Early this year, the Middlesex County Improvement Authority failed to pay $1 million interest on a $20 million loan that it had obtained from the Casino Reinvestment Development Authority. The loan was obtained in 2005 to finance the development of The Heldrich, a hotel and conference center in New Brunswick constructed by the New Brunswick Development Corp. The Authority had already accumulated arrears of approximately $7 million in missed payments. This information was originally reported on Press of Atlantic City.
The New Brunswick Development Corporation serves as a model for its sister firm, the Atlantic City Development, which is expected to manage over $200 million in private and public financing. Senate President, Stephen Sweeney, touted the corporation as a model of what can be achieved when public resources are channeled through private companies to implement large-scale constructions. Chris Paladino who structured Heldrich’s $20 million loan heads the two corporations. The 235-room hotel was opened in 2007 as the economic crisis was setting in. However, it has been struggling to attract guests for quite some time. The previous year’s occupancy stood at 63.5 percent.
On the other end, the Atlantic County Improvement Authority is setting up a $120 million in bonds to be issued in May for the Gateway project. The bond will be utilized to construct a Stockton University Satellite campus and will be repaid through the dorm room revenue and tax credit sales. John Cantalupo, Atlantic County Improvement Authority’s bond counsel, noted that he had examined the Heldrich financing. He was positive that the Gateway bonds would not experience similar shortfalls.
Devco was established in mid-1970’s to act as a catalyst for the revitalization of the city. It is a private nonprofit real estate development firm. The corporation has played a pivotal role in the renaissance of New Brunswick. New York Times recognized Devco as a “powerful engine for economic growth.” Since it was established, Devco has managed about $1.6 billion of investments within the City.