Category: Real Estate Development
In February 2016 the Middlesex County Improvement Authority did not make payment on a $20 million loan from the Casino Reinvestment Development Authority (CRDA) as reported by Press of Atlantic City. The loan was for the construction of a hotel and conference center in New Brunswick called the “Heldrich”.
The New Brunswick Development Corporation (Devco) received the funds from the Improvement Authority and was responsible for the hotel’s creation. Christopher Paladino, who heads the corporation and was responsible for arranging the $20 million loan, said, “CRDA will be paid, but it’s going to take a couple more years.”
DEVCO, established in the 1970’s, has managed over $1.6 billion in development investments for New Brunswick. Most of these projects have been for mixed-use. The funding for these projects have come from both private and municipal sources.
The total for the hotel loan was $107 million. The CRDA chipped in $20 million and the rest came from municipal bonds issued by the Middlesex County Improvement Authority. The hotel is supposed to repay the bonds from revenues. Opening in 2007, the hotel has yet to be profitable. Devco recently had to insert $776,000 of its own money to replace mattresses and carpets.
Paladino also runs the Atlantic City Development Corporation and will be using $120 million from the CRDA to develop the Chelsea Gateway project. This project is a satellite campus for Stockton University.
Officials from the Atlantic County Improvement Authority believe the Chelsea project won’t see the same difficulties the Heldrich. They believe the loan for the new campus to be secure and carefully underwritten.
The one bump in the road for Devco may be the bill that governor Chris Christie signed that bars any state agency from giving money to a business or nonprofit that has defaulted on a state-issued loan.