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Years ago, plans were formed to redevelop the Grove Hotel in Old Town into a trendy, international-themed hostel. But the notoriously run-down building still is occupied mostly by cockroaches.

Today, however, the Portland Development Commission will issue an additional loan for the project, which stalled last year because the original general contractor’s final bid was much higher than expected.

With the loan, construction can start soon, said Katherine Krajnak, central city coordinator for the PDC.

鈥淲e had a project budget, but it was based on late schematic design,鈥� she said. 鈥淎s we moved forward on closing on the project, the budget actually went up. (The additional loan) is to help cover the gap.鈥�

The $180,000 loan will bring the PDC’s project contribution to $2.645 million. Also, the investment group, which includes advertising executive John Jay and hotelier Alex Calderwood, will provide $400,000 more in equity for the $4.75 million project.

The cost increased as a result of delays stemming from ‘ high final bid, according to David Gold, who is developing the project with fellow Old Town property owner Howard Davis.

鈥淚t’s a complicated project, and when聽renovating聽an old building, unexpected costs are part of the process,鈥� Gold said. 鈥淭hey are not directly associated with one element and are nothing out of the ordinary with a construction project.鈥�

Now, the project will be performed by R&H Construction. Although less money will be devoted to construction, delays made additional financing necessary.

Construction is now expected to start sometime between January and February 2013 and finish by next summer, Krajnak said.

The PDC loan 鈥� River District urban renewal money 鈥� was approved because the agency believes the project can have a positive effect on Old Town Chinatown. For starters, it will provide the area, full of late-night bars and clubs, with more daytime activities, Krajnak said. And it will contribute to the neighborhood’s international flair, she added.

鈥淲hen we talk about the vitality and distinctiveness of this district, this is just another huge piece in that,鈥� PDC Public Affairs Manager Shawn Uhlman said. 鈥淭hat falls right in line with what we’ve been doing in Old Town Chinatown for years.鈥�

The 105-year-old hotel will become a 74-room hostel. A 60-seat, 2,000-square-foot restaurant and seven other retail spaces 鈥� a total of 6,000 square feet 鈥� also are planned for the ground floor. A rumor exists that the investment group is trying to lure a well-known New York restaurateur to fill the bottom space, though Gold could neither confirm nor deny that.

The retail spaces will be occupied by tenants that appeal to the tourist market, Krajnak said. Every aspect of the hostel 鈥� from its accents to its decor 鈥� will be Asian-themed.

鈥淭he Grove is reflective of an increasing interest in the history and heritage of Chinatown,鈥� Gold said. 鈥�(The hostel) will add momentum to the wave of resurgence in Chinatown and serve as a meeting place for people and ideas.鈥�

An appraisal of the building concluded that at stabilization the hostel could achieve an average occupancy of 62 percent at an average rate of $36 per bed. Additionally, a 2010 market study found that in five years the hostel could achieve an average occupancy of 70 percent at an average rate of $45.64 per bed.

At one point, the hotel was regarded as one of the shabbiest low-rent apartment structures in the city. In 2007, 480 code violations identified by the city led to the building’s closure. Many of the violations were related to serious fire and health hazards.

But after holes in walls are repaired and cockroaches are removed, the hostel will become a communal place for young innovators, Gold said.

鈥淭he communal spirit at the heart of (the hostel) will be an incubator of fresh ideas and a focal point of forward-thinking and responsible development in Chinatown,鈥� he said. 鈥�(It will offer) an affordable place for travelers to stay and create.鈥