HILO, Hawai'i — Ground was broken yesterday for a 95-bed, long-term care home for veterans that will be named for Medal of Honor recipient Yukio Okutsu.

The $33 million State Veterans Home will be built on the site of the old Hilo Hospital and will be the first long-term care facility for veterans in the state.

There are an estimated 114,000 veterans in the Islands, but Hawai'i is one of only three states that does not have a veterans home. The others are Alaska and Delaware.

"As our heroes and veterans of past wars grow older, it is comforting to know they will have a place where they can live in dignity," said Gov. Linda Lingle, who attended the groundbreaking ceremony.

Residents of the care home will come from around the state, and the facility is expected to help relieve crowding at other nursing homes in Hawai'i. Construction is scheduled to begin next month, with completion in late 2006 or early 2007.

The care home will employ a staff of about 125 and will also offer daycare services for elderly veterans.

The state is providing $10 million, which is being added to a $20 million grant from the Veterans Administration. Ronald Schurra, executive officer for Hilo Medical Center, said the balance will come from loans.

Speakers at the ceremony announced the care home would be named for Tech. Sgt. Yukio "Yuki" Okutsu, who died in Hilo in 2003 at 81. Okutsu was a member of the 442nd Regimental Combat Team and spent 18 months fighting in Italy.

During a battle on April 7, 1945, he used grenades and a submachine gun to take out three German machine-gun positions on Mount Belvedere. He was initially awarded the Distinguished Service Cross, but that honor was upgraded to a Medal of Honor in 2000 after Congress ordered the Army to review its records to see if anti-Japanese sentiment during the war prevented some soldiers from getting full recognition.

Local veterans groups and supporters lobbied hard for the care home.

Plans for a 200-bed home were scaled back to 95 beds after a consultant predicted a smaller facility could be financially self-supporting.

The state is negotiating with a company to manage and staff the center, but officials declined to identify the firm until the deal is done. Operations will be overseen by the quasi-public Hawai'i Health Systems Corp., which has responsibility for a dozen state-run hospitals including the Hilo Medical Center.

Schurra said the home would be the first state-run, long-term care facility operated by a private company.

Miles Takaaze, public affairs director for Hawai'i Heath Systems Corp., said the agency is in talks with the Hawai'i Government Employees Association and the United Public Workers unions on the specifics of the management contract.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com.