NIAGARA FALLS — A state economic- development agency will set aside $1 million for a project to locate Niagara County Community College’s culinary arts institute downtown.

The funding is included in a new agreement between the agency, USA Niagara Development Corp., and the City of Niagara Falls that will change the way state aid for Conference Center Niagara Falls and other economic-development projects is distributed to USA Niagara Development.

The $1 million—which could be used to make a grant to the community college — will be held by the city for up to a year for the culinary arts project.

NCCC officials have been working with the county, city and state officials to work out a deal with Rainbow Centre mall developer David S. Cordish to use a portion of the vacant mall for the college’s hospitality, tourism and culinary programs.

Dennis M. Mullen, USA Niagara Development chairman, said the project is among those that could be “transformational” for downtown Niagara Falls.

“This organization stands committed to development,” Mullen said. “I have seen, as you know, very exciting things that come across my desk that I am personally excited about that I hope we are able to drive across the finish line.”

Mullen — who also is chairman of Empire State Development Corp., the state agency that oversees USA Niagara Development — met with local officials and Cordish at his New York City office in August to discuss the culinary arts project.

A parallel $4.5 million city project to repair the parking ramp and a leaking skylight at the Rainbow Centre mall was shut out of a recent round of grant awards from Empire State Development from its Upstate Regional Blueprint fund, but will be considered in the next round of grant applications, officials said.

The new contract, approved by USA Niagara Development’s board Monday, also reduces the amount of state aid the city is required to share with USA Niagara Development if the city receives less money from the state in the future.

The city has given USA Niagara Development $3.1 million of its state aid each year since 2005 to help subsidize the operations of Conference Center Niagara Falls and for economic-development projects in the downtown area.

Under a new three-year agreement, the city would make payments to USA Niagara Development based on the amount of state aid that it receives. If the city receives less than $16.7 million in state aid in 2010, 2011 or 2012, it would only pay $1 million to USA Niagara Development.

In other business Monday, USA Niagara Development directors also agreed to hire the manager of Conference Center Niagara Falls to maintain and operate Old Falls Street.

USA Niagara Development will pay Philadelphia-based Global Spectrum $3,000 a month during a five-year period to maintain the cobblestone street and landscaping, and to manage vending and events in the area. The monthly fee will increase by 3 percent in future years. The company will also receive 7.5 percent of food and beverage revenue on the street.

USA Niagara Development and the city have spent about $12.5 million to reconstruct Old Falls Street between Third and Prospect streets. The projects also included the demolition of the glass Wintergarden and the removal of two pedestrian malls.

Board members also approved a $75,663 project with the City of Niagara Falls to demolish two buildings at 446 and 448 Third St. to create a parking lot with 13 spaces. The move is an attempt to address concerns from business owners on Third Street that a street-scape project completed in 2006 reduced the amount of parking available on the street.