Construction resumed this week at the site of a partly built Marriott Residence Inn along Highway 78, putting the hotel on track for an August 2010 opening, a city official said.

The project on the southeast corner of Las Posas Road and Los Vallecitos Boulevard was halted in January.

San Marcos bought the land beneath the 112-room hotel from developer Palmetto Hospitality for $3.92 million this summer to help get the project back on track.

The company is now leasing the 2.3-acre site from the city for $392,040 per year.

City building division director Carl Blaisdell said framers returned to the hotel site this week and that plumbing and electrical subcontractors will return next week.

Blaisdell estimated the project will take about 10 months to complete.

City officials have said the hotel will be visible to Highway 78 motorists and provide visitors with another option for overnight accommodations.

The Marriott also is expected to bring San Marcos about $375,000 in hotel tax revenue annually.

"The city is pleased that construction is resuming on this important project in San Marcos," city spokeswoman Jenny Peterson said Tuesday.

Palmetto Hospitality is owned by South Carolina-based OTO Development. OTO President and Chief Executive Officer Corry Oakes was traveling and unavailable for comment Tuesday.

This is the second time San Marcos has owned the hotel site.

The city bought the property several years ago as part of a larger land deal when San Marcos was preparing to build the Highway 78-Las Posas Road interchange.

Once that project was done in 2006, San Marcos tried to lease the leftover land to OTO Development.

The city ended up selling the property to the developer in 2006 for the same $3.92 million it paid to take it back this summer, after company officials said they couldn't get a construction loan unless they owned the land.

The hotel project broke ground in September 2008. The four-story building was in the framing stages when Palmetto told city officials that a tightening credit market had cost the developer its construction loan.

The developer suspended work on the project in January.

The new purchase deal required the city's money to be put into an escrow account that Palmetto can use only to finish the hotel.

Blaisdell said Tuesday that city inspectors will visit the construction site frequently in an attempt to make sure the project stays on schedule.

Palmetto has the right to lease the property for up to 60 years under the new deal with the city. The developer also has the option of buying the land a second time in four to six years.

When it is completed, the Residence Inn will join an 85-room Ramada Limited Suites on San Marcos Boulevard and a 69-room Hampton Inn on Twin Oaks Valley Road.

Together, those hotels generate about $320,000 in transient occupancy tax money for the city each year. The 10 percent tax is added to the cost of guests' bills at the hotels.

Another developer is considering building at least one more hotel along the south side of Highway 78.

Call staff writer Andrea Moss at 760-739-6654.