Local developer Peter Savio has submitted a $132 million counteroffer for the Kukui Gardens housing complex downtown, saying he wants to preserve the project's low-income rental units.

Owner Kukui Gardens Corp. is selling the 22-acre project to San Francisco-based Carmel Partners for about $130 million, in a deal critics say will displace hundreds of poor and elderly tenants.

But Savio said his plan will keep all of Kukui Gardens' 857 rental units affordable and could lead to the construction of additional low-income housing on the 22-acre property.

"Here's an opportunity for making a huge dent in our affordable-housing problem," Savio said.

Kukui Gardens Corp. and Carmel officials had no immediate comment.

Drew Astolfi, lead organizer for the nonprofit activist group Faith Action for Community Equity which is representing Kukui Gardens tenants, welcomed Savio's involvement given the developer's track record.

Astolfi said he hasn't spoken with Savio but hopes he is willing to work with the tenants' consultant, Chan U. Lee. Lee is a senior associate with San Francisco-based affordable-housing developer Devine & Gong Inc., which recently secured more than $80 million in financing to acquire the project and keep it affordable.

In a telephone interview yesterday, Savio said he's looking to convert Kukui Gardens into affordable condominiums or cooperative apartments. Under the condo plan, tenants would buy their units at affordable prices or could rent them at affordable prices from a buyer.

In a cooperative, tenants would own shares in the project and would occupy the units under a 99-year lease, he said.

In either cases, rents or monthly mortgage payments would be comparable to existing rents, he said. The apartment complex, which houses about 2,500 residents, charges tenants between $444 and $1,100 a month for one- to four-bedroom units.

"Our goal would be to structure it so that all the tenants there could stay," said Savio. "Tenants who want to buy could buy. Tenants who do not want to buy or cannot buy would be able to continue to rent as long as they want to."

The 36-year-old Kukui Gardens outside of Chinatown is one of the largest affordable-rental projects in Hawai'i.

Public outcry over the sale of the project prompted the state Legislature to approve a measure earlier this year giving Gov. Linda Lingle the power to use the state's condemnation process to acquire Kukui Gardens. The bill was signed into law by Lingle in July.

Last month, Bishop Larry Silva of the Catholic Diocese of Honolulu asked the owners of Kukui Gardens to reconsider their decision to sell the affordable housing project to Carmel.

Savio questioned whether Kukui Gardens Corp. was interested in selling the apartments to anyone other than a deep-pocketed Mainland developer like Carmel. Savio — whose offer includes $130 million for the building and $2 million to pay for Carmel's costs — said he presented his plan about a week ago to the owners, who have not yet responded.

Savio, owner of Hawaiian Island Development Co., is known for his work on behalf of Kamehameha Schools when the educational land trust converted thousands of its leasehold residential properties during the 1980s and 1990s.

More recently, he worked with the owner of the Queen Emma Gardens Apartment downtown to convert the rental project into a condominium project. He also helped dozens of Del Monte workers and retirees at Poamoho Camp on O'ahu's North Shore acquire their homes after Del Monte said it would not renew its lease on the land.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.