A “transformational” housing redevelopment project could be headed to the Smithfield Community — if the city can obtain a highly competitive federal grant.

Birmingham is applying for a Choice Neighborhood Initiative Grant from the U.S. Department of Housing and Urban Development, which would supply the city with up to $50 million to construct up to 1,000 new and replacement mixed-income housing units in the neighborhoods of Smithfield, Graymont and College Hills. The scope of the grant would include redevelopment of the Smithfield Court public housing community, though the affordable housing would be decentralized and blended with market-rate housing.

Birmingham has applied unsuccessfully before, but Mayor Randall Woodfin said he is optimistic about the city’s chances this year. “There was some serious discussion with HUD from our past application about what was good, what didn’t work, holes, gaps, etc.,” Woodfin said. “I think we’ve been able to address all these things.”

As part of the application, the city has entered into an agreement with the Birmingham Board of Education to purchase two vacant parcels of land along 10th Avenue North, near Parker High School, for $4.59 million, with plans to turn the property into a mixed-use development. That purchase will remain in escrow pending the announcement of federal grant recipients; if Birmingham’s application is unsuccessful, the sale will not be finalized.

The city will submit its application by Jan. 9. If approved for the $50 million grant, the city will have to put up at least $7.5 million in matching funds over the next eight years for the project. Megan Venable-Thomas, the city’s director of community development, said that number could go as high as $35 million. “That’s what allows us to be extremely competitive,” she said.

Venable-Thomas told councilors that the grant would create 1,000 new construction jobs in the city and generate at least $242 million in economic impact.

“This is a really important grant because it’s not just critical to the Smithfield neighborhood … . It will not only demonstrate our ability to take on this type of capital in the city of Birmingham, but also be able to attract more investment that really impacts all of our neighborhoods,” she said.

“The potential for transformation is just phenomenal,” said District 5 Councilor Darrell O’Quinn. District 8 Councilor Carol Clarke said the grant would help the city “to achieve … catalytic development in a weak market like we have around many of our public housing sites.”

Venable-Thomas said it’s likely that six cities across the country will receive the grant later this year.