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Twenty years ago, the Mercado project was envisioned as the cornerstone of revitalization efforts in Barrio Logan, a low-income, predominantly Latino community underserved by retail and grocery stores.

Today, a 6.8-acre plot is still vacant, an unused, weedy stretch of land surrounded by a chain link fence in the middle of a neighborhood where a trip to the grocery store often means a three-mile walk.

But city redevelopment officials say they’ve cleared a major hurdle that in recent years has mucked up progress on the long-promised commercial and retail development in Barrio Logan’s heart. Construction on the project, they say, could begin as early as next year.

Since 2006, a legal battle between the city’s Redevelopment Agency and the private developer of the Mercado project has delayed the already-delayed effort. And it has frustrated Barrio residents who have waited more than 20 years to see construction of the retail and commercial center that was supposed to jump-start their community’s revitalization.

A state court of appeals effectively ended litigation in December, finalizing a 2007 decision that sent the land from the private developer, Sam Marasco, back to the city, which has since chosen a new developer and moved forward with new plans.

“A dark cloud has been lifted from over the project,” said Robert Chavez, a redevelopment coordinator for the Redevelopment Agency, which leads revitalization projects in several blighted neighborhoods throughout the city.

The end of litigation, he said, has infused a new confidence into the project’s proponents and made it more likely the city and the new developer, Shea Properties, will secure financial commitments by potential investors and tenants.

The developer’s plans for the project include 305,000 square feet of building space that would feature a retail center, 95 affordable apartments, a parking structure, and a major Latino-themed grocery store, which would be the first to serve the Barrio Logan community in decades.

The city has already secured a letter of intent from Gonzalez Northgate Markets, whose 50,000 square-foot supermarket in Southcrest, three miles east of Barrio Logan, draws Latino customers from across the county.

Under the proposed development plan, Chelsea Investment Corp., an affordable housing developer, will build the 95 apartment units on four stories above ground-level retail space.

Redevelopment officials say the next several months will prove critical for the Mercado’s progress. Project managers are working with private investors and retailers to secure financing and occupancy commitments for the project, estimated to cost $55 million.

“We have to align several stars before we get to June, but we’re confident we can do it,” Chavez said.

Redevelopment officials say pending the necessary financing commitments and City Council approval in June of a formal agreement with the developer, construction of the Mercado could begin as early as next year and finish in 2012.

The city must meet its June timeline in order to apply for critical tax credits. If it does not, Chavez said, the schedule may be pushed back nine months until it is re-eligible to apply.

And the city’s litigation with Marasco is still winding down. Both Marasco and the Redevelopment Agency acknowledge that the fight over the land has ended. But they may still have to resolve disputes over Marasco’s claims that he made significant personal financial investments in the project.

But that, redevelopment officials say, will no longer hinder the city’s ability to proceed on a project that dates back to an era when George Bush — the first — was president.

It was 1991 when the Barrio’s redevelopment project area was created to capture tax revenue to spur redevelopment efforts in the neighborhood. A first stage of the project, which included an affordable housing complex, was completed in the mid 1990s. The Mercado, though, was supposed to be the centerpiece, the reason the redevelopment area was designated in the first place.

But the retail and commercial project languished, caught up in politics and lawsuits over developers and land ownership. The federal government, which initially provided loans to the project, threatened to demand full repayment. Restaurants that moved in anticipating Barrio Logan’s revitalization in the wake of the Mercado opened and closed in the neighborhood without seeing the project built.

Rachael Ortiz, a prominent and longtime neighborhood activist who runs the nonprofit youth service organization Barrio Station, said she is pleased with the new developer’s proposal, which she said is consistent with the neighborhood character many in the Barrio want to retain.

“This is the first time we ever felt so certain it’s going to happen with no problems,” Ortiz said. “It’s finally coming.”

Please contact Adrian Florido directly at adrian.florido@voiceofsandiego.org and follow him on Twitter: twitter.com/adrianflorido.

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