Israeli-Canadian architect Moshe Safdie - whose Safdie Plan to build suburbs in the forested hills west of Jerusalem was abruptly canceled last year - is about to be vindicated. Later this month the city will see the opening of phase one of the $400-million Mamilla project, his first development in the Holy City, which he initially designed 37 years ago and which has been worked on fitfully ever since. Forty new stores, forming part of an elegant 140-business, pedestrian-only shopping district along Rehov Mamilla, are scheduled to open on Monday, even though the entire project is still under construction and won't open completely until well into next year. The long-delayed luxury zone will connect Jaffa Gate with Independence Park along a 600-meter promenade. The two-level outdoor mall will be followed in October by the occupancy of the high-end quarter's 50 condos, spread over five buildings. To date, 14 of those units have been sold, including two so far in May, all to non-residents, notes the project's sales manager Ben Wasserstein. Prices range from $1.1 million to $13m., he adds. Some of the purchasers are Israelis who have been living abroad. The luxury condominiums, the smallest of which is 187 sq.m., are staggered so that all have views of the Hinnom Valley. During a tour of the lavish $13m. penthouse with its spectacular view of David's Citadel, he says, "People outside can't imagine what's inside. It's a very exclusive project. There's only one Jerusalem." The 250 sq.m. rooftop alone is big enough to host a bar mitzva, he marvels. Asked about the May 28 opening date, he answers that Alrov arbitrarily picked the date to fall close to the celebrations associated with the 40th anniversary of the reunification of the city. Having part of the mall open will boost residential sales, he hopes. "We're not building in the Israeli style," says Oded Bar-Zvi, the project's deputy director-general for operations and maintenance. "We're building in the style of Alfred Alrov. This is the prime location in Jerusalem. Whoever wants to be near the Old City can't be any closer." Early next year, the Safdie-designed 207-room Alrov Mamilla Jerusalem Hotel is scheduled to open, followed by an Aroma Cafe in March, completing the project formally known as the Mamilla Alrov Quarter. Commercial space in the $150m. mall is being leased at $40 to $80 per square meter, says Bar-Zvi, comparable to the Malha mall, which he used to manage. Like most Israeli malls, commercial space is only for rent, not for sale. Signs and store designs must be approved, with the aim of creating a distinctive and exclusive shopping environment. Tenants include international brands such as Rolex, H. Stern, Nike, Ralph Lauren, Nautica, Bebe and Tommy Hilfiger. Local chains include Castro, Ronen Chen, Steimatzky Books and Caf Rimon. The shopping mall is being marketed as a high-end destination, akin to Los Angeles's Rodeo Drive. "It is a bridge between the old and the new parts of Jerusalem, a bridge between the religions," says Shmuel Ben-Moshe, CEO of the Alrov Real Estate Company Ltd. Safdie, whose Jerusalem office on Rehov King Solomon stands beside Alrov's and adjoins the site, is especially proud to finally see his modified project nearing completion. "To see this project realized after all of this time, well, it's actually looking better than I expected. Despite all of the starts and stops because of the local bureaucracy, this new urban space is destined to change the gravity of tourism back to the heart of Jerusalem, where it rightfully belongs," he proclaims. MAMILLA, A key 121-dunam site situated west of Jaffa Gate and the Old City, represents a microcosm of Jerusalem over the last century. Theodor Herzl slept here at the Stern House when he visited Jerusalem in 1898. Now that house has been demolished and reassembled nearby. During the British Mandate, the area became Jerusalem's joint Arab-Jewish commercial center. Five historic buildings have been preserved, including Clark House, a 1,001 Arabian Nights fantasia with horse-shaped windows built by American evangelicals in 1898, and the Hebrew University student center from 1948 to 1967. Many building fronts have been preserved and incorporated into new buildings, although the original structures themselves were demolished, a practice derided by preservationists as "facadism." In the War of Independence, many of Mamilla's handsome buildings were destroyed or heavily damaged. The border between Israel and Jordan passed here; Arab Legion soldiers posted atop the Old City's ramparts occasionally fired at pedestrians, and the once prosperous business district deteriorated into a border slum. Its eastern and northern edges were a no-man's-land, with massive concrete anti-sniper walls, barbed-wire fences and minefields