Conroe withholds $600,000 fee for hotel project
Conroe City Council has withheld $600,000 from Dallas-based developer Garfield Public/Private LLC and questioned invoices related to the city’s new $107 million Hyatt Regency hotel and convention center just weeks after it had to fund $5 million in operation costs city officials say the firm failed to budget.
The council on Thursday approved the payment of two invoices — $394,068.16 and $41,221.24 — for furniture, fixtures and equipment but deferred the firm’s $600,000 project development fee.
Assistant City Administrator and Director of Finance Collin Boothe was absent from the meeting.
The issue comes after a May 22 special meeting where the council demanded answers from developers before voting to provide the $5 million in funding for the rest of 2023 and 2024.
In May, council asked why Garfield Public/Private, which was brought on by the Conroe Industrial Development Corp. in July 2017 to plan, design and oversee the project, didn’t let the city know the operating costs for the hotel were never included in the budget.
“I still don’t understand how we got here today and why this wasn’t given more due diligence three days before the damn thing is supposed to open,” Councilman Harry Hardman said in a previous story. “Your organization was hired to help us with this process.” Co-founder Ray Garfield said his company was not responsible for the hotel’s budget.
“There has been no failure on Garfield’s part on managing your funds,” Garfield said. He blamed the COVID-19 pandemic, inflation and different cost estimates on what it would take to operate the hotel for the omission.
Garfield Public/Private presented the project to the council in January 2019. In June 2019, the city purchased 7.5 acres in Grand Central Park for $2.3 million as the site of the new hotel and convention center, and the council in May 2020 approved the DPR construction contract.
In May 2022, after costs rose to $107 million, the council approved an agreement with the CIDC for $6 million and an agreement to use $2.5 million in hotel occupancy tax funds to cover increases in costs.
In August, the council fired City Administrator Paul Virgadamo, citing a lack of communication, including communication regarding the hotel project, and accepted the resignation of Director of Finance Steve Williams.
Councilwoman Marsha Porter flagged invoices from DPR for an audit in September. The paid invoices included Apple iPads, camping and boating accessories, more than $2,000 in spending at Twin Peaks and thousands of dollars in snacks, according to expenditures presented during a workshop. The city allocated $100,000 for an external auditor to review the invoices.
“The city signed a bad contract, including eliminating our rights to litigation and relying solely on binding arbitration,” Hardman said in May, citing advice former City Attorney Marc Winberry had given the council before the contract was approved. “The former city attorney strongly advised the council not to approve the deal.”
The council will revisit the payments at a future meeting.