In January this year, the Middlesex County Improvement Authority defaulted in its payment of $1 million being the principal and interest on the loan in received some years. The loan amount was $20 million and was advanced by the Casino Reinvestment Development Authority (CRDA). The Improvement Authority has not managed to repay the loan for five years now and as a result it has not paid a total of $7 million.
The loan in question was acquired by New Brunswick Development Corporation (Devco) back in 2005. The purpose of the loan was to construct The Heldrich, which is a hotel and conference center in New Brunswick, NJ.
DevCo is a non-profit organization that is a sister firm to the Atlantic City Development Corporation. The two of them are headed by Chris Paladino, an attorney who made the arrangements for the acquisition of the $20 million loan. The Atlantic City outfit is expected to oversee public and private financing of more than $200 million.
Stephen Sweeney, who is the Senate President of New Jersey State, has touted DEVCO as a perfect example of the results of funneling public finances through private firms in order to carry out large-scale construction such as The Helrich although the hotel has struggled in its operations. Paladino assured that the loan will be paid only that it may take some years.
The Middlesex County Improvement Authority was the actual borrower with DevCo just arranging for the financing of the construction of the hotel. The hotel has remarkable economic impacts such as providing employment to 235 unionized workers, the 100,000 visits in 2015, and generation of annual real estate taxes amounting to $1.2 million.
DevCo was established in mid 1970s as an urban real estate development firm. The firm serves as a vehicle for private and public investment in New Brunswick, NJ that initiates redevelopment projects. It has since overseen investment of over $1.6 billion.
Originally reported on Press of Atlantic City http://www.pressofatlanticcity.com/news/breaking/unpaid-million-crda-loan-raises-questions-about-new-brunswick-devco/article_a03318e2-dcdb-11e5-a563-67611bc7b7bc.html