City officials and neighborhood leaders will break ground this morning on Plaza de San Jose, a new retail center on the southeast corner of Story and King roads that brings together an American retail giant, Target, and FAMSA, a Mexico-based retail chain opening its first store in the Bay Area.

The long-anticipated ground- breaking is the kind of commercial redevelopment many East Side leaders have been pushing for, and it comes a year after the city's failed attempt to take over and redevelop the Tropicana Shopping Center on the opposite corner.

``I think it's going to make a big difference for all of East San Jose,'' said Aaron Resendez, co-chairman of the neighborhood advisory committee for the East Valley/680 Strong Neighborhoods Initiative area. It is one of the East Side groups that has been lobbying for redevelopment in the area.

After the Tropicana debacle, Resendez said, ``I feel we're going in the right direction with this project.''

The San Jose Redevelopment Agency had sought to condemn the aged Tropicana Shopping Center and transfer ownership to developers who would replace it with a new shopping center. The owners refused to relinquish their land, and the agency sued.

Last fall, a judge issued a tentative ruling that the agency had failed to meet a statutory requirement for eminent domain actions. The next day, the city abandoned its case.

FAMSA, one of Mexico's largest retail chains for furniture, appliances and electronics, will open in the same center as Walgreens and Ritmo Latino, a record store that specializes in Latino music.

Jesus Muguerza, executive director of FAMSA's U.S. office in Los Angeles, said the company has nine stores in Southern California and two in Texas. As it looked to expand in Northern California, he said, FAMSA was attracted to the concentration of Latinos in the East Side.

``It's a major sign of confidence from the private sector that there is a strong market on the East Side for new retail,'' said Harry Mavrogenes, executive director of the San Jose Redevelopment Agency, which is investing $39 million the project. Blake Hunt Ventures, a developer in Walnut Creek, is spending $34.5 million.

Target is expected to open its store on the site next December, followed by the other stores.

Frank Chavez, who owns a jewelry design store in the neighborhood, praised Mayor Ron Gonzales ``for keeping his promise of doing something for the East Side.''

``After all the budget cuts, he still stayed on course, and we're glad he did that,'' said Chavez, president of the Story Road Business Association.

The site has been sparsely occupied by commercial tenants for 15 years, Chavez said, and the arrival of major American and Mexican chains will help keep dollars in the neighborhood that shoppers have been taking elsewhere.

``Finally that corner gets a face-lift. It's very exciting,'' said Alofa Talivaa, a member of the East Valley/680 group.

David Vossbrink, spokesman for Gonzales, called the groundbreaking ``a milestone for redevelopment.''

``The mayor is delighted,'' Vossbrink said. ``He's really looking forward to having these additions to come. It will be a draw for the entire community.''