Chesapeake Beach Mayor Gerald Donovan hopes to begin construction in March on a new four-story waterfront hotel in his community.

Donovan, who is building the 72-room hotel in partnership with his brother, Fred, was able to secure a $5 million loan after 80 percent of it was guaranteed by the U.S. Department of Agriculture.

The USDA, through a program that helps rural businesses, backed the project "because of the jobs it creates" as well as the boost to the town's tax base, Donovan said.

"The hardest part of this whole thing has been financing," Donovan said. "The good news is we've been to settlement, and it's a done deal. It's over. Everybody is at work."

The hotel and spa would be adjacent to other Donovan businesses, including the Rod 'N' Reel restaurant.

Donovan had once hoped to break ground on the project by June 2000 and open the doors to the hotel in March 2001. But overcoming difficulties in securing financing delayed those plans -- and ultimately led to some revisions in the project.

At one time, the project's design called for a seven-story, 70-room hotel with an estimated cost of $9 million. The revised four-story hotel and related work carry a cost estimate of $7 million to $8 million, Donovan said.

With the lower-profile design, the hotel will now include 72 rooms, he added.

"It'll be a first-class facility with an indoor pool," Donovan said. "It's a very ambitious undertaking."

Donovan said he and his brother are ready to move ahead with the project. "We have all of our permits," he added, except for the building permit, which will be sought in January.

In 2000, after the town's Planning and Zoning Commission gave tentative approval to Donovan's plan, the Chesapeake Beach Board of Appeals granted a variance allowing the project to go forward with less parking than normally would be required for a commercial development at the hotel site. Donovan maintained then that hotel guests would be able to use parking facilities at his restaurant and adjoining businesses.

Donovan also has received a state permit that would allow him to fill in an eroded spot near the site where the hotel will be built. At a public hearing on Donovan's request for the Tidal Wetlands License necessary to do that, some residents who live near the development objected, questioning whether the beach would be damaged.

Donovan subsequently worked to address those concerns. He said he does not anticipate any objection to the new plan, particularly since the hotel structure will have three fewer stories than the original proposal.