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Carmel investigating after hotel project goes $18 million over budget

Carmel hotel $18M over projected budget

CARMEL, Ind. (WISH) — The Carmel City Council is looking into how construction for a new hotel went nearly $20 million over the original budget.

Officials with the Carmel Redevelopment Commission say the 50% increase in cost is due to an increase in construction and labor costs across the United States, but people with both the city and the council say they are going to need more detailed and concrete answers than that.

When the Carmel City Council approved the Hotel Carmichael plans and agreed to invest $18 million in bonds into the project in 2017, it was estimated to cost a total of $40 million.

“When this hotel was first proposed, we had a very limited set of plans on which estimates were made because we didn’t want to spend the money before we knew the council would approve it,” said Henry Mestetsky with the CRC.

Now just a few months away from the grand opening, the Carmel Redevelopment Commission told the council that the project will actually cost $58.5 million.

“The residents of Carmel hear eighteen-and-a-half million dollars more than the original estimate. That is going to cause, first of all, some shock, and people are going to want to know what happened,” said Carmel City Council member-at-large Jeff Worrell.

Mestetsky said the increased cost is due to tariffs and a nationwide increase in construction and labor costs.

“The frustrating thing for me would be that that estimate was not very good,” said Worrell.

The CRC found a way to cover the additional cost without asking for any more funds from the city or from taxpayers.

“They are going to take those additional funds out of what the proposed profits were that would be split among the entities,” said Worrell.

Worrell says he doesn’t believe anything illegal is happening but agrees that the situation needs explained: “Some, and maybe me included, might not like the answer. It may be unfortunate,” he said.

As the CRC saw the price tag increasing, they tried to accommodate, but there were certain lines that could not be crossed.

“We did make a bunch of cuts. We shifted the facade of the hotel, we shifted from marble to porcelain tiles,” said Mestetsky. He continued, “to qualify as Indiana’s first Marriott Autograph, there are standards that have to be met.”

The hotel is expected to open in May. Both officials with the CRC and the City Council said they don’t expect the investigation will impact the opening date.