Municipal Development District moves $736,000 to cover Hyatt insurance bill

The Baytown Sun
By Mark Kramer, mark.kramer@baytownsun.com
August 7, 2023

At their monthly meeting, the Baytown Municipal Development District board approved shifting $736,000 from the general fund to cover the $1.8 million insurance price tag for the Hyatt Regency Baytown Hotel.

The amount will be included in the FY 2024 budget, which would come before City Council for recommendation.

City of Baytown Finance Director Victor Brownlees explained that the insurance would have originally been paid from a pre-operating expense account from original bond proceeds. However, additional expenses with Hyatt hotel drained that account.

Brownlees said that if the insurance costs had come in at the figure he initially assumed, it would have been paid for from the proceeds within the bond trust, which he said was more than enough to cover the $1.8 million cost.

City officials said when the proposed MDD budget was presented in June, the Hyatt insurance invoice had yet to arrive. Since the insurance bill only covered a portion of the fiscal year, officials budgeted the amount that they thought would be spent, which was between $100,000 to $139,000. Councilwoman Laura Alvarado asked what future insurance costs for the hotel would look like.

“Obviously, the $1.8 million bill was a shock,” she said. “Can you tell us what can we expect going forward?”

Brownlees noted that over time as the hotel gains more revenue, the city will be able to recoup those insurance fund. 

“In addition, the more business that generated by the hotel will bring in more profit which will go directly to the city and the MDD,” he said.

At last month’s MDD meeting, City Manager Jason Reynolds advised the MDD board to begin moving on a reserve balance of roughly $4 to $5 million. 

To obtain this goal, Reynolds said it might take a few years to build this amount up and require less spending from the MDD.

Brownlees reminded MDD that the city has and other staff members are reaching out to Conroe and Abilene and are looking into building their own insurance package with lower premiums. 

Hotels in these cities have experienced similar situations. Conroe’s city council just received news that $5 million was not budgeted for their new $107 million Hyatt Regency hotel. They, as Baytown, hired the firm Garfield Public/Private, LCC, to develop it and DPR Construction to build it. Garfield also oversees the Abilene DoubleTree by Hilton Convention Center Headquarters Hotel.