The Virginia Housing Development Authority agreed yesterday to provide $33.6 million in financing to buy and renovate part of the Lee Gardens apartment complex in Arlington, a major hurdle in a settlement that would preserve 200 units for low- and moderate-income tenants.

The authority had balked at the proposal in April, calling it too costly. But its nine-member board unanimously approved the financing yesterday, swayed by a new proposal that will cut interest costs through the use of short-term variable bonds, and by the assurance of county officials that Arlington will guarantee the project's solvency, said Steve Calos, spokesman for the housing authority.

Elated county officials announced the approval at a news conference attended by tenants and members of Arlington's state legislative delegation. "Today I think we make a clear statement that Arlington wants to be a community open to all," said Albert C. Eisenberg, county board chairman.

The 961-unit complex on Rte. 50 across from Fort Myer is undergoing an expensive rehabilitation, a process expected to displace about 3,000 mostly low-income, Hispanic tenants. Rents will rise to $585 for an efficiency apartment and $830 for a two-bedroom unit, according to owners of the complex.

The World War II-vintage complex is owned by the Bethesda-based Artery Organization, which began renovation work last month on 163 units. Tenants in 149 other units have been given eviction notices that take effect Aug. 31.

The state financing would pay for the purchase and renovation of 364 units in the north section of the complex by the nonprofit Arlington Housing Corp. Of those units, 200 would be set aside for low- and moderate-income tenants who qualify for federal rent subsidies. The rest would be rented at market rates.

The sale itself is still being negotiated but an Artery official expressed optimism yesterday about the deal. "We're confident the sale will go through. There are just technicalities remaining," said Daniel R. Mackesey, vice president of the firm.

County officials said they hope to conclude the sale by September, and that the units would be renovated by March of next year. The price will not be disclosed until the sale is concluded, they said.

It is unclear what tenants will be allowed to return. One factor is whether a tenant qualifies for the federal Section 8 program that will be used to subsidize the rents in the 200 units. Under the program, tenants pay no more than 30 percent of their income in rent. Federal subsidies make up the balance up to an established fair market value.

"Some will simply not be eligible to come back," said Eisenberg.

"I don't know yet where I'm going," said tenant Sonya G. Vasquez, who must leave her Lee Gardens apartment by the end of August. Vasquez, the mother of two, plans to apply for a subsidized unit. "It would be great," she said.

The approval by the state housing authority includes an agreement that Arlington will assume a "moral obligation" for the project's financial liabilities should the Arlington Housing Corp. be unable to pay its debts, said County Manager Anton S. Gardner. The agreement must be acted on by the county board at its meeting Aug. 15.

Eisenberg said it was unlikely the county would have to step in and financially shore up the project. Federal subsidies worth $23 million over the next 15 years will be applied to more than half the units. The other units will be rented at market rates and should be rented quickly, given the scarcity of housing in Northern Virginia, he said.