Conroe Hyatt Project Faces Audit Doubts

Conroe Hyatt Regency Project Faces Uncertainty Amid Damning Audit Report

Conroe's planned $100 million Hyatt Regency hotel and convention center project is facing significant headwinds following the release of an audit report that casts serious doubt on the financial viability of the developer, Garfield Public/Private, LLC. The ambitious project, first announced in July 2022, includes a 250-room hotel and a 60,000-square-foot convention space, intended to be a cornerstone of the larger Grand Central mixed-use development. The City of Conroe had pledged approximately $28 million in incentives over 20 years, comprising hotel occupancy and property tax rebates, to support the development.

An audit report by RSM US LLP, commissioned by the City of Conroe and officially released on May 10, found that the developer's financial statements "lack reliability." Auditors specifically noted that a claimed $50 million in equity from Garfield Public/Private, LLC, and its principal, Fred Kitchens, could not be verified. The report also highlighted "adverse findings" against Kitchens in an unrelated $21 million SEC settlement from 2017.

RSM US LLP concluded there is "substantial doubt" the developer can complete the project without "significant additional capital" and assessed the developer’s "financial projections are overly optimistic." Furthermore, the audit stated it is "highly unlikely" the project would be completed by its target date of December 2026.

In response, Fred Kitchens has strongly refuted the audit's findings, labeling the report "pure nonsense." Kitchens asserts that the audit is based on outdated information and claims the project is now "fully financed" with $70 million in equity and a new financial partner already secured.

However, Conroe city officials are seeking immediate clarification. City Administrator Paul Virgadamo sent a letter to Kitchens on May 10, demanding a comprehensive response and substantiation of his claims by May 17. The Conroe City Council is scheduled to discuss the project's future at its May 23 meeting.

For now, the City of Conroe has paused any further action on the development. The city has already invested approximately $1.6 million in the project for expenses such as land purchase, architectural design, and engineering. The immediate future of the Hyatt Regency hotel and convention center project in Conroe remains uncertain as the city awaits further information from the developer.