Kuhio Park Terrace resident Rochelle Akiona said she didn’t think the day would ever come.

After years of disrepair, the state’s largest public housing project will undergo a multimillion-dollar makeover.

"To see it’s going to finally happen, it’s a dream come true," Akiona said.

A groundbreaking ceremony was held yesterday to kick off the $135 million renovation project for Kuhio Park Terrace and Kuhio Park Homes. Officials and residents said the project is long overdue after earlier attempts fell short due to a lack of funding.

A recent public-private partnership has enabled the state to finally move forward. The Hawaii Public Housing Authority, Michaels Development Co. of New Jersey and Seattle-based Vitus Group teamed up for the multiyear project.

The partnership will improve the quality of life for tenants, Denise Wise, authority executive director, said at the ceremony yesterday.

The housing authority will maintain ownership of the land so the complex will remain affordable. Michaels owns the building and will provide management services through Interstate Realty Management.

Michaels obtained a 65-year ground lease with an option to renew for an additional 10 years. The company will collect rent from tenants as well as housing subsidies from the authority.

The first phase of the project at the twin-tower high-rise will cost about $50 million and include expanded kitchens and enclosed lanais for each unit.

New flooring, windows, plumbing, electrical fixtures and energy-efficient appliances are some of the renovations on tap. Officials said 33 apartments will be reconfigured for handicap accessibility. Twelve units also will be fixed to accommodate vision- and hearing-impaired tenants.

Once the first phase is completed by December 2012, tenants will step into a revamped unit with about $90,000 invested in each apartment, Ava Goldman, senior vice president of development at Michaels, said.

The project will be re-branded as the Towers at Kuhio Park.

Tenants will undergo a "rolling relocation." The top three floors of the B building will be used as a so-called hotel for residents while their unit is being renovated.Tenants will rotate their stay for six to 12 weeks until work on all units is completed. Structural work on the building also will be done.

Akiona, an eight-year resident of Kuhio Park Terrace, will be one of the first tenants to have units renovated. She has dealt for years with plumbing problems and leaks from the bedroom ceiling in her 17th-floor unit.

"I was scared the roof would cave down on me," said Akiona, a clerk for East Asian Basket Co.

She and other residents also complained that the elevator constantly broke down, making access difficult for disabled and elderly tenants. Relatives would carry wheelchair-bound family members up and down the stairs, said Akiona, who noted the elevators have been repaired in the last few months.

In December 2008 a federal and state class-action lawsuit was filed against the housing authority and Realty Laua LLC on behalf of the tenants at Kuhio Park Terrace and Kuhio Homes, who complained of the substandard and unsafe conditions.

Corroded trash chutes and ripped-out fire alarms were among the problems cited in the suit. Residents also complained of a lack of grab bars and other bathroom features for the disabled.

Wise said the housing authority had already started making improvements before the lawsuit was filed.

But Victor Geminiani, executive director for Lawyers for Equal Justice, said it was litigation that spurred the state into action.

"It’s unfortunate that it took a lawsuit to have the government finally accept responsibilities for the many needs that had gone ignored for so many years," he said.

Some residents are still in disbelief about the project.

"It’s just beyond words that this day has come about," said June Talia, vice president of the Kuhio Park Terrace Resident Board.