LYNN – Major projects mixing residential construction with commercial space are taking shape on the Lynnway, Mayor Judith Flanagan Kennedy told business community members Friday, but efforts to open a Market Basket store in the city are mired in a family fight.Kennedy told Lynn Area Chamber of Commerce members that changes in the grocery chain’s corporate structure have left city officials with no clear information on when the Demoulas family will open a Federal Street store.”We are caught in the crossfire of a family feud. I am sorry to report we have not been able to stay above the fray,” Kennedy said.During an hour-long speech and question and answer exchange, Kennedy – who started her second term six months ago – told her Porthole Pub audience that Lynn has become a destination for residential buyers priced out of Boston and surrounding communities.”They are looking for alternatives. We are it – you cannot beat Lynn, Mass.,” she said.She said new development in the city, including restaurant openings, has matched newcomers’ interest in the city with a proposed 238-unit residential project tentatively slated to be built on the so-called Beacon Chevrolet site opposite North Shore Community College.Chelsea soup maker Kettle Cuisine is finishing work on its $20 million manufacturing complex off the Lynnway, Kennedy told Chamber members. Kennedy said the former General Electric gear plant land near the General Edwards Bridge is “nearly under agreement” for a large-scale project next to a commuter rail stop.”These projects have the potential to be initial dominoes to transform the waterfront,” Kennedy said.She said several other housing development projects and park improvement plans are on the drawing board, including a five-story, 68-unit building also facing the college. This “gateway” project will link downtown to the waterfront, Kennedy said.The former Arnold’s Stationary building in Central Square is under design as eight “artist live-work condominiums” and six homes are scheduled to be built on Union Street by spring 2015.Kennedy said the city is spending tax dollars to renovate historic sites, including Stone Cottage in the Highlands and the Grand Army of the Republic building, and improve parks, including Kiley, Cook Street, Clark Street, Barry and Gallagher playgrounds.”These parks are essential to the strength of local neighborhoods,” she said.Kennedy also said school spending requirements placed on the city by the state forced her to make tough decisions for the upcoming budget year, including spending cuts prompting an end to police community liaison patrols.”Beat cops are so vital to reducing crime,” she said.She said the city will benefit from casinos proposed in Revere and Everett if one of the two cities wins state approval to host gambling. She said Lynn is far enough away from Revere to avoid problems that come along with casinos.”When a casino sprouts up, petty crime sprouts up around it,” she said.She said Suffolk Downs principal Joseph O’Donnell is waiting for state casino approval action before he makes a decision on developing Lynnway land he owns near the General Edwards Bridge. Kennedy would like to see that site host a mid-priced hotel.”I’d like my legacy to be a hotel on the Lynnway,” she said.