By Ann Marie Shambaugh
When Carmel Mayor Jim Brainard first approached Pedcor President CEO Bruce Cordingley about developing a full-service, luxury hotel near Carmel City Center, he was not immediately on board. Cordingley figured the city could land a slightly lesser-quality hotel that would still be nicer than anything else in town.
But once he learned more about it, he was all in.
“I want us to make an effort to do something extraordinary,” Cordingley said. “I have no interest in going and doing this if we’re going to just do something other cities have.”
Brainard is hoping to lure a four-star Autograph Collection by Marriott hotel and is spending at least $10 million in an attempt to make it happen. The hotel would be co-owned by Pedcor and the city and funded through $101 million in bonds proposed by Brainard that also include several other projects. The Carmel Redevelopment Commission would help pay construction costs and back up the mortgage loan payments. Construction of the hotel is expected to cost $25 million.
The proposal was the topic of a lengthy conversation Aug. 15 at the Carmel City Council’s Finance, Utilities and Rules committee meeting. Residents packed the room to hear the discussion between committee members and several stakeholders – including Cordingley – but were not permitted to voice their opinions.
CRC Director Corrie Meyer presented a memo that outlined answers to several questions from committee members. She said that the city wants to pursue the hotel as a public private partnership because it will produce tax increment financing to help cover the costs, provide for an entity to hold a franchise agreement with Marriott and won’t require the city to do an RFP process. Current has filed a records request to obtain a copy of the memo.
Cordingley said a public private partnership is the only way this type of hotel could be built in Carmel. He pointed to several other developments in the area that Pedcor has developed in partnership with the city as examples of unique, long-term projects that could not have been built without government support.
“I hope all of you enjoy Carmel City Center. I hope you enjoy the Indiana Design Center. I hope you enjoy the Old Town Shops and Pedcor Square,” Cordingley said. “Those are not things the private sector on its own can do. It needs the help of the public sector to do it.”
Peter Coury, an Oklahoma-based consultant receiving $20,000 a month to advise Carmel on landing the hotel, agreed that it will take a public private partnership to develop it.
“It appears there’s a market there, but the private sector isn’t willing to take that risk,” he said.
Coury, who has a stake in eight other Autograph Collection hotels, said that with 125 corporations calling Carmel home, the proposed hotel shouldn’t have trouble filling rooms. He expects it will serve approximately 65 percent business travelers, 25 percent social travelers and 10 percent groups.
“I think there’s going to be a lot of demand for it and cause it to have a very successful rate of occupancy because there’s nothing (like it) here,” Coury said. “It’s an unsatisfied demand.”
Rates are expected to average $192 per night, said Coury, who added that he was currently paying more than that at a limited-service hotel. Cordingley said the hotel’s “reasonable cost” will make it a “community asset.”
“We can’t expect to get anywhere near $400 to $500 per night,” Cordingley said. “That’s why we need the public assistance to create something that will add that quality to the city and be relatively affordable to everybody here.”
Cordingley said in the past decade Pedcor hasn’t been contacted by any hotel developers about the site.
Both Cordingley and Coury said that the success of an Autograph Collection hotel in Carmel could lead other full-service hotels developers – who may not request public assistance – to the area.
The committee is expected to meet again at 5:30 p.m. Aug. 28 to discuss an antique carousel purchase that is also included in the bonds. The hotel could also be discussed at that meeting. Committee members said the city council will not vote on the bonds at its Aug. 21 meeting.
A gift to the city
When Bruce Cordingley agreed to begin developing an area of Carmel that is now among the city’s most recognizable, he said the city “almost had to give away” much of the land because the area had little to attract developers.
A decade later, Cordingley said the nearby site for the proposed hotel is “the most valuable parcel in the state of Indiana” thanks to the public private partnership between the City of Carmel and Pedcor that led to building The Palladium, Carmel City Center and other developments around it.
“There should be a fair deal for Pedcor, because we caused the site to become valuable at great cost to us,” Cordingley said. “I think the measure of value should be a measure of our interest and a fair share of the profits going forward is measured on that basis.”
Part of the proposed deal includes the city receiving 67 percent of profits from the hotel with Pedcor receiving 33 percent for a decade. The city could use the funds to pay down hotel debt or for other projects.
Cordingley said that Pedcor has lost money on some of the projects it partnered with the city to complete. Carmel City Center – which Cordingley said was delivered two years past due – still has not been a profitable project for Pedcor, and that it turned out to be “a gift to the street, a charitable contribution by Pedcor to the city.”
“You may not like the architecture, but it is clearly different than what you would see in a strip mall,” he said, adding that it adds to the vision and plan for the area in a way that wouldn’t be possible without a public private partnership.