The city of Carmel, Indiana says construction of a controversial boutique hotel at Carmel City Center is on schedule; however, the cost of the project is several million dollars over budget.
As reported by Gerry Dick at Inside Indiana Business, “The Hotel Carmichael is scheduled to open in May with a new estimated cost of $58.5 million, about $20 million higher than initial estimates.”
The city of Carmel cited “a variety of economic factors” in addressing the cost overruns, including a national increase in construction costs and local spikes in labor costs and tariffs on imported materials and goods.
“The same factors that have led to a building boom across the nation, state and the City of Carmel itself have unfortunately also led to increases in costs of materials and labor that have impacted the hotel,” said Henry Mestetsky, executive director of the Carmel Redevelopment Commission. “As we tracked these construction cost increases reported by various construction-related sources, we anticipated the challenge.”
The Indianapolis Star reported Monday that Carmel Redevelopment Commission executive director Henry Mestetsky was aware of the multi-million increase in the budget for the construction of the hotel for nearly a year, but didn’t disclose it to the city council until just last week.
Councilman Jeff Worrell, who has supported the project from the start, told Mestetsky he was frustrated after seeing the budget increases and lack of transparency to taxpayers.
“I can’t help to think that the budget was wrong. We hired consultants and the whole concept was to prevent something like this from happening,” Worrell said. “Is there any blame on the consultants for budgeting and for managing this project?”
WIBC host Tony Katz, a Carmel resident, expressed his displeasure at the news on his Wednesday morning broadcast.
“I live there, and what I have learned is that residents seem to love the way the city looks for the most part and they seem unworried about certain numbers and costs. That’s why Jim Brainard has had such a free ride. People love the way it looks, they like the development they’ve seen in the city, and they’re happy to see the city write the check.
“I want to say for the record that Jim Brainard doesn’t appear to me to be an expert on the financial side of these things. Now, I don’t know that Jim Brainard can be held liable for a construction boom, tariffs, and other things that were contributing factors to the hotel’s cost overruns, but $18.5 million dollars? Are we okay with this? Are we just going to sit back and do nothing? Because that seems like the Carmel way.”
The name for the hotel was announced in January 2018. The name is meant to honor the city of Carmel and the Grammy-nominated artistic director of the Center for Performing The Arts, Michael Feinstein.
Click the link below to hear Tony Katz’s full commentary.
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