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Tourism rose 300 percent in this canal city this year, and Mayor Kenneth D. Swan said Friday much of the credit goes to the U.S. Department of Housing and Urban Development.

Swan pointed to a $750,000 loan HUD made in April to Lockport Locks & Erie Canal Tours, owned by Michael and Sharon Murphy.

The tour boat operator has entered the restaurant and banquet business, staying open year-round and boosting its income and employment as a result of the capital infusion from the government.

HUD Secretary Andrew M. Cuomo said during a satellite teleconference Friday that Swan's figure of 18,000 people signing the guest book at the canal visitor center is "really impressive. The people sitting here with me are really jealous."

Cuomo added, "We have to figure out a way to get those tourists down to the rest of the canal."

Swan said, "Here in the City of Lockport we were stagnant for a few years." He told Cuomo that the tourism increase "could not have been done without your leadership and assistance."

In hopes of developing more attractions along the canal, Cuomo announced Friday that funding is available for $53.5 million worth of new small cities' Community Development Block Grants for upstate New York, with a "bonus pool" of an extra $3 million for communities that lie in the Canal Corridor designated last year.

"Upstate New York is an entity," Cuomo said. "We're using the canal as a magnet to the fuel the entire upstate economy. That's the plan."

Cuomo said HUD and the U.S. Department of Agriculture invested $303 million in small New York communities in 1997 and 1998, including $42 million in the Canal Corridor. The funds for 1999 announced Friday will bring that total to $444.5 million in a three-year period.

Cuomo said the deadline for cities to apply for the new round of grants is Feb. 3. He pledged that the applications would be processed within three months of the deadline, instead of the usual five months.

"The federal government wants to invest," Cuomo said. "It's up to you in the local communities to make it happen."

He advised the officials sitting in on the statewide conference call that grants will be most likely to be awarded to projects that include "good jobs with private-sector leveraging."

Cuomo praised the Murphys' headquarters at 210 Market St., in what used to be the Franbilt factory. Noting how it's been renovated into a restaurant and banquet hall, Cuomo said, "It's a beauty."

Murphy said the 20-year, low-interest HUD loan enabled his company to change "from a 6-month business to a 12-month business."

He said the company employs about 35 people during the peak summer boat tour months, but right now has about a dozen working in the restaurant.

Murphy said the facility will be open at 11 a.m. weekdays during December for lunches, and also has several Christmas parties booked.

The building was refurbished into a 19th Century "canal town" concept, Murphy said. "It's completely different from what it was a year and a half ago," Murphy said.

Noting the region is still in transition from its old manufacturing-based economy, Cuomo said, "We're not going to make it through this economic transition unless government plays a role. . . . It won't happen naturally."

Cuomo said Lockport "is really doing some exciting things, with Mayor Swan and community leaders like Mike and Sharon Murphy. There's a sense of energy and excitement . . . throughout the entire town."

Cuomo visited Lockport Aug. 13 with Agriculture Secretary Dan Glickman. That department is also taking part in the Canal Corridor Initiative.

James B. Bays, state director of the Rural Development Administration, said the agency had pledged to provide at least $75 million a year for four years for upstate projects, but actually ended up investing $110 million in the fiscal year that ended Sept. 30.

For the current fiscal year, Bays estimated the former Farmers Home Administration will invest $85 million in upstate New York. "We are able to counsel and in many cases fund very worthy projects," he said.

"No one has an asset like the Erie Canal Corridor," Cuomo said, calling waterways "a proven magnet for tourism and jobs."

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