Leaders gathered Friday afternoon to break ground on the project.
Mayor Jim Ardis said the city plans to transform the Washington Street area into an 'economic corridor,' that includes new business developments and better accessibility.
A major goal is to attract more people to live downtown. Ardis said, "I think we're going to start to see numbers of new residents moving into downtown Peoria this year and in every year going forward. We have a capacity for a lot of people to live downtown with all the activity going down."
He said construction will begin on Washington Street very soon. Several grants are paying for most of the $38.1 million project.