Middlesex County Improvement Authority defaulted to pay $1 million interest charges on a $20 million loan obtained from Casino Reinvestment Development Authority. This is in addition to five years of arrears which amount to $7 in defaulted payments. The loan was issued to construct a New Brunswick hotel conference center by New Brunswick Development Corp, a nonprofit organization.
The New Brunswick development Corporation (Devco) is an urban real estate development company which was founded in the mid-1970s to stimulate refurbishment of projects and also to serve as a vehicle for both private and public investment in New Brunswick City.
Devo has been responsible for more than $1.6 billion of investment in Brunswick city. This has been guided by adherence to a specific set of guiding principles.
The hotel which was opened at the start of economic depression faced a huge obstacle of attracting guests and had never attained full occupancy as reported on Press of Atlantic City. The hotel was under such financial constraints that the management had to tap into its money to finance its basic expenses such as carpet and mattress replacement.
The loan issued by CRDA was in addition to $70 million in municipal bonds from Middlesex County Improvement Authority and which are supposed to be repaid with revenue generated from the hotel which will be an uphill task.
As Atlantic County Improvement Authority prepare to issue $120 million in bonds for the Gateway project, Chris Paladino is confident that the issues being faced in Brunswick won’t recur. In December, a law was signed to bar state agencies from giving grants, loans and other subsidies to businesses that had defaulted on loans and bonds issued by the state.
CRDA to officials admits that the Heldrich project did not turn out as planned and that repayment of loan offered will be hard. They are however optimistic that future projects will be subjected through due diligence to guarantee repayment.