Long underutilized and more blighted each year, the Water Street project -- a part of Ypsilanti that lies just across the Huron River from downtown -- is nearly ready for redevelopment.

A fast-food restaurant at Michigan Avenue and River Street has already been proposed and has entered “the late stages of negotiation,” according to the city’s Web site. The same is true for a multifamily housing development on the property’s southernmost portion. The City Council will take up these proposals Aug. 18.

The city is talking to a couple of real estate developers and attorneys for both sides “are working to finalize proposals to purchase various chunks of the property,” said Richard Murphy, Ypsilanti city planner. “The vision for it has always been an extension of downtown and the near-downtown neighborhoods that takes advantage of the river.”

Two other preliminary proposals are also reported: a commercial and retail project with Michigan Avenue frontage between River Street and Park Street and a senior housing development along the river.

The 38 acres of city-owned property benefited from a 2008 master plan amendment and now its rezoning from manufacturing to mixed residential and commercial use is in the works.

City officials said the sale of parcels to developers could start soon, leaving new construction possible in 2010. Meanwhile, federal Environmental Protection Agency grants totaling $600,000 will pay for demolition of existing structures and environmental cleanup. The area closest to the river and the downtown has already been cleared.

A dozen or so structures still must be demolished. These include a large manufacturing facility that dates to the 1930s, a retail building from the 1960s, and houses, pole barns, automotive repair garages and a scrapyard. There is also a Chinese restaurant. “The buildings were in poor condition and have gotten worse with time,” Murphy said. Asbestos and lead and sundry contaminants in the soil pose obstacles in the cleanup.

Water Street's 40 parcels have been acquired piece by piece since the 1970s. Federal and state legislation of the 1990s, which prodded along the rehabilitation of brownfield sites, helped to keep alive the vision of a mixed-use area within walking distance of downtown Ypsilanti. The city already owned some of the property when it received a 1998 EPA pilot brownfield redevelopment grant of about $200,000. The state Department of Environmental Quality’s Clean Michigan Initiative later supplied about $3.7 million. The acquisition phase was completed by 2004. “Murky” property deeds, as well as overlapping easements, impeded the process, Murphy said. “Nothing was going to happen if the city didn’t do it,” Ypsilanti Mayor Paul Schreiber said.

About $17 million in bonds have been issued to fund purchases not covered by grants. Including interest, the city will repay about $30 million by 2031.

The city will make its first bond payment of $378,000 from its general fund in October. Payments will escalate to a high of $1.4 million, which Schreiber noted is about 10 percent of the general fund.

Ron Ahrens is a freelance writer for AnnArbor.com. Reach our news desk at 734-623-2530 or news@annarbor.com.