Plans to build a 165-room Hyatt Place Hotel and an adjoining 78,000-square-foot convention center near Jonesboro’s hotel row off Caraway Road are in peril. Dirt work has been begun at the site, but liens have already been placed against the property, according to the city’s A&P Commission.
Work has ceased because the project’s parent company, Northern Arkansas Hotel and Convention Center, NAHCC, has not received funds from its primary investor, A&P Commission Chairman Jerry Morgan told Talk Business & Politics.
“Needless to say, this has raised some red flags,” Morgan said.
Morgan, who was recently appointed to replace former Chairman Thom Beasley, said he isn’t ready to proclaim the project dead. He reviewed the numbers and projection dates and said he intends to protect the city’s taxpayers.
NAHCC CEO Chris Keller sent an email to Morgan prior to an A&P meeting Wednesday afternoon. He hoped to attend the meeting, but a scheduling conflict prevented it. Keller told Morgan he hoped construction would resume and the investment problems will be fixed.
“We continue to move forward with the project,” Keller said.
The A&P has already paid $75,000 toward the project, and another $75,000 is slated to be doled out later this year, according to records. Keller provided bank statements that showed $70,000 is still being held in a local bank. Commissioners voted unanimously to have the city attorney draft a letter asking for the return of those funds to be held in an escrow account until the issues are resolved.
To alleviate concerns, commissioners voted to send a letter to NAHCC asking for a number of conditions to be met within 30 days of receipt of the letter. NAHCC will be asked to produce an irrevocable letter of credit or surety bond for the return of funds if the project isn’t completed. A letter from a bank, investor, or investment group must be submitted detailing available funds for the project.
Final plans for the entire project must be submitted, unpaid vendors must be paid, a commitment letter from the Hyatt corporate office must be included, a full accounting of how the money will be spent, and a timetable to begin construction in the next 90 to 120 days must be established.
Keller told Morgan his company won’t need the other $75,000 installment this year because of the delays. A&P is slated to already pay another $150,000 in 2018, and the $75,000 could be added to that total.
In February 2016, the Jonesboro A&P Commission voted 3-2 to give NAHCC, then known as the Keller Family Hyatt project group, $300,000 in advertising revenue to support their hotel and convention center project. The group will also receive a hotel tax forgiveness of $200,000 per year for up to three years once the project is complete.
A second convention center/hotel is slated to be built on the Arkansas State University campus, but was denied support by the A&P. O’Reilly Hospitality Management of Springfield Mo., will build a 202-bed Embassy Suites Hotel, a Houlihan’s Restaurant, and the 40,000-square-foot Red Wolf Convention Center. Both are slated to open in 2018, but construction updates have not been provided by either company.