creating a buffer zone between Israel and Jordan. The bullet-marked Tannous Brothers building sign has been preserved as a memorial of those tumultuous times. New immigrants of the aliya waves of the 1950s took over the abandoned buildings, and the once fashionable shops became garages, carpentry workshops and small factories. The municipality expropriated Mamilla in 1970 and appointed the Karta Central Jerusalem Development Co. Ltd. to see to its evacuation, planning and development. Karta, which is jointly owned by the Housing and Construction Ministry and the Jerusalem Municipality, began removing the tenants and workshops by relocating them elsewhere in Jerusalem, while setting its planning activities into motion at the same time. Today's Talpiot industrial area grew from businesses displaced from Mamilla. At the behest of then mayor Teddy Kollek, architect Safdie, along with Gilbert Weil, drew up a grandiose development plan which envisioned Mamilla as a living bridge of urban activity between the old and new areas of Jerusalem. The concept was based on an underground street system overlaid with mixed development. The plan involved destroying all of Mamilla's 19th-century buildings, apart from the landmark St. Vincent de Paul Church and Monastery. Other features included a pedestrian promenade, parking for l,000 cars, and a bus terminal. (With the new Mamilla underground lot, there will be parking for 1,600 cars and 60 buses.) Jerusalem had never known a project so complex and sophisticated. The planners and Karta had no trouble persuading the authorities of its quality and the need it would fill. Nevertheless, Safdie's project generated fierce opposition in various professional circles and among the general public. Preservationists questioned the need to destroy all of Mamilla's buildings. Many felt that Jerusalem did not need such a large development next to the Old City. Others feared - presciently - that the financial means required for building the project all at once could not be raised. The municipality's Town-Planning Department drew up an alternative scheme, offering a more modest project. Under this proposal, many facades along Mamilla and King Solomon streets would be preserved, development would be based on an above-ground street system, a pedestrian plaza would be created in front of Jaffa Gate and all buildings in the center of Mamilla Valley would be demolished. In 1986, after 16 years of controversy, during which time Mamilla remained an eyesore in the heart of historic Jerusalem, construction on the scaled-down project began. But Safdie's altered vision was delayed yet again; the contractor who won the tender to build the "Valley Road," a new street now officially named after Yitzhak Kariv which would allow Rehov Mamilla to be converted into a pedestrian-only zone, went bankrupt and fled the country. Karta was left with a huge hole in the ground adjoining the neighborhood's now-abandoned and derelict buildings. Under a new contractor, the access road to the Old City was finally completed. Many of the decrepit buildings leading to Jaffa Gate were demolished in 1988. The following year, Britain's Ladbrook Corp., which controls the Hilton Hotel chain, won out over several international consortiums in its bid the build the project's main hotel. Following a flurry of litigation, that investment ended up being taken over by Alrov Mamilla Commercial District (1993) Ltd., controlled by real estate developer Alfred Akirov, who has built Tel Aviv landmarks including the Opera Tower and Treetop Towers. Karta and Alrov each then accused the other of breach of contract, and filed lawsuits. Last August, the Jerusalem District Court upheld the two arbitration rulings in the costly, time-consuming dispute between Alrov and Karta. The latter was compelled to pay Alrov NIS 100m. in compensation. Karta had asked for the rulings by arbitrator Judge Shalom Brenner to be overturned. In his first arbitration decision, Brenner ruled that Karta's refusal to sign the application for changing the Local Outline Plan was illegal and in breach of contract. But he decided that Karta's countersuit against Alrov was justified on two points: the maintenance cost of the site's parking garage, and user fees for the building. Karta appealed the ruling, but lost when the Jerusalem District Court upheld it. In his second arbitration decision, Brenner found a causal connection between Karta's refusal to sign the Local Outline Plan and a delay of at least 23 months in the Mamilla project, which caused major financial damage. In the third arbitration hearing, Brenner ruled that Karta must compensate Alrov for the loss and prevention of profits in the amount of $9.6m., after financing expenses. Those rulings cleared the way for construction to finally resume.