Work has begun on the first phase of the Yellow House development project, with a two-story plywood structure taking the place of a former diminutive retail shack at 10 South Summer street in Edgartown.

Demolition work got under way in January, after Edgartown selectmen signed off on a 30-year lease with Summer and Main LLC to renovate the dilapidated Yellow House and small adjoining structure. Over the next month, builders laid a new foundation and the tall plywood structure fronting South Summer street went up.

Edgartown voted to take the property by eminent domain for $3 million in 2017, and has since had to fight off legal challenges from the former owners, represented by family member and attorney Benjamin L. Hall.

The town issued an RFP to renovate and maintain the property in July 2018.

Summer and Main LLC submitted the lone bid for the property, detailing a $2.5 million plan to renovate the house and small building over the course of two years. Christopher Celeste, who owns and operates Rosewater Market nearby on South Summer street, is listed as Summer and Main LLC’s principal.

Reached by phone this week, Mr. Celeste described the construction process and the decision to start with the demolition and rebuild of the former retail hut rather than the full Yellow House renovation.

“We were supposed to start building in September and we weren’t able to, which forced us to turn the project around,” he said. “We started with the little building because that’s what we can have up and operating by the summer.”

The new structure increases the building footprint at 10 South Summer street by five feet on the south and seven feet on the west, and adds about 20 feet of elevation and a full basement to what was once only a tiny retail shop. Mr. Celeste said the new structure will better fit with other Edgartown storefronts.

“Even though you look at it now and are like, what? It’s so big! In terms of ground it’s not so much bigger,” Mr. Celeste said. “The house that was there was so small it got lost in the streetscape. The thought was this would be a lovely clapboard, shingled structure that would continue the streetscape.”

He said the building will have storage in the basement, retail space on the first floor and a loft office space on the second floor. His plan is to have a Rosewater toy store on the first floor.

“We’re working on launching a kids store this summer,” Mr. Celeste said. “That used to be a little kids store once upon a time. We think it would be a great location for something like that.”

Barring construction or legal setbacks, he said he hopes to have construction finished by May and the store open for the upcoming summer season.

Meanwhile, construction is set to begin on the Yellow House in October. Plans include a first-floor retail space and three residential apartments on the second and third floors.

Legal setbacks remain a possible obstacle for the town as the former owners continue to press in court. A superior court judge dismissed a complaint against the selectmen in November, but the family has appealed, arguing that the 2017 taking of the property by the town constituted an “unlawful uncompensated taking,” according to court documents.

On Feb. 20, Mr. Hall also filed a complaint in superior court against all members of the Edgartown historic district commission, challenging the commission’s approval of the Celeste proposal.

Mr. Celeste said construction will continue.

“We’re happy to be partnered with the town,” he said. “We’re essentially acting as an agent for the town to invest the money and are excited to reinvigorate the buildings.”