Carmel, Indiana Mayor Jim Brainard says a projected $38.5 million dollars in cost overruns for construction of the luxurious Hotel Carmichael will not be borne by taxpayers.
The city of Carmel announced last week that while construction of Hotel Carmichael at Carmel City Center is on schedule, the cost for the project had grown to an estimated $58.5 million, $20 million higher than the initial budget.
“A variety of economic factors” were blamed for 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 in a statement. “As we tracked these construction cost increases reported by various construction-related sources, we anticipated the challenge.”
In a lengthy statement released Monday, Carmel Mayor Jim Brainard offered an explanation for cost overruns related to the construction of the Hotel Carmichael and argued that “Mestestky and the CRC “should be applauded for finding innovative ways of funding these cost increases without any additional risk to taxpayers.”
“Construction and labor costs are increasing across the industry,” said Brainard. “These increases are not due to any type of mismanagement or oversight, but market forces beyond our control.”
He continued: “While the private sector can get funding upfront for a project, the public sector must first submit budget estimates and preliminary design ideas without the benefit of detailed architectural and engineering plans based on those conceptual designs. It is after the public bidding process that the true costs can be evaluated.
“When unanticipated market fluctuations occur, we must be ready to find ways to cover those costs and continue the project through to completion. As we completed the public bidding in 2019, we were able to get a clear picture of the actual costs for the hotel and, armed with solutions for funding, were able to update the project budget to reflect the new costs.”
WIBC host Tony Katz discussed Mayor Brainard’s defense of CRC executive director Henry Mestetsky on his Wednesday morning program but questioned why the public was not made aware of the cost overruns for the Hotel Carmichael a year ago. Click below to hear Tony’s full commentary.
(Photo: WISH-TV)
