A Jones Lang LaSalle appraisal presented to the Conroe City Council on Oct. 23 found the Hyatt Regency hotel and the adjacent convention center would likely fetch about $22 million to $24 million on a normal market sale — far below the roughly $134 million construction cost cited by officials. The presentation and more than an hour of public comment focused attention on how the project was financed and whether voters could have intervened under proposed charter changes.

The appraisal was delivered by Jones Lang LaSalle (JLL) at the request of special bond counsel McCall, Parkhurst & Horton. JLL said the hotel operated at about 42.8% occupancy in 2024 with an average daily rate of about $162 and that a private-sector buyer could expect current net cash flow in the low millions. "If the determination was made to sell this hotel, undergoing a normal sales process ... we believe that the value is somewhere between $22 and $24,000,000," a JLL presenter told the council.

Why it matters: speakers and several council members said the financing structure — through related local development corporations and revenue bonds rather than direct general-obligation city debt — insulated the project from simple voter review. Multiple speakers during the meeting’s citizens-inquiry period urged approval of charter amendments on the Nov. 4 ballot, especially Proposition O, which would require voter approval for new debt exceeding 10% of the city’s annual operating budget except for core infrastructure.

Public comment and council response

Citizens and some current council members said the hotel has saddled taxpayers with a long-term financial burden. John Sellers, a resident who spoke during public comment, argued Proposition O as written may not have prevented the project because the hotel financing used conduit entities rather than direct city debt. "It was structured through the Conroe Local Government Corporation and the Conroe Industrial Development Corporation using revenue bonds and lease agreements," Sellers said. "None of that is mentioned in Proposition O."

Kim Ataya, who identified himself as a volunteer on the Conroe Industrial Development Corporation, said he reviewed feasibility materials and discovered what he characterized as off-balance-sheet obligations and debt that had been carried by CIDC. Ataya said he supports Proposition O as a guardrail and said S&P and other reports project near-term default risk: "Unless there's a major turnaround, the hotel is expected to default on its subordinated debt by April '26," he said.

Several current council members and the city administration responded by pointing to a staff-commissioned independent review and to newly-appointed officials who the mayor and staff said were not part of the original deal. City Administrator Gary Scott thanked McCall Parkhurst & Horton and JLL for the valuation and said the information will inform next steps. Deputy City Administrator Nancy McCheska gave a detailed statement outlining the staff members who she said were not involved in the original deal and directed residents to the May 26, 2021 council meeting videos where debate and approvals were recorded.

Background and financing details discussed

Speakers and council members repeatedly emphasized the distinction between direct city debt and conduit or third-party debt arranged through the Conroe Local Government Corporation (CLGC) and the Conroe Industrial Development Corporation (CIDC). Multiple public commenters said the original project was presented to voters and council members with optimistic projections and that those projections have not held.

JLL’s appraisal explained valuation methodology: discounted cash flow analysis, direct capitalization (cap rate), and leveraged internal-rate-of-return scenarios. JLL used a market cap rate around 9% and discount rates near 12%, and noted potential buyer property taxes would lower available cash flow to a private buyer. The firm also estimated about $15 million in near-term capital refreshes would be required under current contracts — a cost that would fall to the owner under existing agreements.

Council and staff also discussed the hotel’s construction cost (reported in the meeting as about $135 million), the timeline for required renovations (soft refresh every 7–8 years, harder refresh every 14 years), and the likely capital needs under the hotel's operating model.

What the city will do next

Council did not take formal action on the hotel valuation at the meeting. Staff said they will continue to study options, review contract obligations, and present follow-ups. Several speakers urged prosecutors or audits; one public speaker asked the district attorney to investigate contract development and procurement for the project.

Quotes

"If the determination was made to sell this hotel ... we believe that the value is somewhere between $22 and $24,000,000," a JLL presenter said during the valuation briefing.

"Amendment O will protect taxpayers and keep city government focused on its core mission," Kim Ataya said in public comment, urging approval of the charter changes.

Ending

Council members repeatedly urged voters to use the Nov. 4 charter election to weigh changes that would change how the city approves large projects and debt. City staff said the valuation will be part of continuing discussions about financing, contract obligations, and next steps for the hotel and convention center.