Category: Loan Payments

Unpaid Loans By Devco Concerns Financier of Atlantic City Projects

In 2007, Devco, New Brunswick Development Authority, got funds to redevelop a vacant building in the area. These funds included $20 million from the Casino Reinvestment Development Authority. As a result of the funding, DEVCO was able to build a landmark 235 room hotel in New Brunswick, New Jersey. The Heldrich Hotel has been operating since the onset of recession. Despite slow operations and challenges to improve the occupancy rates from 65 percent, the hotel continues to provide employment to nearly 240 unionized workers and approximately 100,000 guests, every year.
Since the project was build just before the onset of 2007 recession, it continues to struggle with its payments. It is reported that DEVCO failed to pay monthly installments to Casino Reinvestment Development Authority, which is close to $1 Million in principal. In fact according to the Press of Atlcantic City, DEVCO has accumulated nearly $7 Million in arrears as it continues to miss payments.

Concerns over non-payment of loans for Heldrich Hotel were raised because DEVCO’s sister company, Atlantic City Development Corporation, will manage $200 Million in public-private financing in Atlantic City. The investment sum will also include nearly $19.5 Million from Casino Reinvestment Development Authority, which also invested in the Heldrich Hotel.

Despite these concerns, experts are optimistic of the long-term impact of Heldrich Hotel because they see it as a role model for public-private partnership in the State of new Jersey. DEVCO, New Brunswick Development Authority has invested nearly $1.6 Billion in several other similar projects in New Brunswick, which is a testament to the long-term success of such projects. Recognized by the New York Time’s as a “powerful engine for economic growth” DEVCO has revolutionized the area since its inception, in 1970. Interestingly, Attorney Christopher Paladino, who arranged the $20 Million Heldrich loan claimed that CRDA will surely be paid because it is just a matter of time before such projects, as Heldrich Hotel, starts generating positive revenue.