Cumberland Times-News

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September 17, 2013

Trouble ahead for Canal Place

With loss of tax revenue looming, authority searching for alternative funding options

CUMBERLAND — As Canal Place sees revenue from the hotel/motel tax dry up, the tourism center disclosed that it is facing a dire financial picture including potential loses of more than $100,000 for fiscal year 2015.

News of the looming financial troubles were disclosed at the regular meeting of the Canal Place Preservation and Development Authority on Tuesday.

“It’s a significant funding gap that we are looking at,” said Andy Vick, authority chairman.

Canal Place, which is currently having its annual audits completed, has estimated a loss of around $27,000 for FY 2014.

However, the projected loss of more than $100,000 for FY 2015 coincides with the ending of a traditional source of income for Canal Place known as the hotel/motel tax revenue.

The Fairfield Inn, which sits on Canal Place property, opened in August of 2009. Since then, Canal Place has been receiving, hotel/motel tax dollars coming from the Fairfield, as high as $100,000 in some years.

The tax is collected by both the city and Allegany County, and then distributed to Canal Place and other nonprofit entities.

However, Allegany County and the city have been phasing out the tax revenue for Canal Place. As of FY 2015, Canal Place will no longer receive any of the tax dollars.

“We are starting to see the impact of the phasing down of the hotel/motel tax,” said Vick.

Mike McKay, president of the Allegany County Commission, has told the Times-News in past interviews that the hope is for Canal Place to be more self-sufficient by establishing alternative revenue sources.

However, Canal Place officials have grown increasingly frustrated with the scenario. They have found that establishing a revenue stream on the grounds to be difficult.

Canal Place officials say that the open layout of the property does not make it conducive for holding events that can allow for an admission to be charged.

“I don’t think we can be completely self-sustainable,” said Dee Dee Ritchie, executive director of the authority.

However, Canal Place, which is owned by the state, feels it has done much to rehabilitate the 11 acre parcel it inhabits.

Figures that were distributed showing the amount of money spent on Canal Place since 1994 disclosed that the state has spent more than $22 million on the venture.

“There has been too much invested here to let it fall it apart,” said Vick.

Authority officials are looking for ways to raise funding and make cuts in spending.

said they are considering closing the public rest rooms, doing away with free parking tokens, raising the fees for use of the grounds by 40 percent and trying to have Canal Place become a nationally designated heritage area.

The national certification would make Canal Place eligible for federal funding packages. However, the process would take three to four years.

“We need to find a way to fix things in the short term,” said Rick Thayer, authority board member.

Authority officials are going to formally ask the city and county to reconsider their funding of the tourism center, in particular the discontinuance of the tax funding.

They are also trying to set up a meeting with the District 1 legislative delegation to ask for their help in developing more state funding.

“They cut us off when things were moving too slow here at one time,” said Ritchie.

Ritchie listed the recent accomplishments of Canal Place. The list, which had many entries, included filling three vacant buildings, creating a heritage newsletter, launching a website, constructing an ADA playground and stabilizing the Footer Dye Works building.

Canal Place hopes that revenue from Footer Dye Works, which they hope a developer will take over, will increase their bottom line. Doug Reed, authority member, said Canal Place now has full control over a lot beside the Footer building, known as Parcel B, which will create additional parking and expansion room.

Parcel B had been tied up with an option on it. The option expired in August.

Reed also said that a structural inspection of the building and its roof has been completed.

“It’s (The Footer Building) a different project now. We know what we have and what we need to do, and we have parking,” said Reed.

Canal Place plans to solicited offers, known as a Request for Proposal, to potential developers at the first of the year.

In addition to a loss of the tax revenues, Canal Place has suffered at the hands of a sweetheart deal given to the Fairfield Inn to attract the business.

According to authority officials, the original lease extended to the Fairfield Inn only required the hotel to pay $6,000 per year to Canal Place for ground rent.

Even that income is set to expire in Sept. 2014 in accordance with the terms of the lease. However, in its place, the Fairfield Inn must pay 1.5 percent of its room rental charges to Canal Place.

Authority officials do not yet know that amount of income it may produce.

However, the authority contends that the loss of the tax has been the primary culprit in their financial dilemma.

Mayor Brian Grim, who sits on the authority board, takes issue with any reference to the city being a source of Canal Place’s situation.

“We have been nothing but a partner with Canal Place,” said Grim in an interview after the meeting.

Grim pointed out a recent $100,000 in bond funding that was allocated to Canal Place.

“Some of the historical sources of funding are not going to be there. They have been encouraged to be more self-sufficient. I think some good will come out of it. They are starting to look outside the box,” said Grim.

Greg Larry can be contacted at glarry@times-news.com.

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