ROCKPORT — A state judge rejected the town of Rockport’s request to dismiss an appeal of its approval for a 26-room downtown hotel.

Justice Bruce Mallonee also declined the request by neighbors appealing the town approval for a preliminary injunction and stay that would halt further work at 20 Central St.

But Justice Mallonee again warned the hotel developer — 20 Central Street LLC — that it was taking a risk to continue with construction.

“Although the court has declined to issue a preliminary injunction or stay, and declines to do so today, it has signaled to 20 Central with what it hopes is unmistakable clarity that in the event either set of plaintiffs prevails, and the court is required to assess remedies, it will not restrained by the risk 20 Central assumed by continued construction as these cases were pending,” Justice Mallonee stated in his ruling issued July 14.

He added that the neighbors’ concerns were not fanciful.

The judge also issued a scheduling order for the case, where briefs and replies must be filed by Sept. 7. He then will schedule a hearing for oral arguments to be made by the attorneys for the Friends of Rockport, the town, and 20 Central St. LLC.

Mallonee declined April 22 to issue a temporary restraining order sought by the neighbors. The town sought to dismiss the appeal at that time, saying the residents did not exhaust their administrative remedies. The judge ruled July 14 that they now exhausted their administrative remedies, following a July 8 meeting of the Rockport Zoning Board of Appeals.

The Board of Appeals voted July 8 to deny the appeal of the group.

Neighbors John Priestley, Mark Schwarzmann, David Barry and Winston Whitney filed the appeal to the court over the town’s approval of the 20 Central Street LLC hotel at 20 Central St.

The neighbors argued the temporary restraining order was needed to prevent irreparable harm, that the harm would outweigh any harm to the hotel developer, that neighbors are likely to be successful in their overall appeal and that the public interest will not be adversely affected by granting the injunction.

The neighbors contend in the court appeal that the Planning Board failed to properly apply several standards in the town’s land use ordinance. Those errors, according to the lawsuit, are not protecting the scenic view from the main road; a parking deficit downtown was not considered; and the board did not find there would be no nuisances from the hotel in terms of lighting and noise.

The Planning Board approved the 26-room proposed by Stuart, Marianne and Tyler Smith at 20 Central St. at a Feb. 27, 2020, meeting. The number of rooms had been reduced from the originally proposed 35 to 26 due to public input. Residents, however, launched a petition drive to further restrict the hotel.

The neighbors have asked the court to determine whether the hotel must adhere to two new ordinances — approved by voters at an Aug. 18, 2020, town meeting. One of those set a cap of 20 rooms. The ordinances would have been retroactive to before the Planning Board approval.

Justice Mallonee pointed out in an earlier ruling the complexity of the case because the citizens’ petition drive to amend town ordinances had been scheduled for the regular June town meeting vote but was postponed because of government-imposed precautions against the spread of COVID-19.

The delay exceeded the 45-day period for the town to amend the Planning Board’s approval.

The town issued a building permit March 10.