Joe Yasutake has seen first-hand the effects of the state budget crisis, as the Japanese American Museum of San Jose prepares to reopen in a couple of months after several years of delays.

Yasutake, a museum board member and the former president, said that turning the dream into a reality has taken so long due to the state’s budget woes.

San Jose’s Japantown has also felt the impact of the economic recession. Some construction projects have managed to stay afloat while others have been put on hold. Local businesses and organizations have also been affected by the economy.

While the Corporation Yard project has been postponed temporarily, the museum and the Akiyama Wellness Center are expected to open soon. Yasutake said construction had to be stopped from January to August due to a shortage of state funding. He explained that the funding of the museum depended on the sale of state bonds.

Yasutake said that four years ago, the museum received a $1 million grant from the California Cultural and Historical Endowment with the stipulation that the museum had to match it with funds from the community. Once the museum raised the necessary funds, it was awarded a contract to begin construction.

“We were three-quarters of the way done when the state stopped payment, and we had to stop construction. In mid-August, funding was resumed,” he said. “We were fortunate that it wasn’t permanent.”

Yasutake said there have been mounting costs associated with the stops and starts in construction over the past 18 months.

“We suffered some increases in costs as the result of the delays. We had to spend money to rent the temporary fence and an outdoor toilet. Little things add up quickly.”

The museum will feature 6,400 square feet of interior space, allowing the organization to expand its exhibits and community activities. Viewers will have the opportunity to see such exhibits as a replica of the World War II interment barracks.

The center, which will provide fitness and wellness classes for seniors, is also on track to open in a couple months after receiving state funding.

Sophie Horiuchi-Forrester, executive director of Yu-Ai Kai, said, “We were very fortunate to receive money from the San Jose Redevelopment Agency in the spring. With the recent cuts in San Jose, that is no longer a source we can go back to.”

The ground-breaking ceremony for the center was held in June 2008. At that time, it was announced that $300,000 was still needed through donations and other funds for the renovations to be completed.

While the museum and the center are proceeding, the Corporation Yard project in Japantown is on hold. The project was slated to be built at Sixth, Seventh, Jackson and Taylor streets.

Ed Shikada, San Jose’s deputy city manager, said, “We’re not proceeding with any development plans. It’s clear the market conditions won’t be able to support it.”

The $200 million development calls for 675 homes, 30,000 square feet of retail space and a 20,000-square-foot cultural center.

Shikada said he is hopeful that the project can be resurrected. The prior developer, Williams & Dame, pulled out of the project earlier this year.

“We could restart with them or others. We’ll hold on to the property, and won’t push it now in this down economy,” Shikada said.

Japantown merchants have also been striving to stay afloat in the face of tough economic times.

Arlene Damron, who own the Nichi Bei Bussan store, said, “It’s tough all the way across the board in this economy.”

She said that the store has been working to build a niche market in order to compete with the big-box retailers.

“We’re a very specific niche. You don’t buy kimonos at Wal-Mart,” said Damron, adding that some of the most popular items are the martial-arts equipment, fabrics and kimono.

While the recession has affected Japantown construction and merchants, the festivals such as Nikkei Matsuri have not been significantly impacted.

Warren Hayashi, president of the Nikkei Matsuri, said, “The Nikkei Matsuri Festival has kept on par with previous years. We didn’t really take a big hit.”

Hayashi said that although some vendors did not generate as much in sales as before, on the whole the volume of sales was in line with previous years.

He added that food sales did unexpectedly well this year, and all the food booths sold out early.

“We anticipated a shortfall. So I was pleasantly surprised at how well we did in light of the economic conditions,” he said.

Despite the economic challenges facing the community, San Jose’s Japantown leaders are cautiously optimistic.

Kathy Sakamoto, executive director of the Japantown Business Association, said, “We’re not down in the doldrums. We’re working on it. Everyone is trying to make the best of a difficult situation.”