In 2005, the Casino Reinvestment Development Authority (CRDA) loaned $20 million to the Middlesex County Improvement Authority to construct The Heldrich, a New Brunswick, New Jersey hotel and conference center on pressofatlanticcity.com. Though the loan was officially granted to the Improvement Authority, the transaction was arranged by a nonprofit called the New Brunswick Development Corporation (DEVCO). Last month, the Improvement Authority did not pay the $1 million it owed on the loan from the CRDA, according to The Press of Atlantic City.
The $20 million loan was arranged by attorney Chris Paladino, who heads DEVCO. DEVCO, a private, nonprofit, tax-exempt real estate development corporation on northjersey, was founded in the 1970s to “serve as a catalyst for the city’s revitalization,” as stated on the company’s website.
DEVCO’ revitalization efforts in New Brunswick have mostly concentrated on a 10 block radius surrounding the town’s train station. The company has been credited with numerous successful projects, including Rutgers University buildings, theaters, offices, government buildings, hospitals, restaurants, residences, hotels and a convent, says NJ.com.
Though Paladino has promised the CRDA that its loan will be paid within a few years, investors are nervous because the Heldrich hotel has not performed well since it opened in 2007. The Press of Atlantic City reported that its occupancy rate last year was only 63.5 percent, and DEVCO had to use about $776,000 of its own funds for expenses such as hotel mattresses.
Still, Paladino has highlighted the positive impacts of the Heldrich hotel, despite these debt repayment concerns. He cited its employment of 235 unionized workers, its $1.2 million annual real estate taxes, and 100,000 customer visits in 2015.