Devco Loans Are in Trouble

There is trouble afoot regarding the repayment of development funds for The Heldrich, a New Brunswick hotel and conference center that opened in 2007, just as the economy headed into a downturn. The Middlesex County Improvement Authority was due to pay $1 million for interest and the principal on the $20 million loan that was given to bankroll the project by the Casino Reinvestment Development authority.
The Press of Atlantic City has reported that the missed payments from the Improvement Authority for developments in the area now add up to $7 million. The Heldrich was developed by the New Brunswick Development Corporation (Devco).

It was hoped that DEVCO would act as a model of how public funding could be used to successfully create large construction projects in New Jersey. The timing for the hotel’s opening couldn’t have been worse, however, and since its opening the 235 room hotel has had a hard time attracting enough customers to really be viable. The hotel has had to use its own cash to pay for keeping the hotel running with improvements like basic upkeep and replacement of mattresses and carpeting.

Chris Paladino is the head of Devco, and he is still upbeat about the project and its value. In his view, the hotel turned around an area that had been rundown before. He added, however, that’d he be much happier with the project overall once its debt is completely repaid.