New London — Contractors this week began their work transforming the downtown municipal parking lots into what city officials say will be a more vehicle-, bicycle- and pedestrian-friendly gateway into the city.

The $1.5 million partially grant-funded project also is being pitched as a stimulus for economic development and a way to spruce up what had been a simple stretch of asphalt.

The lots off Eugene O’Neill Drive stretch from Golden to Tilley Street and are bordered by a line of Bank Street businesses.

The plan calls for wider parking spaces, improved traffic flow within the lots, new pedestrian walkways, streetscape lighting, trees and improved storm drainage.

Plans were designed by Mystic-based architectural firm Kent + Frost.

The project is expected to be completed by year’s end.

“It’s absolutely fabulous,” New London Parking Director Carey E. Redd II said of the plan.

Redd said that because some of the parking spaces will be unavailable during construction, signs are directing people to the city-owned Water Street parking garage.

Redd said there are currently about 236 existing spaces in the municipal lots. Since at no time will both lots be closed, the Water Street garage and its 995 spaces has ample space to accommodate any overflow.

The 62 individuals with permits to park in the municipal lot also have been directed to park in the garage.

Redd said he expects “little, if any, impact on the ability of motorists to get in or out of the garage.”

Colonna Concrete and Asphalt Paving is performing the work on the lots and this week already had removed and moved the perimeter granite curbing of the south lot, cutting into and narrowing a portion of Eugene O’Neill Drive.

The road will be narrowed with “traffic calming bump outs,” in part to slow traffic and allow a shorter distance for pedestrians to cross the roadway.

The number of spaces also will be unavoidably reduced from 236 to 201 to accommodate new parking standards — a fact that has led to some grumbling among business owners.

Frost and the city’s Office of Development and Planning contend, however, that since the spaces are grossly undersized and could never be repainted as they exist now, the final number of spots is actually an increase over the 188 the lots would contain with a simple repaving and repainting.

Construction is expected to last four or five months and is being performed in four phases in order to limit the disruption and so at least some portions of the two lots will be open for parking through the work, according to Public Works Director Brian Sear.

The streets will remain open throughout the project but with some lane restrictions.

Phases 1 and 2 will concentrate on the lot between Pearl and Tilley streets and half of the lot will remain open until Phase 2, when the entire lot will be closed to parking.

Each phase is expected to last about a month.

There is a similar schedule for the lot between Pearl and Golden streets.

The city has approved $1.25 million toward the project and obtained a $500,000 grant being used toward the final cost.

Construction updates are available at www.eonlots.info.

g.smith@theday.com