Devco Yet to Pay on $20 Million CRDA Investment

According to an article published by the Press of Atlantic City , the Middlesex County Improvement Authority has yet to pay $1 million in interest and principal on a $20 million loan. The loan was funded by the Casino Reinvestment Development Authority (CRDA), and was developed by the New Brunswick Development Corporation (Devco).

The loan in question was originally awarded in 2005, and funded The Heldrich, a hotel in New Brunswick, NJ. Since then, about $7 million in missed payments has accrued. The Heldrich is the property of the Middlesex County Improvement Authority, says Atty. Chris Paladino.

DEVCO is a development company dedicated to revitalizing New Brunswick. It was founded in the 1970s and has since been associated with educational, recreational, civic, and residential projects. According to their website, Devco has overseen $1.6 billion in New Brunswick investments since the 1970s.

Projects like The Heldrich and the upcoming Gateway project, developed by Devco’s sister firm, the Atlantic City Development Corp., are supported by New Jersey state Senate President Stephen Sweeney. Sweeney endorses Devco and similar companies, encouraging the funneling of public investment dollars through private corporations.

John Palmieri, Executive Director for CRDA, states that CRDA’s involvement in investment projects like The Heldrich allow for senior lenders to participate. Since the CRDA loan was subordinate to other more senior loans, the senior lenders’ risk is mitigated.

The Heldrich opened in 2007 to limited success; the 2015 occupancy rate was 63.5 percent. Devco has paid $776,000 out of pocket for expenses such as mattress and carpet replacement, in order to keep the hotel afloat, although Maria Prato, Middlesex County Improvement Authority spokeswoman, stated that she believes the loan will be repaid in time. There is a standing order to repay senior lien holders first. Senior bonds have already been paid about $30 million at about 5 percent interest.

 

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