Efforts to save the Kukui Gardens low-income housing project will receive a kick start from the federal stimulus plan.

The rescue of Kukui Gardens, one of the state's largest and oldest affordable rental complexes, had been in jeopardy since November because of financing problems caused by the meltdown in the nation's financial markets.

But under the stimulus plan signed by President Obama earlier this month, the project will be eligible for up to $3.8 million in financing, allowing affordable housing developers to proceed with the purchase and construction of low-income apartments, said Drew Astolfi, lead organizer for Faith Action for Community Equity, or FACE, which represents tenants.

"We've been on a roller coaster ride for three years, so this is such a relief," said Winona Sardinha, a 38-year Kukui Gardens resident. "This will help us tremendously."

The fate of Kukui Gardens has been in limbo since 2006 when the former owner of the 857-unit low-income apartments offered to sell the property to upscale developers.

The affordable housing complex was saved a year later after a campaign by tenants, community leaders, the Lingle administration and other elected officials persuaded Kukui Gardens' buyers, San Francisco-based Carmel Partners, to sell half, or 11 acres of the land and more than 400 apartments, for $72 million to affordable developers, EAH Housing and Devine & Gong of San Francisco.

But the purchase hit a snag in November when the market for a key component of the deal — state housing tax credits — dried up with the collapse of the nation's financial markets.

Astolfi said the federal stimulus plan will provide $3.8 million to fill in much of the gap created by the loss of the state housing tax credits. State tax credits had accounted for about $5 million of the purchase price.

Astolfi said U.S. Sen. Daniel K. Inouye was instrumental in securing funding from the stimulus plan for Kukui Gardens and other affordable rental projects in Hawai'i. He also credited state House Speaker Calvin Say for supporting tenants.

Overall, the state is eligible for up to $9.7 million in this form of federal financing.

Chan U Lee, senior associate at Devine & Gong, said the developers hope to complete the purchase and start construction by fall. The original timetable called for the purchase to be completed last month with construction starting in March.

Lee said the 15-month project will create 100 to 160 construction jobs. "Once we get the money, we can close and can hire right away," she said.

Built in 1970 by the late developer Clarence Ching, Kukui Gardens is a 22-acre low-income rental project. The former owners, Kukui Gardens Corp., put the complex up for sale in January 2006.

Kukui Gardens agreed to sell the property in March 2006 to Carmel for $131 million.

"Hundreds of residents can all breathe a lot easier now," said Astolfi, the tenant's representative. "The shadow of losing their homes will be removed by this."