Of all USA Niagara’s projects, the reconstruction of Third Street has garnered the most attention — and not in the way the agency had hoped.

The entertainment corridor has failed to live up to its billing and more businesses have closed than opened since the project wrapped up in 2005. Those closest to the problem complain the lack of available parking, over inflation of property values and USA Niagara’s failure to properly promote the street to new development are the main factors in its failure.

According to USA Niagara’s Web site, the goal of the Third Street project was to “create a vibrant, pedestrian-friendly neighborhood, with commercial, retail and residential development elements that will service several market segments and ultimately result in capturing more of the tourist visitation to downtown Niagara Falls.”

Some would consider that a joke if the punchline wasn’t so cruel.

“They put in that new road and totally killed the street,” said Dan Vecchies, who owns the former Shadow Martini Bar building, now the Ultra Lounge. “They didn’t listen to what the local businesses wanted. Since they screwed up on Third Street, I think they should go back down there and straighten out the screwup.”

Other business owners say Third Street has been left for dead and have constantly complained about the parking situation. The available spaces were significantly reduced in favor of special cut-ins to provide additional sidewalk room for foot traffic and outside patio seating.

“I was told (by USA Niagara) we didn’t have a parking problem on Third Street, we had a walking problem,” said Steve Fournier Sr., owner of Donatello’s Restaurant. “It’s tough to get tourists to walk down the street the way it is now, let alone convince them to return.”

USA Niagara President Christopher Schoepflin admits Third Street hasn’t turned out the way anyone had hoped, but said the state agency isn’t the only one responsible for the street’s development. He pointed out the original plan called for parking along Second Street but it hasn’t materialized because people think it’s an unsafe area.

“Maybe just building a well-lit and safe sidewalk that connects people from Second to Third Street is a solution,” Schoepflin said, adding the cost would be in the $50,000 range if the city decided to do it. “You also have to deal with the alley on the east side between Third and Fourth to give you some safe pockets on both sides. I think those are steps that the local government can continue to take.”

Even if the state went back and removed the cut-ins, there wouldn’t be enough parking along Third Street to accommodate the amount of traffic officials are hoping for someday.

“In a city, not everyone can park at the front door,” Schoepflin said.

As for not promoting the street or seeking out new development, Schoepflin argues USA Niagara isn’t responsible for leasing out other people’s property. He added the state agency doesn’t specialize in marketing but would be willing to partner up with the city or provide the proper data to advertise Third Street better.

“USA Niagara’s strength is to continue to be a large player in terms of bringing dollars to those micro-enterprise projects,” he said.

Back in 2003, the state agency kicked off a $2 million grant program exclusively for Third Street to support existing or incoming businesses.

“We have the most robust and aggressive grant program perhaps in the state,” Schoepflin said. “I wonder where else you get 25 cents to 40 cents on the dollar to open a business. You certainly don’t get it on Pine Avenue or on Niagara Street or in LaSalle or on Hyde Park Boulevard.”

Despite the availability of grants, only a few businesses have taken advantage. Shawn Weber was awarded $100,000 from the state to renovate the original McClure’s Pharmacy building at 501 Third St. The renovation includes the street-level Wine on Third bar and market-rate lofts on the second floor. A new business, Cafe Lola will soon be opening inside the building and Weber is searching to lease out the final storefront.

Weber believes more people would apply for the state program if USA Niagara pushed Third Street harder on outside developers.

“I talked to Chris about doing some advertising and promotion and pounding the pavement but nothing ever happens,” Weber said.

Another contributing factor to Third Street’s decline is property values have skyrocketed since the streetscape project, leaving existing operators struggling to pay their bills and land speculators on the street holding on to vacant parcels in hopes of a big payday.

Some believe it’s the job of the city and state to do something about those land speculators. Schoepflin admits factors like property inflation should have been considered more closely prior to the project’s start. He said the state could consider taking some of the vacant properties through eminent domain but that’s not an ideal solution.

“The city has options and we ultimately may have options to do something about (land speculators) but I don’t think we’re at that point yet,” he said. “We need to start with dialogue and put additional pressure on all realms of inspections and building and tax compliance issues. That really has to be ratcheted up to address some of the vacant properties along the street.”