Just a month ago, the Middlesex County Improvement Authority was not able to pay a $1 million principal payment on a $20 million total it got from the Casino Reinvestment Development Authority. Over the course of five years, The Improvement Authority has totaled $7 million in payments that it missed. The loan was used to develop a new hotel and conference center combo called The Heldrich, located in New Brunswick in 2005.
The president of the state Senate, Stephen Sweeney, said that the project is a great example of what can happen when public money is funneled into private companies for big construction projects. The Atlantic City Development Corp. is a sister company of the New Brunswick Development corp and is using them as a model to emulate. The company will use $200 million to develop a new project in Chelsea.
Attorney Chris Paladino is in charge of both operations and personally arranged the Heldrich’s $20 million loan. The $20 CRDA loan is just a part of a larger $100 million loan that was put together to build The Heldrich. Bonds were included in the loan, and were supposed to be paid back. However, only senior bond holders (representing about $30 million) have been paid back in full, plus about 5% interest. Other bondholders haven’t been paid for years now.
John Palmiere, the CRDA Executive Director, said that the payment had not happened but they knew they would be the last to be paid. Apparently, there are positive effects. For example, the hotel employs 235 union workers and pays $1.2 million in taxes for real estate every year.
The funds for the Gateway project in Chelsea are going to be used to build a dorm and campus extension for Stockton University. Apparently, the sale of the tax credits and revenue from the dorms is going to repay the loan.
Devco is based in New Brunswick. It is a development company. It was founded in the 1970’s.
Devco is planning to further its operations nationally. They have managed over $1.6 billion. Their projects are mainly in New Jersey.
This is a recap of an article that originally appeared in Press of Atlantic City