The original Cavalier Hotel was built in 1927. It is a Virginia Beach icon, like the Cape Henry Lighthouse, Town Center and King Neptune – a charming, graceful symbol of the city’s early resort days.
It has hosted presidents, celebrities and thousands of visitors from around the world.
Last year, a judge ordered the Cavalier sold – 21 acres that include the old Cavalier on the Hill, the newer Cavalier on the ocean and the old Oceanfront Beach Club. More than 100 groups and individuals inquired about buying the property. Ultimately, a local group led by Bruce Thompson of Virginia Beach won the property with a bid of $35 million. He will close on the site by July 22.
In April 2013, the City Council expressed its strong support for saving the old Cavalier Hotel by endorsing a series of incentives. The Council hoped these would attract someone to buy and preserve the historic hotel.
On June 14, Mayor Sessoms announced that the city had reached a tentative agreement with Thompson to save the old hotel. Thompson agreed to spend more than $200 million on the both Cavalier hotels and a new tower on the Oceanfront, including $43 million just to restore the old Cavalier. This includes preserving the lawn facing the ocean, with the famous Cavalier name, and the entrance off Cavalier Drive, with its charming old serpentine walls. It also includes preserving and renovating the Oceanfront Beach Club.
The new hotels – the restored old Cavalier, the revitalized newer Cavalier on the ocean and the new tower – will bring roughly $41 million to $52 million in new tax revenues to Virginia Beach over the next 20 years.
In return, the city will provide:
- $8.2 million from the city’s Economic Development Incentive Program. This is a fund used to bring new jobs and investments to Virginia Beach. It is funded entirely from the cigarette tax. The funding is determined by a standard formula for all new businesses and investments.
- $2.37 million to buy a public easement on the lawn and the entrance way, so they can never be developed. That money is already set aside for open space in the capital budget.
- $2.449 million to improve and rebuild Cavalier Drive. In return, it would become a public street.
- Incentive payments each year by returning the additional real estate tax created by the owner’s investment in an amount not to exceed $5 million total.
- Help qualifying for state gap financing. That means the state would contribute 1% of the sales tax generated at the property, the city would contribute another 1% of sales tax from the property, and the new owners would contribute 1% themselves.
- Help getting the old Cavalier placed on state and national historic registries, so it can be preserved forever. Thompson has promised to do this as part of the preservation deal. In addition, a preservation easement will be placed on the property at closing.
All together, the city will provide $18 million - $13 million up front and up to $5 million in real estate tax incentive payments over the next few years. The benefits are saving the Cavalier and a quarter-billion-dollar private investment. The ratio of public private dollars with this agreement is 1 to 11; that is, for every dollar the city invests, the private sector is contributing $11 – a sound investment.
- June 11 – Thompson presentation to City Council
- June 18 – Staff presentation to City Council of term sheet
- June 25 – Public hearing
- July 2 – City Council vote
The termsheet is available for download.