Downtown property owners and tenants will be paying a higher fee to Buffalo Place for being in the downtown business improvement district, after the organization’s board of directors on Wednesday approved a new budget with a 3 percent increase in the special charge.

The fee hike translates to about $36,000 on a total budget of nearly $4 million, but it’s the first increase in at least five years, officials said. In all, the special charge assessment, including the fee hike, will bring in $1.28 million in 2013.

“It was just time,” said Michael G. Baritot, Buffalo Place treasurer. “It’s just the sensible thing to do. You just can’t keep operating without passing some of that through.”

But the directors were also concerned about filling a deficit for this current year, after the summer concert series came up $200,000 short of budgeted numbers. “The concert series has subsidized operations in the past,” Baritot said. “This year, it hasn’t done that as much as we had hoped.”

Revenues were higher than expected, but expenses were significantly higher, because of the costs of putting on shows at the Erie Canal Harbor area were much more than anticipated. Additionally, bad weather dampened attendance at two concerts. Buffalo Place has been putting on summer concerts downtown for 26 years, but the shows were held at Lafayette Square until they gradually moved in the past couple of years to the waterfront.

“It’s a bigger venue, so it costs more to operate,” said executive director Michael T. Schmand, citing the larger stage, sound equipment, and other expenses. “We believe you have to give people a pretty good experience so they come downtown.”

Directors also complained that a more permanent contract with the Erie Canal Harbor Development Corp., instead of year-to-year, would help ensure predictable revenues and expenses for the organization. They noted there’s also uncertainty about whether Buffalo Place would continue managing the concerts if and when they eventually relocate to the outer harbor, which is well outside the Buffalo Place zone.

Some board members, led by developers Carl Paladino, of Ellicott Development Co., and Paul Snyder III, of Snyder Corp., want to expand the Buffalo Place special-charge district to include more properties and businesses, enabling the group to derive more revenues. They argued that the services provided by Buffalo Place already benefit all of downtown, not just those businesses and landlords within the district.

And they said that increasing the special charge without an expansion just taxes the existing landlords and tenants more. “To not expand the district, to simply tax ourselves more, solves everyone else’s problems, not ours. We have to say to the community that we can’t afford to tax ourselves anymore,” Snyder said.

Currently, Buffalo Place is centered on Main Street and extends from Goodell Street to the Buffalo River and from Ellicott to Franklin streets.

In approving the budget with only one “no” vote, the board also agreed to hold a strategy meeting to examine an expansion, as well as to pursue a more permanent concert contract.