Canalside and put it in a position to be self-sustaining. And over the past three years, the amount of physical space managed and the numbers of events have grown.
"We have doubled, tripled and quadrupled our footprint," Dee said, including HarborCenter and One Canal Center, which houses Courtyard Marriott and two other tenants, and the activation of the Aud block canal used for ice skating.
"That means you have to manage that much more space, and while we've done that, we have increased the amount of events and things for the public to enjoy."
The agency this week begins interviewing candidates to manage the site after the current three-year agreement expires in March 2017. Known bidders are Spectra, the current operator owned by Comcast Spectacor of Philadelphia, and Be Our Guest, a Bisons subsidiary and part of the Buffalo-based Rich Products Corp. that last year took over event planning for the Outer Harbor. It also is partnering with previous Canalside manager Buffalo Place for the Canalside contract.
Spectra is paid a $120,000 base fee each year, with some incentives to earn more.
Erie Canal Harbor's board expects to make a decision in December or January.
"We're counting on whoever is selected to lead us into a sustainable future," Dee said. "At some point, our goal would be to get to a breaking-even point where controlling the expenses through product sales, merchandise sales and revenues through sponsorships would be sufficient to cover expenses in terms of programming."
Dee said he hopes property owners within the canal district will eventually pay the bulk of the operations and maintenance costs. With that goal in mind, he hopes to see a request for proposal for development on the south Aud block sometime in the first quarter of next year. That could be followed by a second request for proposals for the north Aud block, after a study is completed on the best layout for the space.
A train station has also been discussed for that site, and Dee said such a station could "work hand in hand" with other development, with a lobby on the ground level and a boarding platform on the lower level. The RFP could be written, he said, seeking someone familiar with or experienced in integrating a train station into a larger development.
There are some positive developments concerning revenue.
Sponsorships grew from $466,253 in 2014-2015 to $713,587 in the current budget.
Event revenue from rentals nearly tripled in three years, from $129,363 to $459,491.
And event food and beverage revenue climbed from $837,853 to an anticipated $1.4 million this year.
At the same time, expenses for third-party events more than doubled over the past two years to $445,840. The Thursday concert series expenses are also projected to climb from $862,813 in 2015-2016 to $1.946 million for the current year. Dee attributed some of the costs to increased personnel and security.
The waterfront agency and various partners are discussing changes to the concert series, which could boost revenue and lower maintenance costs. The changes include instituting age limits or charging a low admission charge.
Dee said he sees progress in reducing costs and increasing revenue, and expects that trend to continue.
"The numbers are going down each year, and we want to continue that path," Dee said.