Mayor Rahm Emanuel joins construction crews already working on an extension of U.S. 41 to better connect the Southeast Side with the rest of the city. (Credit: CBS)

UPDATED 04/03/12 11:46 a.m.

CHICAGO (CBS) — Crews began work on Tuesday to relocate U.S. 41 through the old USX steel mill site on the South Side, essentially extending Lake Shore Drive eight blocks farther south.

As CBS 2’s Susanna Song reports, the massive project would build a new road to relocate U.S. 41 to the north end of the north end of the old USX Steel site at 79th Street and South Shore Drive to the south end at 87th Street and Avenue O.

Mayor Rahm Emanuel says the effort is part of a push to connect a forgotten and landlocked section of the Southeast Side to the rest of the city, increasing its economic value.

Currently, Lake Shore Drive terminates at Marquette Drive in Jackson Park. U.S. 41 continues along Marquette Drive, South Shore Drive, and zigzags along a succession of surface streets – Bond Avenue, Baker Avenue, 85th Street, Burley Avenue, 87th Street, Mackinaw Avenue and Ewing Avenue – before finally exiting the city for Indiana on Indianapolis Avenue along the Chicago Skyway.

But despite the name “South Shore Drive,” the city extends more than a mile farther east through the desolate former steel mill site before finally hitting Lake Michigan.

The mayor’s plan would reroute U.S. 41 by building a new diagonal road that would extend the current Baker Avenue southeast to 87th Street and Avenue O.

The project is part of the mayor’s Building a New Chicago program, a $7 billion, three-year infrastructure initiative. It is expected to cost $30 million and create about 100 construction jobs.

On Tuesday, construction crews were already working on placing a sewer line through two miles of the old U.S. Steel plant.

The new two-mile section of new roadway will include:

New street lighting

Landscaped medians and upgraded landscaping at the entrance of Rainbow Park

New sidewalk, driveways, curbs and gutters, sewers, signage and pavement markings

600 new trees

All the funding will come from the Federal Highway Administration and the State of Illinois.

“What was once an eyesore will become an economic engine. What was once a strain on our infrastructure will now become and show the strength of our infrastructure,” Mayor Emanuel said.

“Extending Lake Shore Drive further south and transforming the former U.S. Steel site will provide an economic boost to the southeast side of Chicago,” added Gov. Pat Quinn. “Together, the State of Illinois and the federal government will invest $19 million to complete a project that creates jobs and improves the quality of life from 79th to 92nd streets and beyond.”

The new roadway is expected to be complete by December, with landscaping installed in the spring of 2013.

To be created in multiple phases, the 360-acre Chicago Lakeside project in the USX site will include more than 8,000 residences, two million square feet of commercial space, and several new parks as it moves forward over the next few decades.

In a kickoff to the restoration of the U.S. Steel site, the Dave Matthews Band Caravan held a three-day concert at the old industrial site last summer.

There has also been talk over the years of extending Lake Shore Drive and the park of Lincoln Park north from their current terminus at Hollywood Avenue, through the Rogers Park neighborhood and into Evanston. But residents of Edgewater and Rogers Park voted down the most recent proposal for such an extension in a 2004 referendum.