Officials break ground on development at Lake St. and Hiawatha Av.

Acres of parking lots surrounding one of the metro area's busiest transit hubs at Lake Street and Hiawatha Avenue will soon be ripped up to make way for an ambitious multiphase development featuring social services, housing and the Midtown Farmers Market.

A celebratory groundbreaking on Monday followed a long and arduous neighborhood process to transform the Minneapolis site, considered one of the best opportunities for development along the Blue Line light rail. The project is a partnership between a private developer and Hennepin County, which stepped in with a plan to build a new county service center after a previous development plan faltered.

"Take down that wall!" Commissioner Peter McLaughlin said in a takeoff on Ronald Reagan, referring to an uninviting blank retaining wall that greets pedestrians along Lake Street. It will be replaced by ground-level retail and a ­widened sidewalk.

The redevelopment — if fully realized — promises to bring more than 500 units of housing to the southwest corner of the intersection, now occupied by an adult education building and parking lots. The first phase, expected to be largely complete by mid- to late-2017, includes the service center, more than 100 units of market-rate apartments, a transit plaza for the Midtown Farmers Market, a 400-stall parking structure and retail space.

"It's about providing human services at a neighborhood scale … it's about housing that's going to be right next to transit that's going to give people access to jobs," said McLaughlin, who described the area as "popping."

Years after development looked lackluster around the Hiawatha-Lake intersection, new housing is starting to materialize — much of it benefiting from public subsidies.

Among the undertakings are a 64-unit affordable senior housing project that recently opened across the street and a 135-unit affordable housing project planned just south of the light-rail station. The east side of the intersection remains dominated by a Target parking lot, which is owned by a blind trust unaffiliated with the retailer.

"There are counties that have fewer people living in them than receive services every day in Hennepin County," said County Board Chairwoman Jan Callison at Monday's groundbreaking.

The county's overall budget for the service center and parking ramp is nearly $55 million, $8 million of which was used to acquire land from Minneapolis Public Schools. The land acquisition costs are expected to be repaid by L&H Station Development as the firm buys back parcels to build the ­housing.

About a thousand adult students — many of them immigrants — rely on the adult education building still standing on the site, mostly to study for their GEDs and take English classes.

The building, formerly a grade school and a broadcasting technical college, is expected to be demolished as part of the redevelopment.

Mark Bollinger, the school's district's deputy operations chief, said the district can occupy the building for up to eight years, but must make lease payments after year three. The district has already purchased a number of buildings about a block away, with plans to move the adult education program and another program geared toward young adults with disabilities to a new building.

"Our neighborhood leaders thought long ago … that we should be doing something about this, knowing that the Blue Line was going to be built … and knowing that we had a sea of disinvestment in this area," said Lisa Barajas, chairwoman of the Corcoran neighborhood board.

The neighborhood is now focusing more attention on making the adjacent intersection, dominated by a highway overpass and eight sloping on- and offramps, more inviting for pedestrians. The city and county have hired a consultant to help rethink the design of the space.

Eric Roper • 612-673-1732

Twitter: @StribRoper