The Steaming Baguette in downtown Kiryat Yam yesterday hosted, as usual, dozens of pensioners, unemployed individuals, as well as guests who came to celebrate the 60th birthday of proprietor Yossi Mizrahi. The pensioners played backgammon, others drank coffee, and one guest slept slumped on a chair. Nobody paid any attention to him, until a woman passing by woke him up, in Russian.

Everyone has been hearing for more than a decade about the first hotel in the Haifa Bay suburbs that will be built in the city, and transform it from an unemployment-cursed and crime-ridden blue-collar town of 45,000 residents into a flourishing resort, as history and geography had intended. Yesterday, when they learned that the municipality had signed a deal with a developer to start work in the near future, eyes shone, hands were rubbed in glee at the prospect, and enthusiastic suggestions for doing business and "rehabilitating the jobless" were offered from every corner of the eatery, which has become a sort of community drop-in center.

News spread fast in the small, tight-knit town, and the gathered residents' joy - tinged with slight doubt - mingled with questions concerning the plan's details. the developer's name and phone number.

"We need to talk to him right away about giving priority to local tradesman in opening businesses in the commercial center. There's bound to be a huge queue," Marina Kuzia, who owns a local clothing store, said.

The deal Kiryat Yam signed with the Zim Group, a real estate and retail company, is the opening salvo in a tourist project encompassing a deluxe hotel, conference center, commercial space and spa, that will cover 12 dunams along the beach promenade opened a year ago. Zim paid NIS 6 million for the land, small change compared to the projected cost: $60 million. The municipality restricted the land's use to hotel development and auxiliary services.

"Kiryat Yam does not have a strong economic anchor, there aren't enough employment sources," Mayor Shmuel Sisso said, "and what seemed most natural to me was that we could leverage the only natural resource we've got to develop the city, draw people here, create jobs and business opportunities for residents."

Kiryat Yam's founders always meant their town, the only one among the krayot with a beachfront, to build its fortunes on tourism, and the hotel plan was approved back in the 1960s. But developers stayed away, and as the years went by Kiryat Yam became a weak city, dependent on its neighbors for employment, and on the state for annual help balancing their budget.

"We are the only ones who competed in the tender," Oded Givon, a lawyer for Zim Group, said. "During a tour for potential contractors, everyone said it's not worth it and that it's crazy; that no tourists will come to Kiryat Yam. Everyone was from the North, except for us, and they were stuck on the concept of 'Who will come here?' We saw tremendous potential here."

The project's developer, Rani Zim, says that the combination of a beach vista and the night illuminated by the lights of Haifa on Mt. Carmel opposite, along with a population of some half a million in the krayot and other communities in the Western Galilee and not one hotel - all make this a worthwhile investment.

Back at The Steaming Baguette, Mizrahi's daughter, Noam, 26, who has lived in Tel Aviv for the past three years, compared the potential inherent in her childhood town to that already realized in Herzliya and Tel Aviv. "This is huge!" she kept saying.

"When you told me there's a check and a deal I didn't believe it," her mother, Malka, said, adding: "This is sort of a historic event for us."