Gov. Terry McAuliffe is pitching in $2.5 million to assist Richmond in transforming the impoverished Creighton Court area of the East End into a model, mixed-income community.

The governor went to the East End on Wednesday to announce Richmond as a winner of a Vibrant Community Initiative grant.

The grant will support development of a $45 million subdivision on the 20-acre site where the former Armstrong High School now stands at 1611 N. 31st St., just south of Nine Mile Road.

The Richmond Redevelopment and Housing Authority is taking the lead on the project, with major financial support from City Hall, which has made this project a signature effort to deconcentrate poverty and stimulate growth in a depressed part of Richmond.

Work is expected to start in October with the demolition of the old Armstrong building, followed by six months of site work and then construction on the first of the planned 256 new residences, 220 apartments and 36 single-family homes.

The development could take two to five years to complete, and would not include any new schools.

The new subdivision is the first step in a proposed massive revamp of the largely impoverished area, which is to include a separate $220 million redo of nearby Creighton Court, a 504-unit public housing community just north of Nine Mile Road and a stone’s throw from the former school.

The plan is to remake the Armstrong site first and move in some residents from Creighton Court so that initial work on transforming the public housing area could begin by 2018, according to officials.

Up to half of the planned units at the Armstrong site are to be set aside for Creighton Court residents. That includes 35 units for families and 90 units for elderly people, with the remainder marketed to anyone who wants to live in the area.

The Armstrong development is an expensive project, equaling about $156,250 per unit. It is perhaps the largest housing investment ever in the city’s East End. It would be dwarfed, however, by the proposed Creighton redevelopment, which is to provide 604 new units at a cost of $343,750 per unit.

The grant from the state symbolizes the significant government contributions that are required to make the Armstrong development possible. City Hall plans to pitch in $15 million to create streets and alleys, redo underground infrastructure and support construction of the development. The development also will rely on $10 million to $12 million in low-income tax credits.

RRHA hired The Community Builders, a nonprofit Washington-based developer of affordable housing, to carry out the project and then worked with community residents and others to craft the development plan for the Armstrong subdivision that won city approval.

Residents also worked with RRHA and consultants to craft the separate Creighton Court plan for new apartments that will mix public housing residents with other renters.

RRHA and the city are rushing to complete and submit an application by next Tuesday for a $30 million grant from the U.S. Department of Housing and Urban Development.

Winning the grant would allow RRHA and its partners to jump-start work in Creighton Court. RRHA has said it would still proceed with that development, but it would go slower.