May 25--NEWBURYPORT -- City officials said yesterday that New England Development is moving closer to creating plans to build a hotel in the downtown -- but away from the water.

Mayor Donna Holaday said she met recently with company officials, and they are talking about "75-ish" rooms on property they own on Merrimac Street.

"I am very pleased New England Development is making moves to go forward," she said.

New England Development spokesmen were more circumspect when reached by phone. No denials were put forth, but affirmation was also lacking.

The possibility of a hotel in the downtown has been mentioned for decades by numerous developers, including Karp. The prospect of building on the river has always generated opposition, and many open-space activists have said they will work against any hotel that would be situated on the Merrimack. But New England Development appears to be altering its approach by considering use of property it owns on Merrimac Street, which is away from the water.

"We have done some investigation, some site assessments," said Scott Kelly, a vice president of development for the company, which is headed by veteran developer Stephen Karp.

"There is nothing formal under way now. We continue to consider the best use of our land in Newburyport and what is good for Newburyport as a city."

Kelly acknowledged that he was at City Hall on Tuesday.

New England Development owns close to 50 parcels in the city's downtown area. Many are along the river, and the holdings include four marinas, two major restaurants, Oldies Marketplace, and numerous buildings and lots near the water.

The company also owns property on key thoroughfares in the downtown, including Merrimac Street.

The parcel that appears to be under consideration is on the corner of Merrimac and Titcomb streets, and inhabiting that property now is the Vanguard Key Club fitness center, and a sizable parking lot. The former Fitness Factory used to be located at the site.

The plan is quite different from ideas that Karp's team has proposed in the past, because it does not place the hotel on the waterfront. Instead it would b about a block away from the Merrimack River. Several multi-story buildings stand between the site and the river, blocking a direct view of the water.

Karp's team first began discussing this tentative plan for such a hotel with city officials last January, but that vision continues to grow stronger.

Holaday said it would not be part of a chain, "but an independent boutique hotel."

"I would imagine they would hire a firm/group to manage," she said.

The mayor added, "There are many steps to complete before they will be ready to file any paperwork."

New England Development officials run several hotels on Nantucket.

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