Update: The City of Virginia Beach has promised local hotelier Bruce Thompson $18 million to help preserve the Cavalier. Thompson’s entire redevelopment will cost more than a quarter billion dollars, and will include the construction of 100 homes nearby, but the grand old structure is safe for now.

City Council’s decision to provide money for this project has elicited a chorus of howls from government watchdogs who suggest this is an improper use of taxpayers’ money. Preservationists are pleased to see that one of the city’s most historic structures won’t be razed. There will likely continue to be debate as this project unfolds, but that won’t change the Cavalier’s illustrious history:

Seven U.S. Presidents have stayed there. Dozens of minor and major celebrities, too. But the Cavalier Hotel’s glory days have long since passed, and now the grand old hostelry is at the center of a legal dispute, throwing its future, its very existence, into question.

The Cavalier Hotel opened to great fanfare in 1927. The stately 110-room hotel is situated high on a dune in Virginia Beach’s north end. For decades, the Cavalier was a playground for the rich, famous and well-connected.

The hotel’s lavish amenities were once a source of pride. Saltwater poured from bathtub taps. Guests could busy themselves trapshooting and horseback riding, not to mention sunbathing and swimming at the adjacent Cavalier Beach Club. The grounds had a putting green and sunken garden. One brewing executive, Adolph Coors, even chose the Cavalier as the place he’d end his life, and jumped from a sixth floor window.

Celebrities stopped coming some time ago, and the building is showing its age. Cracks have grown in the masonry. Brickwork on the patios is no longer tightly patterned and could use some touching up. On a recent visit, plywood covered a couple rear windows, an incongruous fix for such a stately structure.

A family dispute recently compelled a judge to order the Cavalier sold–the iconic hotel on the hill as well as an adjacent 1970s beachfront high-rise that’s part of the property. One side of the family says a sale isn’t necessary and wants to continue to operate the hotel. There appears to be a long, messy legal road ahead.

Preservationists would like to see the building saved, but the Cavalier’s fate is just as hazy as its current state of affairs. Whoever owns the building will ultimately have to make some tough decisions. The high dune on which the hotel is situated, as well as the oceanfront parcel in front of it, are prime real estate, and it might be just as profitable for a developer to start from scratch and build high-dollar condos, or even a hotel complex with more modern conveniences. Someone, somewhere has a bottom line.

Virginia Beach has been criticized for its smart-growth-be-damned approach to development in the past, the epitome of suburban sprawl. City officials have conceded that new land use at the Cavalier could be quite profitable for the city and businessmen alike.

If ever a community had an icon to stand behind, the Cavalier would be it. The hotel is famous, old, monumental, nostalgic. In such a large and dynamic city with so many competing interests, however, there’s no guarantee the Cavalier’s prestigious lineage will save it from the wrecking ball.