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Unpaid Bills Cloud Jonesboro Hyatt ProjectLock Icon

3 min read

The owner of the Jonesboro Hyatt Place Hotel & Convention Center project is accused of defaulting on a $1.5 million settlement agreement with contractors, sparking a new round of legal action against the developer.

KEG Construction LLC of Paragould filed an amended complaint in January alleging that Northern Arkansas Hotel & Convention Center LLC defaulted on the settlement agreement it signed in July.

Northern Arkansas Hotel was supposed to pay a total of $1 million by Sept. 15 to its general contractor, Construction Network Inc. of Jonesboro, and subcontractors KEG, Naylor Concrete & Steel Erectors Inc. of Mount Vernon (Faulkner County) and Midsouth Steel Inc. of Harrisburg (Poinsett County). A second payment of about $500,000 was to follow. Charles Keller Sr. of Effingham, Illinois, a developer of the project, personally guaranteed the payments.

But neither payment was made, according to the lawsuit filed in Craighead County Circuit Court.

In the lawsuit, KEG asks for a $413,000 judgment against Arkansas Hotel, Keller and Construction Network. KEG’s filing triggered the other contractors to seek judgments against Northern Arkansas Hotel. CNI denied in its court filing that it owes KEG any money.

Construction Network also asked a Craighead County circuit judge to place a judgment against Northern Arkansas Hotel for defaulting on the settlement agreement.

Northern Arkansas Hotel and Keller have denied the allegations in their court filings and requested that the cases against them be thrown out. A hearing is set for July 27 in front of Craighead County Circuit Judge John Fogleman.

The construction companies first sued Northern Arkansas Hotel & Convention Center in early 2017 to collect money owed for work on the project, which began in late 2016. The project was one of two convention centers being built in the city of about 70,000.

Contractors also placed liens on the estimated $30 million project, envisioned as a 165-room Hyatt Place and 37,000-SF convention center.

The lawsuits brought construction to a halt. The construction companies reached a settlement agreement with Northern Arkansas Hotel, and construction was expected to resume after the companies were paid.

But the project “as of right now, it’s sitting,” said attorney Jim Lyons, who represents Keller and Northern Arkansas Hotel & Convention Center. “But I have not talked to the owner in the last few weeks to know what their plans are right now.” He declined to comment further.

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Chris Keller, CEO of Northern Arkansas Hotel & Convention Center and son of Charles Keller, did not respond to an email and didn’t answer several calls to his cell phone. Keller is part of Keller Enterprises Inc. of Effingham, which has developed other hotel projects. A person who answered the phone at Keller Enterprises last week said the Jonesboro project has been “put on hold” and referred questions to Keller.

Meanwhile, building has begun on a long-delayed convention center project at Arkansas State University.

O’Reilly Hospitality Management of Springfield, Missouri, is developing the 40,000-SF convention center, 202-bed Embassy Suites Hotel and Houlihan’s Restaurant on the A-State campus. In July, CEO Tim O’Reilly said he needed financial support from the Jonesboro Advertising & Promotion Commission for the project to continue. In November, the commission agreed to a 3 percent tax rebate of up to $2.5 million over 10 years.

“The incentive is in the form of a tax rebate from the project itself, so nothing will be rebated back until the convention center is fully operational and generating the hotel tax,” Jerry Morgan, the A&P chairman, said last week in an email to Arkansas Business. He also said that dirt work had started at the site, and “it appears to be on schedule.”

A city building permit filed in March 2017 lists the value of construction at $39 million and the general contractor as Clark Contractors LLC of Little Rock.

The center, hotel and restaurant are expected to open in 2019.

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