The Middlesex County Improvement Authority has been in arrears for the last five years. At the last count, it had racked up $7 million in missed payments. That hole just got deeper. Last month the authority failed to pay $1 million in principal and interest on a $20 million loan it received from the Casino Reinvestment Development Authority.
The loan is from 2005 and funded the construction of a New Brunswick hotel and conference center, The Heldrich, developed by the New Brunswick Development Corporation (Devco), a local non-profit organization.
The New Jersey State Senate President Stephen Sweeney had trumpeted Devco in the past as an example of what can be accomplished when the state gives public money to private corporations to undertake large-scale construction projects.
DEVCO is the model for the Atlantic City Development Corporation, which expects to see over $200 million in public and private funding to develop The Gateway Project in the Chelsea section of Atlantic City. The two Corporations are both headed by Chris Paladino, an attorney who also arranged the loan for The Heldrich hotel and conference center.
The Heldrich opened back in 2007 and sports 235 rooms. But, when the country quaked under the recession the following year, the Heldrich began to struggle. It failed to attract guests. Its occupancy rate tumbled to just 63.5 percent last year. Johnson & Johnson is its largest account, and their executives sit on the New Brunswick Development Corporation’s board of directors.
The hotel is so desperate for funds that the corporation had to take around $776,000 of its own money to pay for basic expenses, like mattresses and carpet replacement, Paladino recently told the Atlantic City Press.
The New Brunswick Development Corporation (Devco) is a private non-profit real estate development company launched in the 1970’s. It’s overseen nearly $1.6 billion of investment in New Brunswick since its founding.