Construction on the city's next Marriott will not begin by the end of the year, the target date set by its developer.

Kevin Urgo, senior vice president of Bethesda-based Urgo Hotels, said he had hoped to get the 176-room Marriott Residence Inn under way on a fenced lot on Redwood Street before the end of this year. But a series of events and opposition has delayed his loans.

"We'll have good news in January," Urgo said.

Urgo has had both support from the city and opposition from preservationists and labor unions since he proposed the hotel about five years ago.

The city approved last month a $3.2 million tax break called a PILOT, or payment in lieu of taxes, for the hotel. The developer, who initially requested no subsidy, said it became necessary because the Sept. 11 terrorist attacks on Washington and New York curtailed travel and made lenders wary of paying for more hotel rooms.

The PILOT, which exempts the developer from local property taxes for 10 years, had been delayed because of city rules that require certain levels of investment and employment.

In reviewing the rules, the city determined that it could reduce the limitations on the developer and provide the subsidy if, among other changes, it acquired the land at Light and Redwood streets and leased it to Urgo.

But officials at Local 7 of the Hotel Employees and Restaurant Employees Union said the city still would not be adhering to local and state investment and employment rules, and sued Oct. 10 in the Circuit Court for Baltimore City to stop the PILOT.

The city is seeking to have the suit dismissed. A hearing is expected next month, said Nick Weiner, a senior researcher for the labor union.

Weiner said the city should not subsidize a development that does not promise a high level of employment and good benefits for those workers.

Urgo said he believes the city will prevail and he will receive his PILOT. But if it is not dismissed it could pose a problem. That subsidy is key to financing the project, he said.

He attributed the latest delay to the details of his financing documents.

"We're just dotting the I's and crossing the T's," he said about his agreement with lenders he declined to name.

Urgo also had to overcome the objections of preservationists in knocking down historic buildings to construct his hotel. They had stalled demolition with a late-night injunction, but Urgo ultimately prevailed.

Also on Redwood Street, construction of a Hampton Inn & Suites is under way. A third hotel, an Embassy Suites, is planned at Light and Redwood streets.