1. There is hereby established within the department an Erie/Barge canal challenge grant program to be administered in coordination with the department of transportation for the purpose of providing municipalities adjacent to the Erie/Barge canal with matching funds to plan and carry out canal-related tourism activities; provided, however, that:

1. (a) no grant to any municipality shall exceed the sum of twenty thousand dollars or forty percent of the total project cost, whichever is less;
2. (b) each applicant, whether a single municipality or two or more municipalities acting jointly, shall be eligible to receive only one such grant in any twelve-month period;
3. (c) no part of any such grant shall be used for salaries or for services regularly provided by the municipality or for administrative costs in connection with this grant;
4. (d) the municipality or a designated nonprofit entity has committed sufficient funds to fulfill the local match requirements of this program;
5. (e) in-kind services shall not be considered part of the local match requirement; and
6. (f) no grant shall be used for the direct benefit of a for-profit business unless (i) the funded activity shall further a public purpose and have a clear, long-term benefit to the applicant and (ii) such funded activity is not available to the business from other public or private sources.

3. The commissioner shall establish and publish, on an annual basis, guidelines and a standard application form relative to the use of funds to be granted hereunder. In addition to such other information as shall be requested by the commissioner, applicants shall provide a description of:

1. (a) the activity or project for which a grant is requested and how it relates to the canal;
2. (b) how the proposed activity or project will contribute to or enhance tourism development along the canal;
3. (c) project impact including, where appropriate, an estimate of the number of people to be served by the project, the length of time visitors may be expected to spend in the area, the ratio between local residents and visitors to be served by the project, the duration of the project; and
4. (d) whether it is part of an overall tourism marketing or development plan.

4. In reviewing and selecting applicants to receive grants under this program, the commissioner shall consider, in coordination with the department of transportation, the following:

1. (a) the nature and extent of economic distress within the applicant community and the need for assistance. Preference will be given to municipalities which meet the criteria for economic distress as established by the department;
2. (b) the potential of the proposed canal-related activity to make a significant and permanent contribution to tourism development within the applicant municipality and along the canal as a whole;
3. (c) the existence of a local tourism marketing or development plan to enhance tourism activity, and the extent to which the proposed activity is consistent with the plan;
4. (d) the nature and extent of local support for the proposed canal-related activity including the commitment of additional financial resources;
5. (e) the degree of support within the municipality for tourism development, in general, and the nature and extent of other canal related activities, in particular, engaged in by the municipality or its designated nonprofit entity, business community and community organizations;
6. (f) preference shall be given to those applications submitted by two or more municipalities; and
7. (g) preference shall be given to applications creating new tourism activities.