The Carmel City Council voted Monday to have one of its subcommittees conduct a review of what led to $18.5 million in cost overruns on the Hotel Carmichael project.
The Carmel Redevelopment Commission announced in late January that its estimated $40 million Hotel Carmichael, which is scheduled to open in May, would actually cost about $58.5 million. Since then, city councilors have fielded public complaints about the commission’s fiscal responsibility and lack of transparency regarding the cost overruns. Those critiques continued Monday night.
“Significant cost overruns on major projects in Carmel are not new,” John Accetturo, a former Carmel city councilor and Carmel Redevelopment Commission member, said during public comment.
Earlier in the day, Accetturo issued a statement calling for the resignation of the entire Carmel Redevelopment Commission and the firing of Henry Mestetsky as it’s executive director.
He said the $52 million in overruns related to Keystone Parkway’s redevelopment, $72 million in overruns related to the Palladium and now $18.5 million related to the Hotel Carmichael is “either incompetency or mismanagement.”
“Mayor Brainaird is correct to say he has the authority to do what he does, but so does a mob boss,” Accetturo said Monday night. “People need to be held responsible.”
In response to the public outcry, the council voted to have its Finance, Utilities and Rules Committee look into how the cost overrun on the hotel occurred and why officials failed to disclose the additional costs until just months before the project’s expected completion. Councilor Sue Finkam leads three other councilors on the committee: Jeff Worrell, Bruce Kimball and Miles Nelson.
“This seems like a best, first step,” Finkam said.
According to the resolution, the finance committee will be in charge of reviewing the budgeting, cost management and funding of the hotel since its approval by the city council in September 2017. The review’s purpose is to determine whether those matters have been, and continue to be, in compliance with all applicable laws and fiscal procedures.
The resolution also affords the finance committee the authority to use city lawyers, third-party lawyers, consultants or any other city employee necessary to conduct its review.
Finkam said she anticipates the committee will hire an independent attorney to attend the three planned public reviews of the project. The resolution allows the finance committee to spend up to $30,000 on independent oversight before the members have to come back to the full city council for additional funds.
The Carmel Redevelopment Commission will be responsible for paying for any consultants the committee hires.
Finkam said the Carmel Redevelopment Commission already undergoes an independent audit each year. She said the city pays $75,000 each year for the State Board of Accounts to provide “the citizens of the State of Indiana with complete confidence in the integrity and financial accountability of state and local government.”
Finkam requested the committee’s meetings on March 18 and 25, as well as the meeting on April 1, be open to the public, broadcast and recorded online. Though they’ll be public meetings, Finkam said she does not plan to allow public comment.
“We’re going to have enough on our plates that to have public comment every time won’t be productive,” she said.
Instead, she encouraged members of the public to send her questions before the meeting so that they might be incorporated over the duration of the review.
Finkam said one potential outcome of the finance committee’s review is a new interlocal agreement between the Carmel Redevelopment Commission and the Carmel City Council—one that increases collaboration and transparency between the separate entities.
The council briefly considered and voted on an amendment proposed by councilor Tim Hannon, who introduced the idea of a double-barrel audit one month ago. Hannon’s proposal would’ve broadened the review to include all nine members of the council.
“The usual and sundry way of doing this is going to the finance committee is the usual way of doing this. I think that it warrants something unusual,” Hannon said.
Councilor Tony Green also supported involving the entire council. He said it would go a long way to restoring the public’s confidence in its government. Not all councilors were in support, though.
“Having a special committee for this review would set a bad precedent,” Councilor Adam Aasen said. “I’m not on the finance committee, but I have complete faith I won’t be cut out of this process.”
Councilors Green, Hannon and Miles Nelson voted for the amendment. The remainder of the nine-person council voted against it.
After the amendment failed, every council member except for Nelson voted in favor of the finance committee’s review. Nelson told IBJ after the meeting that he mistakenly pushed the dissent button, and that he actually supports the finance committee’s review.
Editor’s note: A previous version of this story incorrectly listed how councilor Adam Aasen voted. We apologize for this error.