Long-delayed plans to build a retirement community on 40 acres in Kapolei are moving forward with construction, though the project has been dramatically reshaped with fewer homes and more commercial uses including restaurants, retail and a hotel.

Kisco Senior Living, a senior-housing developer based in California, announced Friday it is starting construction on the first $26 million phase of the Leihano at Kapolei community.

The initial phase, called ‘Ilima at Leihano, comprises 84 rental apartments for seniors and is projected to be completed in mid-2014 on a roughly 7-acre portion of the 40-acre block close to the commercial core of Kapolei.

The rest of the block is envisioned by Kisco for a hotel, retail, restaurants, medical services and more housing, including additional senior rentals and homes for residents without age restrictions.

The plan represents a major shift from a prior vision that called for a retirement community with close to 800 homes for people age 55 and older.

Mitch Brown, Kisco’s chief development officer, said the recession, a withdrawal of a development partner and dynamics in the senior-housing market led to redrawing the plan for Leihano.

"It’s been a long journey," he said at a groundbreaking ceremony Friday. "We feel very fortunate right now and very excited to be here."

Leihano was conceived after Kisco and a partner, California-based Brookfield Homes, acquired development rights in 2004 for the 40-acre site from a local company that was working to develop Luana Koa, an ambitious project that would have been the largest continuing-care retirement community in Hawaii with 850 units for independent seniors as well as those needing assisted-living and skilled-nursing services.

Kisco and Brookfield announced detailed plans for Leihano in 2007. Brookfield was to build 344 fee-simple condominium homes for families with at least one person 55 or older. Kisco planned to build 438 homes with a variety of care levels for residents paying an entry fee and monthly rent. The idea was to create a community where residents could "age in place."

The entry fee for the Kisco homes ranged from the high $300,000s to the $900,000s, of which 90 percent was refundable to residents or their estates if they moved or died.

Kisco and Brookfield built a sales center with a model unit, took reservations and expected to begin construction in 2009. But the economic downturn put the project on hold, and Brookfield pulled out.

Brown said Kisco had its doubts about forging ahead, but the family-owned company, which was established in 1990 and has 18 senior-living communities it acquired or built in five states, maintained a long-term view and waited for financial and real estate markets to recover.

Kisco moved ahead with buying half the 40-acre site from James Campbell Co. in late 2011 for $11.2 million, according to property records.

The developer redesigned the community plan by scaling back the number of homes, eliminating the entry fee and increasing the amount of commercial development. Assisted living and memory care are still part of the project.

Lance Wilhelm, senior vice president and Hawaii area manager for Kiewit Building Group Inc., said the construction firm retained to work on Leihano was uncertain at times whether the community would be developed.

On Friday the Kiewit executive thanked Brown and Kisco for sticking with the project.

"I’ll admit having some doubts — not being sure we’d ever get here," Wilhelm said. "We are extremely happy to be part of this."

Brown said the initial rental building will be three stories featuring 84 units ranging from studios to two-bedroom apartments. Kisco expects to begin accepting reservations this summer. When open, the project is projected to employ 50 to 60 people.

The company is also working on plans to develop land surrounding the rental complex with a hotel, restaurants, retail, a medical building and about 100 more rental units.

Kisco retains rights to develop the other half of the 40-acre site, which it envisions for more homes, including senior rentals, retail and restaurants.