The Middlesex County Improvement Authority did not have the funds to pay $1 million in principal and interest that it owed for a $20 million loan it got from the Casino Reinvestment Development Authority. It’s been five years now that The Improvement Authority had already been missing payments, totaling $7 million. The loan was originally made in 2005, which funded the construction of a New Brunswick hotel called The Heldrich. The hotel also has a conference center that the New Brunswick Development Corporation (a nonprofit) developed.
Stephen Sweeney, the president of the state’s Senate said that the corporation is a shining example of what can happen when public money is put towards the efforts of private firms and turned into large construction projects. The company is also being modelled by its sister company in Atlantic City, called Atlantic City Development Corp. They plan to raise over $200 million in financing (public and private) along with $19.5 of CRDA funds to develop a new project in the Chelsea section of the city called Gateway.
Chris Paladino is the attorney who put together both projects and oversaw the $20 million loan for Heldrich. The hotel has experienced low occupancy and has not attracted as many guests as it could have. The corporation had to use $750,000 of its own funds to fund certain basic costs. The CRDA loan was part of a $100 million package, including municipal bonds. The senior bond holders have been paid back with 5% interest on schedule, but subordinate bond holders have not seen a payment for a number of years.
Devco, also known as New Brunswick Development Corporation, is a private nonprofit development company specializing in real estate. It was founded in the 1970’s as a way to revitalize the city. It was named as a powerful engine of economic growth by the New York Times.
They focus on creating alliances with public and private partners. They finance projects that are of mixed-use. Their strategies often involve hotels and other large projects. DEVCO has handled over $1.5 billion of development.
This is a recap on an article originally written by Press of Atlantic City.