Hawai'i's housing market is in a major slowdown, but the softness in home sales and prices isn't derailing development plans for two large O'ahu retirement communities, including one that would be the state's largest.

The two projects — 15 Craigside in Nu'uanu and 'Ilima at Leihano in Kapolei — have nearly enough reservations to begin construction this summer despite weakness in the broader residential real estate market.

A slowing economy and constrained finance market have made building senior-living projects more difficult, but the continual graying of the local population balanced by the fact that Hawai'i's real estate market hasn't suffered significant price declines are helping sustain momentum of the two long-planned projects.

"Even though it's a rough time, it's not so rough," said Emmett White, CEO of Craigside Retirement Residence, the nonprofit developer of the Nu'uanu project. "It's still a marketable need."

Hawai'i's population of 65-and-older residents has increased 1.9 percent annually since 2000, or more than double the 0.8 percent annual growth rate for the whole population, according to Census Bureau estimates for July 2007 released last month.

The Census Bureau reported that people 65 and older represent 14.3 percent of the state's population of 1.28 million, up from 13.2 percent in 2000. The state's share of residents 65 and older was seventh-highest nationally.

At the same time, Hawai'i has been relatively underserved by retirement communities. Part of the reason may be that many local cultures customarily take care of their elders at home. High land and development costs also make it challenging to develop senior-living projects.

Typically, senior-living communities provide residents condominium or single-family home accommodations with hotel-like services and care options, and limit entry to people at least 62 years old, or 55 in some cases.

A range of living facilities and care options allow residents to move within senior-living communities as personal needs change.

The financial arrangement often includes a one-time entry fee — which sometimes is partly refundable if a resident moves out or dies — plus monthly service fees for meals and service that can include nursing care and Alzheimer's disease care.

Because many buyers sell their homes to finance entry to a senior-living project, a housing market with slowing home sales and softening prices can discourage seniors considering the move.

Still, developers of the Craigside and 'Ilima projects said interest from prospective buyers remains good.

MANY FAILED IDEAS

Eileen and Mel Maeshiro, retired school teachers approaching 80 years of age, have lived in their Moanalua Valley home since 1974, but decided to move to Craigside because they didn't want to burden their two children.

"Eventually, we're going to need more care as we get older," Eileen Maeshiro said. "We want (our children) to have their own life, and we have our own life. I'm freeing them."

Still, the senior-living concept is unfamiliar to many people who have their own perceptions of retirement communities and nursing homes, which along with real estate and financing markets has challenged developers of senior-living projects in Hawai'i over the years.

Failed projects include an ambitious plan by local developer Sheldon Zane, who planned six senior-living projects totaling 700 units but had to seek bankruptcy protection for the projects in 2002.

Another developer abandoned a plan to convert the 600-room Ohana Hobron Hotel to 165 fee-simple units for seniors, and instead converted the high-rise to traditional condos as The Windsor in 2003 after soliciting buyers for the senior-living project called HaleNohona.

Some of the past difficulty with developing senior-living projects in Hawai'i had to do with construction financing because land costs are high and the local real estate market often was not well understood by Mainland lenders familiar with funding senior-living projects.

The situation wasn't helped when Hawai'i's first large-scale senior-living rental, The Ponds at Punalu'u, went into foreclosure. A year after the project opened in 1997, its Seattle-based developer couldn't pay the mortgage on the hotel-like low-rise with 127 assisted-living and independent-living units plus a 26-bed dementia unit.

In recent years, however, investors and guarantors such as banks, insurance companies and the federal Department of Housing and Urban Development — which backs loans to lower borrowing costs for developers and reduce risks for lenders — warmed to Hawai'i senior-living projects.

In 2004, The Plaza at Punchbowl, a 108-unit senior rental mid-rise, was completed at 918 Lunalilo St. on the site of a similar project that failed in the hands of a different developer.

KAHALA NUI 98% FULL

The largest senior-living facility in Hawai'i is Kahala Nui, with 393 units in Kahala. The project had a troubled history as the successor to a senior-living project called Hale O Malia that was expected to open in 1994 but resulted in bankruptcy for developer Episcopal Homes of Hawaii in 1998.

After being revived, though, Kahala Nui has been fortunate. The project obtained $183 million in revenue-bond financing that was a record for continuing-care retirement community projects in the United States.

When Kahala Nui opened in 2005, it had 224 deposits, or commitments for nearly 60 percent of its units, at entry prices from $364,000 to $784,000 that excludes monthly fees for services but is 90 percent refundable upon leaving.

Today, Kahala Nui occupancy is 98 percent and is filling empty units from a wait list of 47 people, according to Darlene Canto, project marketing director.

In Nu'uanu, Craigside lined up financing last year by getting legislative approval to issue up to $120 million in special purpose revenue bonds, though White said only about $90 million will be sold based on the latest cost projection.

Sales in the 171-unit Craigside have been building gradually. White said 107 prospective buyers have reserved units, including 83 who have made deposits ranging between $16,000 and $34,000. To begin building, the developer needs 111 presales, or 65 percent of the project.

White said he hopes this threshold can be met by the end of July, allowing construction to begin in the summer.

"We're putting the big push on now," he said, adding that selling senior-living units is more complex and challenging compared with most residential real estate. "We're not selling Trump Tower. This is life-changing decision making for seniors to spend the rest of their life at Craigside."

Costs for Craigside are mainly a nonrefundable entry fee ranging from roughly $160,000 to $350,000, plus a monthly service fee from $2,300 to $3,500. Entry is limited to people ages 62 and up.

Craigside units range from 440-square-foot studios to 672-square-foot one-bedroom apartments in a 12-story building. Planned amenities include an indoor heated pool, library, chapel/multi-use room and beauty shop. Also, 41 long-term-care beds are part of Craigside.

PROJECT GETS NEW LIFE

In Kapolei, the 'Ilima project stems from a prior plan delayed for several years called Luana Koa by another developer, Hawai'i Village Associates.

Luana Koa expected to start construction in 2003, but had stalled and was bought in 2004 by Kisco Senior Living and California-based homebuilder Brookfield Homes.

Brookfield plans to build 344 fee-simple condo homes called Maile at Leihano for families with at least one person 55 or older. The idea is that owners at Maile can easily move to 'Ilima when they're older, or they may want to be close to parents living at 'Ilima. Brookfield recently began accepting reservations for Maile.

Kisco, a California-based company with 25 senior-living communities in six states, plans to develop 'Ilima with about 380 units for buyers ages 62 or older.

'Ilima's initial phase includes 124 independent-living homes, plus 78 assisted-living units and a 20-unit nursing care facility.

Mitchell Brown, a Kisco executive vice president, said 85 reservations for homes have been made. The company is seeking 90 to 95 reservations to begin construction, which is expected this summer.

'Ilima's entry fee ranges from the high $300,000s to the $900,000s, though 90 percent is refundable to the resident or their estate. The monthly service fee ranges from $2,500 to $3,500. Units range from 650-square-foot to 1,350-square-foot apartments in a six-story building, and also include detached homes of about 1,500 square feet. Planned amenities include walking trails, a clubhouse, fitness center, spa, shops and restaurants.

Brown said helping attract buyers to 'Ilima are other commercial development projects in Kapolei, including road improvements, a Target-anchored shopping mall and neighboring community Mehana.

"The timing right now is coming together," he said.