The Carmel Redevelopment Commission on Feb. 19 approved a change order that adds $1.2 million to contracts for the construction of Hotel Carmichael.
The approved costs are within the updated $58.5 million budget for the hotel. The city announced the new budget in a Jan. 31 press release. When approved in 2017, the budget for the hotel was approximately $40 million, but rising construction costs and tariffs helped contribute to the 45 percent increase, city officials said.
The CRC approved the change order by a 3-0 vote, with Adam Campagna abstaining because of his pending employment with hotel construction manager Shiel Sexton.
Much of the change order related to costs for Feinstein’s, the hotel’s upscale restaurant and cabaret. CRC Director Henry Mestetsky said that part of the hotel was not included when bidding out the work.
“We didn’t carry it in the same contracts as the rest of the hotel until we figured out the funding gap,” he said. “Now that the CRC resolved the hotel funding, we are incorporating it into the standard contracts.”
Approximately $34 million has been spent on the project so far, Mestetsky said.
Before the vote, commissioner Jeff Worrell, who is also on the city council, said he polled the councilors to see if they supported the change order. With support from all but Tony Green and Tim Hannon, Worrell cast his vote in favor.
At a city council meeting earlier this month, several councilors said they were disappointed CRC officials did not alert them about the new budget total and plans to cover the gap until a day or two before the city’s press release about it.
The CRC is mortgaging two city-owned properties, using funds from its own budget and using excess bond funds to cover the budget gap.
Worrell said many of his constituents are concerned about the hotel’s rising price tag.
“People I represent are worried that whatever happened might cause a tax increase or we won’t be able to plow snow,” Worrell said. “I’m just trying to draw a distinction to the fact that you are solving the problem in the way we asked you to solve it (by not coming to the council for more funds). You are using funds that have been generated and developed by the success of the CRC, which seems to me like an obvious good thing.”
CRC Director Henry Mestetsky said rising costs won’t lead to increased taxes, but he understands why many Carmel residents are upset about the situation.
“It certainly feels like sticker shock, where previous estimates in mid-2017 said $40 million and an updated estimate in 2020 said $58.5 million,” Mestetsky said. “It certainly seems like that is a large number and I can understand why people would be upset by that.”