RICHMOND -- The state Department of Finance has reversed its earlier opinion and restored redevelopment funding for a nearly $30 million underpass project linking Marina Bay with the rest of the city.

In a letter datedMonday, the department informed redevelopment director Alan Wolken that the Bradley Moody Grade Separation Project has been approved for funding that was initially seized when the state dissolved redevelopment agencies statewide earlier this year.

"Based on our review, this item qualifies as an enforceable obligation," the letter read.

The decision, first reported in Councilman Tom Butt's e-forum newsletter, was hailed by a major land developer and owner in Marina Bay.

"This is a great day for Richmond," Richard Poe, owner of Virtual Development Corp., said in an email.

The uncertainty first emerged in June, with a dispute between the city and the state Department of Finance over whether the project was an "enforceable obligation," a designation required to spend funds from former redevelopment agencies.

The project is named for a Richmond patrol officer killed in a 2008 traffic accident near the proposed site.

The underpass is seen by city officials, area residents and developers as a crucial infrastructure upgrade in one of the city's newer communities. In addition to several thousands residents, Marina Bay is home to a growing commercial district, restaurants, national park exhibitions and hundreds of boat docks.

But two of the main roads accessing the area, Marina Bay Parkway and Marina Way South, are crossed by heavily trafficked railroad tracks, often used by long, slow-moving cargo trains. The desire for an underpass dates to at least 2005, when the former Richmond Community Redevelopment Agency contracted initial feasibility studies that identified the Marina Bay Parkway site as a priority railroad crossing.

The Police Department is also located in Marina Bay, and residents have expressed concerns that lengthy railroad delays could impair public safety in an emergency.

The existing grade crossing on Marina Bay Parkway is between Regatta Boulevard and Meeker Avenue. Low maximum train speeds result in traffic blockages for 20 to 30 minutes at a time with no alternate access, as all north-south ingress and egress to this area is affected.

"The underpass at Marina Bay Parkway will reduce traffic congestion and allow emergency vehicles to access the Marina Bay area unimpeded," according to the city's website. "Additionally, the project would improve access to proposed Water Emergency Transit Authority ferries and improve air quality by reducing emissions of idling vehicles."

The funding includes about $19 million from the Proposition 1B Trade Corridor Improvement Fund, and additional funding from Measure J transportation sales tax and developer fees resulting from recent residential projects in the area.