The failure by the Middlesex County Improvement Authority to pay the Casino Reinvestment Development Authority’s (CRDA) principal and interest has raised questions over the viability of the projects being undertaken by the New Brunswick Development Corporation. The interest payment to the CRDA amounts to $20 million. The loan was provided for purposes of facilitating the renovation of Heldrich Hotel as well as construction of a conference center and a New Brunswick hotel.
This was not the first time that the Improvement Authority had failed to honor its obligation since 2005 when it was loaned the money. Over the last five years, the authority has accrued about $7 million in arrears. This situation has made analysts doubt the ability of the Improvement Authority to pay the loan and the feasibility of the various projects that New Brunswick DEVCO undertakes to do.
Questions on the projects being over sighted by Devco has seen people doubt whether the Atlantic City was right to come up with the Atlantic City Development Corporation, a private firm modeled on the New Brunswick Devco. The Atlantic City Devco is expected to manage over $200 million required for various projects in the city. Although Chris Paladino, the head of both corporations, claims that CRDA will be paid, the failure of his projects in New Brunswick is considered as an outcome of what might happen in the Atlantic City. This information was originally published on Press of Atlantic City as found in this link http://www.pressofatlanticcity.com/news/breaking/unpaid-million-crda-loan-raises-questions-about-new-brunswick-devco/article_a03318e2-dcdb-11e5-a563-67611bc7b7bc.html.
Although Heldrich Hotel has seen its occupancy rate reach 63.5% in 2015, the Hotel has not still recovered from the economic downturn of 2008. This problem has been made conspicuous by Paladino’s move to invest another $776,000 into the hotel. This amount is intended to fund basic capital expenses. If the trend continues, Devco will have no way of convincing the New Brunswick County to continue with similar projects.
About the New Brunswick Devco
New Brunswick Development Corporation, popularly known as DEVCO, was founded in the mid-70s. Its objective was to reignite economic growth in New Brunswick through a wide variety of redevelopment projects. Currently, the private nonprofit real estate development firm has made over $1.6 billion worth of investments.