For the sponge:

1. In the bowl of the electric mixer, stir the yeast into the water and stir. 
2. Add sugar and flour and mix with a wooden spoon until well combined.
3. Let stand, covered with plastic wrap, until bubbly and foamy, about 30 minutes.

For the first dough:

1. Measure 2 ½ cups of the flour (that will be used for this part), and reserve remaining for the second dough.
2. Attach the bowl to the stand mixer with the paddle. 
3. Stir the water with the yeast in a small bowl. 
4. Add to the yeast mixture together with the sugar, and eggs. 
5. Start the mixer at low speed.
6. Add the flour to the sponge by half cups. Mix with the paddle attachment until combined.
7. Add the soft butter, one piece at a time, and beat at medium speed until well blended and the butter has dissolved. It will be thick and maybe a little stiff.
8. Cover with plastic wrap or a clean kitchen towel and let rest until doubled, about 45 minutes.

For the second dough:

1. Add eggs, yolk, sugar, vanilla, and lemon zest to the first dough and beat with the paddle attachment until it's all well integrated.
2. Change to the dough hook.
3. Gradually add the softened butter and mix until well incorporated.
4. Add the reserved flour and salt in ½ cup additions.
5. Knead for 10 minutes at medium speed. The dough should be soft and buttery. It should not clean the sides of the bowl completely, but add up to ½ cup more flour if the dough is still too wet and pools in the bottom and sides like a thick cake batter.
6. Transfer the dough to a buttered bowl and cover tightly with plastic wrap. Let rest in a warm place until doubled in volume, anywhere between 1 to 2 hours.
7. Turn out the dough onto a clean surface and, with floured hands, deflate first and then gather it to make a loose ball. The dough should be soft and elastic, sticky but easy to work with. 
8. Shape into a loose ball and place in a well-buttered pandoro pan (see Notes for alternatives), cover with a clean kitchen towel, and let rise until doubled, between 1 to 2 hours.
9. Preheat oven 30 minutes before baking to 350º F /180ºC.
10. Bake pandoro bread for 20 minutes on the middle oven shelf.
11. Reduce oven temperature to 300ºF/150ºC and continue baking for another 30 minutes. The top should be brown and the bread sounds hollow when tapped. If the top is too dark cover loosely with aluminum foil. If unsure, insert a cake tester; it should come out clean with no wet crumbs attached. 
12. Let cool on a wire rack and remove from pan.
13. Dust with powdered vanilla sugar and shake inside a cellophane bag before serving.