New London - Families that live in the Briarcliff housing project off Colman Street came one step closer Friday to updated apartments.

The Carabetta Organization, which is renovating moderate-income housing at Bates Woods, has been awarded more than $4.6 million in state and federal funds to renovate Briarcliff. It is the second phase of the company's $22 million project.

The money is from the state's Housing Trust Fund and the federal HOME program, according to Gov. M. Jodi Rell, who made the announcement Friday.

"We're walking on air. We're sitting around with big smiles on our faces,'' William Stetson, vice president of the Meriden-based Carabetta, said Friday. "But we also have a lot of hard work ahead of us to get the residents the homes they deserve."

The money will go toward renovating 106 two- and three-bedroom rental units at Briarcliff. In March, the company received about $6 million from the state for renovations to the Bates Woods complex.

Housing officials and the developer were concerned at the time, when Rell announced that she'd recommend that the state bond only $6 million of $10.6 million sought to complete the project.

The $10.6 million bond was to be a key step to a $48 million renovation of the aging Briarcliff and Bates Woods moderate-income housing complexes to be undertaken jointly by the housing authority and Carabetta.

Only the Bates Woods renovation went before the state Bonding Commission, and a Carabetta spokesman said the company was worried that the overall project would seem less attractive to private investment.

The New London Housing Authority, which has owned and managed the two complexes since the late 1940s, will retain ownership of the land. Carabetta has signed a 99-year ground lease with the authority and will own the houses and manage the properties when the project is complete.

"It's a great day for the housing authority,'' said Sue Shontell, acting director. "The moderate rental units will be remodeled and refurnished and all the tenants will be taken care of."

Money from the ground lease will be used to help the authority pay off long-standing debt, she said.

"It's another step in taking the agency out of trouble status,'' Shontell said. The authority has been on a federal list of "troubled agencies" since 1998.

The project, one of five in the state to receive funding on Friday, will offer units to families with incomes at or below 60 percent of the local median income. The project includes site and street improvements, recreational amenities and a new community-room building. The funding will be administered by the state Department of Economic and Community Development.

"These funds will help create a 'walkable community' near local bus lines and provide more housing choices for low-income families and residents," Rell said. "The state's affordable housing program continues to be a strong partner with cities and towns that strive to meet the housing needs of their citizens."

Other projects that received funding Friday are the Metro Green Apartments in Stamford; Alfred E. Plant Elderly Apartments in West Hartford; Cedarwoods Apartments in Windham; and Downtown Bridgeport, Phase II.