That effort began to pay off Tuesday, when the Rasmuson Foundation, an Alaska-based philanthropic organization that directs grant funding to projects throughout the state, extended a $1.2 million grant for the project.

The grant is by far the largest awarded for the library project so far, said Homer Library Director Helen Hill.

"This is a tremendous boost for the project," Hill said after receiving word that the grant request would be met.

The money, however, is contingent upon whether the remainder of the balance for the $7.7-million project is raised or committed from other funding sources.

A representative from the foundation traveled to Homer late last month to learn about the new library project.

The foundation's board of directors met Tuesday and voted to extend the grant, which the foundation hopes will be a catalyst for other organizations to support the project.

"Our hope is that our commitment will encourage others," said Helen Howarth, program officer at the Rasmuson Foundation. "Where you're dealing with a huge funding gap, it can be difficult for some to want to step in."

The grant also carries residual effects -- for example, it allows fund-raisers to meet a matching grant from the National Endowment for the Humanities, which brings another $320,000 for the project.

The city has dedicated land downtown valued at almost $1 million for the building, planned for the corner of Heath Street and Hazel Avenue. It would replace the current library, which many say is no longer large enough to support the community's needs.

Currently, the Homer Public Library's home is a 3,500-square-foot building located on Pioneer Avenue. The new library, with 15,830-square-feet of usable floor space, includes plans for a children's room, 42,000 books -- about 12,000 more than the old building -- and Internet "hot spots" for laptop users.

The news from Rasmuson comes on the heels of a bad break for organizers, suffered when a federal spending bill passed by the U.S. Senate failed to include $1 million, which organizers said then was crucial for the library project's future. With the grant from the Rasmuson Foundation, however, the project's funding gap shrinks significantly.

Hill said that she and others are actively working on numerous other grant applications that could close the funding gap for good, including a request for $1.35 million from the Economic Development Administration, part of the Department of Commerce, and a grant application for $880,000 from the Department of Agriculture, which approved a $100,000 grant earlier this year for design and also approved a long-term loan of up to $2.2 million.

Library organizers also have raised more than $250,000 through a community fund drive, which is continuing through the end of the year.

And on Tuesday, Wells Fargo Bank donated $20,000 for the project.

So far, approximately $5 million has been earmarked or raised for the library. That is close to the project's original $6.5 million cost estimate.

Ballooning construction costs this year inflated the project's price tag, however, and without federal funding this year, construction, which was slated to begin next spring, could be delayed, organizers said.

If more than one large grant application is approved, it could mean the city will shoulder less of the burden when it comes time to borrow, said Anne Marie Holden, special projects coordinator for the city of Homer. Homer voters in October gave permission to the city to borrow up to $2.2 million to build and equip the new library.

"We still don't know how it's all going to shake out," said Holden. "If we get that full amount we could reduce the loan further. There are still quite a few unknowns."

Over the course of the year, the design's usable floor space has shrunk by 2,000 square feet, from over 17,000 to 15,830.

Before hearing of the Rasmuson grant, city council members had discussed trimming the design further, but Hill said that is not the answer.

"We can't shrink it anymore without affecting the value of services," she said.

Chris Eshleman can be reached at chris.eshleman@homernews.com.