It seemed like a good idea at the time.
This is what officials at the Casino Reinvestment Development Authority (CRDA) likely tell themselves when they check the balance on the $20 million loan they issued to build The Heldrich hotel in New Brunswick. This January, New Brunswick Development Corporation (DEVCO), builders of the Heldrich, missed yet another installment, adding another $1 million to the $7 million in payments missed since 2011.
The 235-room hotel debuted to fanfare in 2007, shortly before the economic downturn. In years since, business hasn’t lived up to expectations. Most customers today come from nearby Johnson and Johnson. J&J executives happen to sit on the board of Devco. Revenue has been tight enough to force Devco to dip into their own funds to pay for needed repairs to mattresses and carpets.
Attorney Christopher Paladino heads both Devco and its sister organization, the Atlantic City Development Corp. He arranged the loan for The Heldrich. So far, only senior bond holders have seen timely payment on the $107M total borrowed for the project. Paladino states that as a subordinate lender, CRDA anticipated the potential of slow repayment. In a recent article in The Press of Atlantic City Paladino asserts all creditors will eventually be repaid.
Eyes are on The Heldrich as a model for similar redevelopment in Atlantic City.
Devco has made news in the past as a pioneer in uniting public funds and private capital for redevelopment projects in New Brunswick. Their projects have included Liberty Square, the Middlesex County Administration Building, and Skyline Tower. Many of Devco’s efforts have been praised for modernizing New Brunswick.
Since its founding in the 1970’s, Devco has overseen nearly $1.6 billion in funds dedicated to rebuilding New Brunswick. They pride themselves on innovative funding structures and mixed-use projects.