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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowWe’re glad to see that the colossal cost overruns on Carmel’s city-backed Hotel Carmichael are raising a chorus of concerns from members of the city council.
Councilors, after all, represent the public—which deserves to know what city officials knew when about the ballooning cost of the project, which is slated to open in May under Marriott’s swanky Autograph Collection branding.
The scale of those overruns is significant in itself—a project estimated in 2017 to cost $38 million now is expected to run $58.5 million.
But questions about lack of transparency loom just as large. The city announced the overruns on the evening of Friday, Jan. 31—timing that seems aimed at attracting as little attention as possible. The announcement followed weeks of inquiries by IBJ and other media outlets seeking to confirm rumors about overruns.
At a Carmel City Council meeting Feb. 3, Carmel Redevelopment Commission Executive Director Henry Mestetsky said the commission delayed its announcement until it had lined up a patchwork of funding sources that will cover the overruns without turning to taxpayers.
That’s a flimsy explanation, to be sure. Working out a Plan B aimed at protecting taxpayers sure beats not doing so but in no way justifies secrecy in the interim.
At the meeting, Mestetsky said it had been clear since early 2019, when the project was bid, the cost would be at least $55 million.
But Councilor Tony Green said he did not believe the commission had been forthcoming. “You had an opportunity each and almost every council meeting here to say something. You gave the perception to all of the council members that we were staying the course.”
The project, a longtime dream of Mayor Jim Brainard, is being developed by Carmel-based Pedcor Cos. It will have 122 guest rooms and 3,200 square feet of meeting space.
One point everyone can agree on is that, over the past two years, construction costs have skyrocketed, thanks to higher prices for materials and a severe labor shortage.
But other developers who spoke to IBJ say those setbacks alone would not explain a nearly 50% increase in the project’s cost.
One question to explore is whether the original estimate was wishful thinking.
If the answer is yes, it raises questions about whether project planners wore the same rose-colored glasses when they drafted operating budgets for the property. If so, brace yourself for more trouble ahead.•
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