As development in Hollywood continues to push farther east, two L.A. builders have been picked by the city for a $140 million redevelopment project at the well-worn corner of Western Avenue and Hollywood Boulevard.

CIM Group Inc. and Kor Group Inc. propose to transform the western side of the intersection into block-long developments with 500 for-sale and rental apartments, new storefronts, plus 30,000 square feet of office space that would be converted from the historic four-story Louis B. Mayer Building.

Separately, developer Larry Bond has proposed a 42,000-square-foot supermarket to be operated by Whole Foods Market Inc. on the edge of the developments, at the northwest corner of Hollywood Boulevard and Garfield Place.

“We’ve been considered a blighted area,” said K.C. Schmidt, president of the Eastwood Coalition, a community group. “For years our neighborhood has been totally ignored. Only in the last three years has it become popular.”

The projects would replace a vacant lot and run-down storefronts, including a 24-hour adult bookstore. But unlike other public projects across Western, CIM and Kor would refurbish and re-use aging buildings instead of razing them.

Bond’s project is not in conjunction with the CRA. His Santa Monica-based Bond Cos. is working through the approval process and conducting an environmental impact report.

As development in Hollywood reaches critical mass, the CIM and Kor projects may be some of the last CRA efforts in the area. Officials hope the private sector will now pick up the baton. “Our goal has never been to be involved in every project that goes on in Hollywood,” said John McCoy, a senior finance officer in the agency’s Hollywood office. “We always intended to help jump start things and ultimately step aside.”

Without any hitches, the CIM and Kor developments could receive final approval next year and construction could be under way by 2006. CIM’s team will have the northern side of Hollywood Boulevard, including the St. Francis Hotel, and Kor will be awarded the south side of the boulevard, where the Mayer building is located.

The two projects were selected from a dozen plans submitted by real estate developers after the agency issued a blanket request for proposals earlier this year. CIM and Kor will handle their own financing, though the CRA will kick in up to $7 million for the construction of affordable housing.

Despite the improvements, some residents are worried about the impact the increased population and traffic congestion will have on the area surrounding the intersection. The Whole Foods market is a particular sore point. “They want to build it there because it’s accessible for people living in the Hollywood Hills,” said Schmidt, whose group opposes the proposed store.

Calls to Bond weren’t returned.

Some residents are also wondering how many more affordable housing units will be built in their neighborhood. The Hollywest and Metro Hollywood, the affordable housing development above the subway station, have already created 220 units at the intersection.

(Affordable apartment units are built with the help of subsidies so they can be rented at a lower-than-market price to families earning far less than the county median income.)

Another 56 affordable units will be included a block south at Western Avenue and Sunset Boulevard in Views at 270, a project by non-profit developer Hollywood Community Housing Corp. Views at 270, slated to be complete by the end of the month, includes a Walgreen’s drug store on the ground floor.

Yet another 50 or so affordable units could be included in the CIM and Kor projects. CIM has established a partnership with McCormack Baron Salazar, developer of Metro Hollywood, to construct its share of the affordable housing.

The proposed changes have also raised concerns among current low-income residents and owners of mom and pop businesses. They fear that as rents rise, many of them could be forced out. “One of the greatest things about my neighborhood is the color,” Schmidt said. “We are a multi-ethnic neighborhood and I think one of our big concerns is that we are going to be homogenized.”

The publicly assisted developments at Hollywood Boulevard and Western Avenue are a continuation of a trend towards private development.

First came the subway station in 1999, followed two years later by the opening of the Hollywest Promenade a 121,000-square-foot retail center anchored by a Ralphs supermarket with 100 affordable senior housing units on top.