The San Francisco-based buyer of Kukui Gardens rental complex said it plans to maintain the downtown project for low-income tenants for the next five years and will work with tenants to develop a plan for beyond that date.

Carmel Partners said in a news release yesterday that it plans to retain as many of the project's low-income and elderly tenants as possible. But it said it is still studying its long-term strategy and could not provide specifics.

"During the next five years, Carmel Partners will develop and implement a transition plan that will allow deserving elderly, ethnically diverse and disadvantaged residents to remain while, at the same time, ensuring that a viable business model can be maintained," said Christopher Beda, Carmel's chief investment officer.

Carmel's remarks come as state lawmakers are approving legislation that would allow the state to use its condemnation powers to acquire the 857-unit property to keep the project affordable.

Kukui Gardens Corp., the nonprofit owner of the 22-acre apartment complex, put the project up for sale in January, raising concerns that a new owner would tear down the apartments and build more expensive housing that will displace hundreds of low-income tenants.

Kukui Gardens Corp. previously said that the buyer has no plans to tear down the project. Yesterday, Kukui Gardens Corp. said it is in the process of completing the deal, which requires approval from the U.S. Department of Housing and Urban Development.

Kukui Gardens said Carmel Partners — which has invested in a number of low-income housing projects in Hawai'i and on the Mainland — recently completed its due diligence review of the 22-acre parcel, which is expected to sell for more than $130 million.

"We have thus achieved an ideal profile in a buyer who has offered a compelling price with an open mind toward creating a plan for keeping the property affordable in the long term," Kukui Gardens said.

The 36-year-old Kukui Gardens outside Chinatown is one of the largest affordable rental projects in Hawai'i, built with funding from the Department of Housing and Urban Development.

In exchange for HUD financing, the owner agreed to keep the units affordable until 2011.

The apartment complex, which houses about 2,500 residents, charges tenants between $444 and $1,100 a month for one- to four-bedroom units.

Carol Anzai, president of the Kukui Gardens Association and a tenant for 33 years, said there's no firm commitment by the buyers on the number of units that will remain for low-income and senior residents.

At the $130 million price, Anzai and the tenants' representatives believed that the buyers will feel pressure to raise rents or eventually sell the property to a developer.

The property currently receives less than $2 million a year in net income from its renters. Under the $130 million purchase price, the property would have to generate $7 million to $8 million a year in income.

"Until we see something in writing, we won't feel comfortable," said Anzai. "We still have to keep our guards up."

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.