On a clear day in January 2007, downtown New Haven disappeared into a thick, white plume: The New Haven Veterans Coliseum, the town’s stadium at the time, had finally come down after three decades of withstanding the raucous concerts of U2, Guns N’ Roses and Elvis Presley.

But once the smoke cleared and the rubble settled, the dreams of the site’s role in a revitalized downtown New Haven also collapsed.

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Today, the site, at the crossroads of Orange and George streets, has become an asphalt parking lot. It fills up nearly every day (pulling in roughly $240,000 in revenue for the city each year), but the space has yet to recover the cost of demolition, which set the city back $12 million. And though the lot itself was meant to be temporary, the city’s plans to redevelop it into a mixed-use retail, office and residential complex have been indefinitely postponed because of funding shortages.

“It’s all torn up, obviously,” said Anstress Farwell GRD ’78, the president of the New Haven Urban Design League. “It leaves a very unfinished and raw impression in the city.”

Still, while many business owners and employees said around the time the redevelopment proposals were announced that they eagerly anticipated the new complex, they now say that they have come to recognize the lot as perhaps a permanent fixture in their neighborhood. In fact, the space’s new function as a parking lot has come to be a necessary relief to the downtown parking crunch.

As the city’s other large development, the high-rise at 360 State Street, nears completion, it is clear to downtown commuters and residents that little of the downtown plans — once called the “10th Square” project, alluding to the city’s original nine-square grid — are coming to fruition.

When the Coliseum was first demolished in 2007, the city had decided to remove it in advance of a development contract with hopes of attracting investors to the empty space. Both the current dean of the School of Architecture, Robert A.M. Stern ARC ’65, and former dean Cesar Pelli submitted proposals, along with a number of other architects. In 2008, the city selected Stern’s designs to move forward. The plans were nonetheless put on hold when the recession hit, and little headway has been made on the project, Stern said in an interview Wednesday.

“[The project] is delayed like every other major proposal in cities throughout America,” he added. “The recession caught a lot of people off-guard, but I think the development will still happen sooner or later.”

Until then, the lot is advertised as parking for train passengers. It regularly overflows when nearby residents need to park their cars in New Haven as they head on their ways to major events in New York. On Thursday evening, as nearby city employees were returning to their cars at the lot, the area seemed to resemble little of its reputation as an abandoned piece of the city. Certainly, though the area is no longer hosting the likes of Madonna, to some commuters, the parking lot has solved one of the city’s biggest dilemmas: the parking shortage.

Removing it would only exacerbate the city’s parking shortage and add pressure to nearby parking lots that also operate at full capacity on those nights, Jamal Talib, a supervisor at the Coliseum-area parking lot, said. He added that employees at the nearby Yale-New Haven Hospital were specifically assigned to park at the lot, making the spaces even more of a necessity for the city.

Four owners and employees interviewed Thursday said that since the demolition, the lot has had a positive impact on the formerly underdeveloped area, drawing in customers and bolstering the block’s security.

Half a block away from the site, on State Street, Lou Cox has been running his skate shop and gallery showroom for the past five years. He said the dilapidated Coliseum kept potential customers away from the area; instead, the neglected arena attracted a crowd of homeless people who squatted in the building.

“The parking lot brings in more gentrified businesses,” Cox said. “With the destruction of the Coliseum, the area has become more attractive.”

Sitting in his tollbooth, Talib said redeveloping the site into something without the same amount of parking space would be severely detrimental to the city.

“People got crazy yesterday when there were no more spaces left,” Talib said. “We need more parking lot in this area.”

Stern’s plans would have created 816 units of parking, nearly triple the number of spots in the current parking lot. Ward 7 Alderwoman Frances “Bitsie” Clark, in whose ward the parking lot reside, did not respond to requests for comment Thursday.

The Coliseum took four years to build and was completed in 1972. Its demolition took 18 seconds.

Correction: April 23, 2010

An earlier version of this article misstated the ward Alderwoman Frances “Bistie” Clark represents; it is 7, not 1.