Construction crews will have Second Street in Bend torn up until next spring — but the loose dirt and heavy machinery are signs of progress for a budding mixed-use district.

The city is digging into the shabby road to install a water pipe underneath it from Greenwood Avenue to Franklin Avenue.

But that’s not what has nearby businesses buzzing.

Once water work finishes up later this year, the city plans to roll right into the next phase of construction: new sidewalks, shared-use paths, more lights, curb extensions and other improvements to modernize the area for walkers and cyclists.

With City Council approval in October, Second Street will be transformed by next spring, said Ryan Oster, lead engineer with the city of Bend.

“It’ll be a shared environment where vehicles as well as bikes can use that corridor. It’ll slow the speeds down,” he said, adding street parking will be maintained.

It’s a key part of the vision for the Bend Central District, an area just east of the Bend Parkway the city and private builders are redeveloping into an urban core with denser, taller housing and walkable amenities.

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Besides a few small business grants, the Second Street work marks the first public investment the central district has seen from the urban renewal area the city created around Bend’s core in 2020. Oster said the project is the brainchild of the advisory board of developers, business owners and others in the area who make recommendations to the council about urban renewal projects.

“We’ve been pushing for this for years,” said Todd Breslau, owner of the Campfire Hotel, which the Second Street construction site is behind.

Breslau saw potential in the central district when he bought the hotel in 2019 and rebranded it as a boutique midcentury motor lodge. He believes completion of the Second Street work will help trigger private developments, some of which are on hold due to high costs and interest rates.

“In a year or so you’re going to have a beautiful street, and builders will start breaking ground,” Breslau said. “We can see how it’s going to unfold.”

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But funding isn’t quite set in stone. New project estimates came in at $4.5 million, a slight bump from $3 million initially earmarked through the urban renewal district, which captures property taxes on new development and reinvests them in the area.

Slowed development in recent years has capped the Core Area’s urban renewal funding strategy at $10.5 million. Other than Second Street, $3 million apiece was earmarked for planned safety improvements to Franklin Avenue, expected to break ground next summer, and the Hawthorne Avenue footbridge over the parkway, set to be completed by the end of 2027.

That means the city will need to decide whether to pull urban renewal money away from other planned projects to fund Second Street.

Oster said city staff will make recommendations at a Sept. 30 meeting of the advisory committee to take urban renewal funds off the table for the Hawthorne footbridge. While cost estimates for the bridge sit at $30 million to $35 million, the city already has $32 million in state and federal grants and about $6 million in 2020 transportation bond funding at its disposal, so urban renewal funds may not be needed, Oster said.

The advisory committee will make a recommendation about the funding shift to the City Council, which has final discretion as the Bend Urban Renewal Agency.

Brad Irwin is the owner of Oregon Spirit Distillers, which moved into a tasting room and production facility on the corner of Hawthorne Avenue and First Street eight years ago. He’s excited for the Second Street improvements to conclude and for the new Dogwood Cocktail Cabin to move in one block away.

But he doesn’t want it to distract attention and money from the footbridge that will land at his business. It’s the No. 1 project not only for the distillery, but many residents in the area, he said.

“As long as the bridge still gets done,” he said.