PORTLAND, Maine — A multimillion-dollar project seeking to convert a former U.S. Army barracks on one of Casco Bay’s islands into a luxury hotel is back online after a massive fire gutted the historic structure nearly two months ago.

Efforts to reclaim the long vacant former Fort McKinley building on Great Diamond Island as a high-end island resort destination were put in jeopardy in the early morning hours of Nov. 23, when a blaze tore through the 19th century brick structure.

The renovation project was within two weeks of substantial completion, and city officials initially announced that the damage to the building was estimated to be as much as $9 million.

But at a Friday morning news conference at Portland City Hall, project developers and city officials announced in no uncertain terms that the project would move ahead despite the recent setback.

“This is significant,” Mayor Michael Brennan said. “In less than two months to be able to come back to you now and announce that we have a plan to allow this to go forward is nothing short of extraordinary.”

David Bateman, lead developer of the project, said construction crews arrived at the site on Monday to begin rebuilding. He said the estimated completion date of the project, which will cost roughly $12.3 million, is now May 2015.

Because of the efforts of the Portland Fire Department, he said a substantial portion of the building’s walls were saved, which is significant because it means the project is still eligible for historic tax credits.

“That program, which is both a federal and state historic tax credit program, was integral to the success of the project initially and is the underlying reason that we’re able to move forward again today,” Bateman said.

He said his and his partners’ “collective enthusiasm has never wavered.”

The ordeal brought to light the need for changes in how the fire department approaches island blazes. Fire Chief Jerome LaMoria said in the aftermath of the event that he plans to step up recruitment and training for volunteer firefighters on the islands, and said he hopes to begin storing at least one of Great Diamond Island’s fire engines indoors.

Because the trucks were kept outdoors, the engine coolant had been drained for the winter, and reviving the truck to fight the barracks blaze took valuable time while the fire built up momentum.

The Nov. 23 fire grew to be so massive the glow was seen by the Casco Bay Bridge tender more than two and a half miles away, who first reported the flames.

The property, located at the street address 18 McKinley Court, is on the National Register of Historic Places.

The city of Portland acquired the historic barracks property in 2005 due to unpaid taxes and agreed to turn it over to hotel developers four years later for $1. A group of Great Diamond Island residents protested the hotel project, arguing the new influx of transient visitors would disrupt the island’s neighborhood atmosphere.

At the time of the blaze, Jeff Levine, director of Planning and Urban Development for the city, called the redevelopment effort “a wonderful reuse of a long-abandoned property.”

Bateman said Friday morning that a project of this magnitude would not be possible without the continued support of the city.

“These commitments come to us as no surprise. This is a city whose very emblem is the phoenix. This is a city that has risen itself four times from the ashes and its underlying motto is, ‘I will rise again,’” Bateman said. “And I think that really sums up our vision and our commitment to make sure this project not only moves forward, but is successful.”

Seth Koenig

Seth has nearly a decade of professional journalism experience and writes about the greater Portland region.

Whit Richardson

Whit Richardson is Business Editor at the Bangor Daily News. He blogs about Maine business, entrepreneurs and the economy.