April 28–VIRGINIA BEACH

The restoration of The Cavalier Hotel at the Oceanfront is costing $20 million more than anticipated and taking more time to complete, according to a letter from the developer.

Bruce Thompson, manager of Cavalier Associates LLC, sent a letter to the city manager late Wednesday about the status of the project. The city will not make the letter available to the public until Monday, Julie Hill, a city spokeswoman, said Thursday. The Pilot obtained the letter Thursday afternoon.

Cavalier Associates is spending more than $200 million on the Cavalier property at 42nd Street and Pacific Avenue. The project includes preserving the 1927 hotel's historic elements while transforming it into a member of Marriott's Autograph Collection, a luxury hotel chain.

The roof supporting the pool walls and skylight had to be removed and replaced. The chimney in the Hunt Room was damaged, and the Cavalier Suite, an addition on the second floor, needed to be rebuilt, according to a report from Thompson.

The budget for demolition, rehabilitation and restoration has grown from about $50 million to nearly $74 million, Thompson said in his letter. He did not ask the city for additional financial support. The project has already qualified for about $36 million in state and city incentives. He added that he and his partners plan to honor their commitment to restore the 90-year old hotel and develop the adjacent properties.

A Marriott hotel, beach club and residences are planned for the oceanside of 42nd Street.

The historic hotel was originally scheduled to open this year, but the structural damage was more extensive than expected, the developer has said. In November, the Pilot reported that the hotel would open in spring 2017.

"Our anticipated opening date at this time is April 2017," Thompson wrote in the letter, with "at this time" underlined.

"Crumbled is a good word to describe the present condition of the old Cavalier Hotel," said Chris Bonney, a history buff who toured the site with Thompson earlier this month. Bonney launched a Facebook group, "Save the Old Cavalier Hotel," and regularly updates its 4,000-plus members on the hotel's condition.

"It turns out nearly everything they've started on has led to surprises and unexpected costs," Bonney posted recently.

Several areas of the hotel have been gutted, and ceilings are being replaced because of water damage. Historic elements, including some of the masonry, doors and windows are being salvaged.

The Cavalier property went up for sale in 2013 after a circuit judge ordered the breakup of The Disthene Group Inc., the company that had owned the Cavalier for more than 50 years. Cavalier Associates LLC purchased the old hotel on the hill, land around it and the sister building on the Oceanfront for $35.1 million in 2013.

The City Council granted a series of incentives totaling $18 million to the developer in 2013 to help preserve the Cavalier. Those include: $8.2 million in a performance-based economic development incentive grant; $2.37 million for a green space easement over the lawn and entrance drive; $2.5 million to rebuild Cavalier Drive, a public street; and $5 million rebated from taxes collected on the increased value of the hotel properties.

The project also qualified for $18 million from a tourism financing program. The money will come from taxes generated by the project, once it is complete, and includes 1 percent of city and state sales taxes each generated at the Cavalier and an equal contribution from the developer.

The project is expected to generate $41 million to $52 million in new taxes in the first 20 years. It also is expected to create 200 year-round jobs and 330 seasonal jobs, according to the city's Department of Economic Development.

"The time taken by Cavalier Associates is a testament to the meticulous standards and quality they are seeking during the restoration of the Cavalier," Warren Harris, the department's director said in an email Thursday.

The Cavalier Hotel made the National Register of Historic Places in 2014, providing additional tax breaks. The federal government covers up to 20 percent of eligible costs to rehabilitate a building listed on the national registry.

Greg Rutledge, a historic architect with the Norfolk firm Hanbury Evans Wright Vlattas + Co., has described the building as an "architectural gem," from the ornamental cornices to the terrazzo floors.

When it opens, the hotel will feature restaurants, a spa and a distillery. Renovation work has included reinforcing steel columns and beams as well as repairing the frame of the tower that sits atop the hotel. W.M. Jordan Company is the general contractor.

Construction is under way on the Cavalier Residences, 81 homes surrounding the historic hotel. D.B. "Bart" Frye Jr., developer of the residential project and president of Cavalier Residential Builders, one of seven companies that will build homes on the site, confirmed that the hotel work is taking longer than planned but said it would not alter the schedule for building the houses.

"We will try to keep the same schedule on the residential," Frye said. All of the lots have been purchased either by the project's builders guild, which are companies that have been contracted to construct homes on the site, or individual buyers, he said.

A percentage of the proceeds from lot and home sales will support renovations to the historic building. The homes will range from 600-square-foot bungalows among live oaks to 4,000-square-foot estate homes. Several homes are under construction in front of the hotel. Site work to prepare for homes to be built behind the hotel, next to Holly Road, is under way.