Sacramento is one of two California cities that are finalists for a $35 million grant aimed at developing green infrastructure in low-income communities.
The money would come from the state's Cap and Trade program.
Sacramento's plan includes adding a range of housing units, in the city's River District.
Two years ago, the River District was designated as a federal Promise Zone, one of just 22 such communities nationwide. The designation opened the neighborhood up to a host of resources and partnerships.
The grant money would also be used to build a new light-rail stop, bikeways, and several other projects.
Tyrone Williams is the development director for the Sacramento Housing and Redevelopment Agency. He says the plan is to improve the River District to combat climate change.
"This is about creating walkable, living neighborhoods that have been blocked off for years by highways and industrial activities," Williams said.
Williams says the grant committee will tour the River District in early January, with a decision expected a few weeks after that.
The area is also the site of the planned soccer stadium for Sac Republic FC.
The City of Ontario in Southern California is the other finalist.