LAWRENCE — A rusting, dilapidated bridge the city recently purchased for $1 is being viewed as a crucial piece in a multimillion-dollar redevelopment project on the South Island that could include the headquarters of a major corporation, 132 units of housing, and 40,000 square feet of retail and office space.

The old bridge is set to be replaced with a new bridge, paid for with $650,000 in state money, including $500,000 from a 2006 economic stimulus package approved by the Legislature, and another $150,000 grant freed up by Gov. Deval Patrick yesterday.

The new bridge will cross the South Canal from Merrimack Street near the International Business Center, which is owned by Art McCabe.

McCabe said the new bridge will benefit his property — he owns about four acres of land that includes the Business Center at 29 South Canal St. and a vacant parcel at 39 South Canal St., formerly the home of Plycraft Corp.

"The bridge is critical for the whole South Canal area," he said. "It's very hard to get potential tenants into that site without some improved traffic control."

The International Business Center, which had just five employees five years ago, now has more than 200 people working in the converted, 80,000-square-foot mill building, which serves as a trade center and incubator for international companies interested in opening manufacturing facilities in the United States.

As a result of the growth, traffic has become a problem for people entering and leaving the site, since the best way off the island is from South Canal Street onto the busy Central Bridge near the intersection with Merrimack Street.

The new bridge will help alleviate that traffic problem, he said. "It gives access off Merrimack Street," he said.

McCabe said the bridge should also alleviate traffic concerns of future tenants of both his building and a proposed office complex on the vacant lot he also owns. He said he is in "active negotiations" with a regional corporation interested in settling at the 2.5-acre vacant lot.

While he declined to identify the company, he said it would bring both administrative and manufacturing operations to the site.

Meanwhile, next door to the International Business Center, the owners of the former Merrimack Paper Co. are moving ahead with plans for a $30 million apartment, retail and office complex on four acres of property.

Stephen Stapinski, a local developer working with the owners of the site, whom he declined to identify beyond saying they are a limited liability corporation from Maine, said the new bridge "is a godsend" for the development of the island.

He said the bridge isn't as important to Merrimack Paper as it is to McCabe's property because a bridge is already in place that can carry up to 55,000-pound vehicles and which had been used by the paper company before it closed in 2006.

However, potential tenants of the retail complex have indicated they would prefer at least two ways to get on and off the island, in addition to the entrance near Central Bridge.

"They are reticent," Stapinski said, "because if something happened to one bridge, what is the redundancy? With this, that issue has gone away. Now, there should be no holdups to the development, just permits from the city. And the city has been wonderful to work with."

Stapinski said the new owners purchased the site in November 2006 after the paper company went bankrupt. Since then, they have been working on a master plan for the property that includes a $25 million to $30 million development with 100 rental apartments, another 32 owner-occupied dwellings, and 40,000 square feet of retail and office use.

He said the site is unique in that it has four water turbines in the basement of the complex that the owners plan to use to generate power for the complex and sell into the region's electricity grid.

The way Lawrence was originally set up, the Great Stone Dam, just up river from South Island, fed water into canals on either side of the river, and water from the canals was fed through raceways that turned turbines in the basements of the mills before spilling into the river, which was below the level of the canals.

Stapinski said the potential use of the hydroelectric generators caught the interest of MassDevelopment, the state's public financing agency, which has offered up $15 million in tax-exempt financing for the project.

"This is going to be a green development," he said.

Gov. Patrick, in an interview with The Eagle-Tribune yesterday, said the $150,000 grant, which comes on top of $500,000 from an economic stimulus package, comes from the Massachusetts Opportunity Relocation and Expansion jobs program, and is intended for the type of project taking place in Lawrence.

"The program was meant to provide resources for partnerships between municipalities and private investors to expand economic opportunities," he said. Infrastructure projects like the bridge lead to the creation of more jobs, a cornerstone of his administration's economic development agenda.

"I am proud our administration can partner with cities and towns in this way to help both the state and local economies flourish," he said.

Tom Schiavone, the economic development director for Lawrence, said the bridge has been engineered and will be put out to bid for construction as soon as the money comes from the state.

"We're ready to get going on it," he said.

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In addition to the grant for the bridge, the governor announced an additional $49,200 work force training grant for the Abel/Womack Co., a warehousing business in the South Lawrence Industrial Park.

President and CEO John Croce said the grant will be used to train 41 people at the company to implement a new enterprise resource planning system into the sales, distribution and financial operations of the business.