Preparatory work on a new residential youth justice facility, south of Rotorua, will start in October.
The 40 bed facility is being built on a 10-hectare site of rural land and is expected to be complete by the end of 2010.
A soil turning ceremony was being held at the site on Saturday morning.
Social Development and Employment Minister Ruth Dyson says many of the facility's users will be from Waikato and Bay of Plenty, and having them closer to family and community will help with rehabilitation.
The Government has allocated $60 million to the project.
