Concerns Raised over Devco’s Inability to Pay $20 million CRDA Loan
Brunswick Devco has triggered concerns over its inability to pay Casino Reinvestment Development Authority’s loan of $20 million. It did not honor its payments for the loans (in principal and interest) way back in January. This loan had been sourced in 2005 to be used for the construction of the Heldrich which was a conference hall and hotel built by New Brunswick Development Corporation.
Devco serves as the model for Atlantic City Development Corporation, another firm that looks forward to managing $200 million in private-public financing. This includes $19.5 million in New CRDA money, whose purpose is to develop the Gateway Project in the city’s Chelsea section.
The Attorney who made possible the $20 million loan, Christopher Paladino heads these two corporations. He stated that CRDA would eventually get paid but this would take some more years. The Heldrich contains 235 rooms but in the recent past has not been attracting guests. The occupancy rate is just 63.5%. This is as originally written in an article in Press of Atlantic. http://www.pressofatlanticcity.com/news/breaking/unpaid-million-crda-loan-raises-questions-about-new-brunswick-devco/article_a03318e2-dcdb-11e5-a563-67611bc7b7bc.html
Paladino said they however plan on making profits from the hotel. The $20 million from the CRDA had been just part of the loan taken to fund the Heldrich. The full amount was $107 million. $70 million in municipal bonds was issued by Middlesex County Improvement Authority. The revenue from the Heldrich is supposed to pay the bonds. In 2015, Governor Christie signed a law which prohibited state agencies from giving loans and grants to businesses and other nonprofits that have defaulted on state-issued bonds and loans.
New Brunswick Development Corporation (Devco) is a private nonprofit urban real estate development company based in New Jersey. The company was founded in the 1970s to serve as a medium for the city’s resurgence. They have experts who are excellent at creating innovative project financing structures, strategic alliances and strong public private partnerships. To date the company has overseen around $1.6 billion of investment in New Brunswick.