Thanks to millions of federal stimulus dollars, the “wall” that divides central campus from the Medical School will soon be no more.

Flanked by city and University administrators, Sen. Chris Dodd and Rep. Rosa DeLauro (CT-3) announced at a Friday press conference that New Haven has been awarded $16 million in federal TIGER II grants to replace Route 34 with two urban boulevards that will connect to Ella T. Grasso boulevard. The TIGER II grants are a continuation of the Obama administration’s transportation infrastructure development program and part of the administration’s federal stimulus package. Construction is slated to begin sometime in 2011, and will reclaim 11 acres for downtown development that will bring thousands of jobs and millions in additional revenue to the city, Mayor John DeStefano Jr. said at the conference.

“We think this is a big f-ing deal,” DeStefano said.

University administrators, too, expressed enthusiasm about the grant. University President Richard Levin called the news “fantastic,” and Bruce Alexander, Vice President for New Haven and State Affairs, said it will be “tremendously important” in alleviating the University-wide crunch on office and lab space.

The project will create 2,000 construction jobs and 960 permanent jobs, many in the fast-growing biotechnology sphere, said economic development administrator Kelly Murphy. The development will add over $80 million in wages and $100 million in overall economic activity for the city, as well. Developer Carter Winstanley has already committed $140 million to the construction of 100 College St., a biotech and lab research building to be located adjacent to the Air Rights Garage, a parking garage on North Frontage Road.

And given past precedent, demand for this new office space will be high, officials said. Yale School of Medicine dean Robert Alpern said although he expected it would take years to fill Smilow Cancer Hospital, which opened last October, the building was full within a matter of months.

“If you give us land and you put a building on it, we will fill it instantaneously,” Alpern said.

In addition to continuing the biotech boom downtown, DeStefano said the new urban boulevards will knit together the main university and the medical school campus. The division has become especially problematic in recent years, as the medical school’s role in the University has grown, DeStefano said. Today, the University spends 42 percent of its budget on its medical programs, Levin said.

When Route 34 was built in the 1950s, then-mayor Richard C. Lee hoped it would someday connect all the way to the Naugatuck Valley west of New Haven. But Route 34 never made it to the Naugatuck, and for half a century it has been considered a central obstacle to downtown’s development.

“It separated all that action and juice from the central business district,” DeStefano said, referring to the highway’s impact on biotech developments around the medical school campus.

The highway, DeStefano said, has created a “dead end” at the end of Church Street that’s hindered downtown business for decades. In large part because the highway reduced foot traffic, DeStefano said, Malley’s department store shut down in the ’80s, Macy’s closed in the ’90s and the Chapel Square Mall on Temple Street was converted into apartments in 2002.

The project to change Route 34, an effort also known as Downtown Crossing, is part of a larger “pattern of humanizing” intended to revitalize the portions of downtown stifled by the connector, Alexander said.

“New Haven is becoming more and more a people place,” he said. DeLauro added that “dramatic” improvements in traffic safety will create a pedestrian-friendly environment, as well.

When construction begins next year, exits 2 and 3 on the connector will be shut down and all traffic into the city will instead be funneled off exit 1 or directly from I-91 and I-95. The exact timetable will not be available until the city receives final approval from the state, but Murphy and others said a 2011 start date is likely.

The city originally requested $21 million in federal support for the road project in September, but will make up the difference with an extra $5 million in city funds, Murphy said. The city originally planned to contribute $2 million, along with $7.9 million from the state and $500,000 from Winstanley. The city requested $40 million in the first round of TIGER grants last year, but was rejected.

The Department of Transportation received over $2 billion in requests for the $600 million of TIGER II grants available, Dodd said. When Transportation Secretary Raymond LaHood called Dodd Friday morning to announce the grant, Dodd said LaHood called New Haven’s proposal one of the best in the country.