The planned senior living center 15 Craigside in Nu'uanu has weathered the severe global financial market storm, and will begin construction shortly after successfully selling $86 million in tax-exempt bonds to investors.

The 170-unit continuing care retirement community project aimed at moderate-income seniors had been held up for roughly a year by the frozen market for tax-exempt bonds despite having a high level of reservations from people wanting to live in the 13-story building.

Chicago-based investment banking firm Ziegler Capital Markets, which sold the bonds to finance construction of Craigside, said the bond sale was the largest fixed-rate financing deal this year for a senior living project in the United States and the only one for a new senior living project in the past 18 months.

"We kept the dream alive," said Emmet White, CEO of developer Craigside Retirement Residence, a nonprofit corporation affiliated with Arcadia Elder Services and the Arcadia retirement facility on Punahou Street.

Construction of Craigside previously was anticipated to begin last year, but investor demand for tax-exempt bonds financing retirement housing projects froze up amid global financial market turmoil last fall.

White said hardly any tenants interested in living at Craigside canceled their reservations, and the few who did were replaced by others to keep the project in line for financing when the bond market thawed.

A little more than 120 people have reserved units with a 10 percent deposit, and that figure is expected to grow when skeptical prospective residents see that construction is under way, according to Jan Kaeo, marketing director for Craigside.

"It has been quite a journey," Kaeo said. "It was tough. It was really tough."

To help attract investors to the bond sale, White said, The Arcadia Foundation, a private foundation supported by donors to help seniors, agreed to invest $5.2 million in the project and guarantee another $7 million in support.

Also, unit prices were increased on Aug. 1 by $10,000 to $100,000 to help pay off bonds quicker, and a construction contract was whittled from close to $60 million to about $50 million.

Mary Mu—oz, managing director of Ziegler's Senior Living Finance unit, said the response was solid and enthusiastic among investors in the Craigside bond deal, which involved unrated bonds, and represents a positive indicator for institutional fixed-rate bond financing of senior living projects.

Craigside is scheduled to begin construction soon and finish in late 2010, allowing residents to occupy the tower in early 2011.

The project, reserved for tenants 62 or older, is targeting residents earning 80 percent to 120 percent of Honolulu's median income.

The cost to live at Craigside involves a nonrefundable entry fee ranging from $171,000 to $449,000 for lifetime use of the unit, services and amenities including an indoor heated pool, library, chapel/multi-use room and beauty shop.

A monthly charge for meals, cleaning, utilities, maintenance, security and general healthcare ranges from $2,200 to $2,600, with additional costs for assisted living or long-term care.

The project on 1.5 acres at Nu'uanu Avenue and Craigside Place is designed with 30 studios and 140 one-bedroom apartments. Craigside also includes a health care facility with 41 long-term-care beds and four beds for skilled nursing and intermediate care.