Conroe leaders talk hotel's future From the cover
Managing the impact
Breaking it down
The CLGC—established in 2019 under state law—is made up of Conroe City Council members. The public nonprofit was created specifically to develop and operate the hotel facilities. To build the hotel, the CLGC issued the three layers of hotel revenue bonds. As of late 2025, outstanding principal balances across the three liens total about $28.2 million, $26.6 million and $21.2 million. To cover shortfalls, the CLGC set up debt service reserve funds. The first-lien reserve was initially funded at about $2.83 million and, after required additions and investment earnings, held about $3.1 million as of November, even after roughly $196,000 in draws. The second-lien reserve was funded at about $2.15 million, and—after additions and investment earnings—draws of about $2.26 million bring it to about $145,000 . The CIDC reports it has paid about $2.73 million toward the third-lien interest obligations.
bonds have fallen from a “BB” to “CCC-.” In a report released in October, S&P lowered the CLGC’s second-lien bonds to “CCC-,” projecting a default on that lien’s April 2026 payment absent a significant improvement in performance or outside support. Analysts reported the hotel had drawn on its second-lien debt service reserve to make payments and estimated about $115,000 would remain after the Oct. 1, 2025, payment. The second-lien reserve was originally funded at about $2.15 million, and S&P esti- mated the April 1, 2026, interest payment at roughly $632,956—far more than the $115,000 projected to remain in the reserve, which is why analysts warned of a likely default. In the same October report, S&P affirmed a “B” rating on the first-lien bonds but kept a negative outlook, citing thin cash-flow cover- age and the risk that the hotel’s revenue would land lower than originally expected.
City leaders are now weighing what comes next for the Hyatt Regency Conroe as the proj- ect’s debt and performance continue to strain its finances. On Oct. 23, the Conroe City Council and CLGC board held a meeting to review options, including the possibility of a sale. Ahead of that meeting, commercial real estate firm Jones Lang LaSalle delivered an updated market valuation. JLL representa- tives concluded the hotel’s net value range was between $22.5 million and $23.8 million, assuming it remains branded and managed by Hyatt. That valuation is less than 25% of the roughly $108.6 million it cost to build. Meanwhile, the CLGC’s credit rating has been downgraded multiple times since the hotel opened. S&P Global Ratings first downgraded the hotel bonds in February 2024, followed by additional downgrades in June and again in October, according to S&P. The hotel’s first-lien bonds were originally rated “BB+” in 2021 and now hold a “B” rating, while the second-lien
Lien total In total, 3.95% of the hotel liens’ principal have been paid off. Per city projections, surplus revenue will not be generated until around 2050. First lien: $28.7M 1.74% principal paid
According to JLL Commercial real estate firm Jones Lang LaSalle discussed its evaluation of the hotel Oct. 23.
Total: $77.1M
The hotel’s 2024 assessed value is $49.1 million , but a sale would trigger a reassessment, reducing first-year property taxes to about $554,770 . The Hyatt is classified as an upper-upscale hotel. Compared to recent sales in that category, which range from $74,627 to $200,000 per room, the Houston-area average is $94,091 per room. The Hyatt is valued at $90,000–$95,000 per room, which is roughly in line with that average but still far below what it cost the city to build the project. Most comparable hotels are 20+ years old , and the Hyatt is still “ramping up performance,” which lowers value.
Occupancy remains below projections: 2024: 42.8%
2025 (projected): 51.7%
Second lien: $27.2M 2.21% principal paid
Third lien: $21.2M
0% principal paid
SOURCE: JONES LANG LASALLE/ COMMUNITY IMPACT
SOURCE: CITY OF CONROE/COMMUNITY IMPACT
Put in perspective
approval before issuing certain large amounts of debt. They said that change, along with a more conservative approach since 2022, is intended to prevent similar situations. Wood said the experience has reinforced his belief that Conroe should focus on core services. He also said the new voter-approved debt charter amendment gives residents more say before future councils take on large projects—though he believes there is still room to strengthen those safeguards.
Gibbs said. They also continue to issue debt for various infrastructure projects through the capital improvement program. Bond rating changes for the CLGC have not directly altered the city’s own credit ratings, but staff said downgrades can make it harder and more expensive for the CLGC to borrow for future projects by reducing investor confidence. City officials also point to Proposition O, a charter amendment approved by voters Nov. 4, which now requires future councils to seek voter
City and CIDC leaders said the Hyatt project has narrowed their room to take on other priorities. “The hotel and convention center project has impacted the city’s overall financial flexibility. It was a major endeavor and investment,” Gibbs said. Even so, Conroe continues to move forward with other major investments. Excluding the hotel and convention center, the city and CIDC currently have one large project that is also funded through debt: the new Oscar Johnson Jr. Enrich- ment and Recreation Center at about $35 million,
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