The Heldrich, a beautiful New Brunswick hotel and conference center developed by Devco, short for the New Brunswick Development Corporation, once sat in disarray until Middlesex County Improvement Authority decided to restore it. New Brunswick residents were excited, and everyone expected the best. However, financial contentions might place the project on hold indefinitely as the Improvement Authority is currently millions of dollars behind in payments on the loan it took out in 2005 to conduct the project.
The loan was paid by the Casino Reinvestment Development Authority (CRDA), and, as Press of Atlantic City recently reported, the loan has been in arrears for five years. The $7 million in unpaid money accrued during those five years now has an extra million attached, and the future of the Devco project seems to be at a standstill.
President of the New Jersey State Senate, Stephen Sweeney, has held up the Devco project as an example of what happens when public funds are sent through private corporations and channels in order to fund construction and renovation projects. He has good reason to be concerned. The New Brunswick Devco utlizies the same model as the sister operation in Atlantic City, the Atlantic City Development Corporation. Why is this a concern? Because the Atlantic City Devco is expected to oversee public and private funding in excess of $200 million to help develop the Gateway project in the Chelsea section of the city. Nearly $20 million of those funds are CRDA loans.
The Heldrich, which opened in 2007 and boast 237 rooms, has struggled under the weight of the contentious political and financial climate surrounding it, carrying only a 63.5 percent occupancy rate on average. In fact, the hotel is hurting so badly that it had to dip into its own resources just to fund basic capital such as mattresses and linens. How much did it take from its own funds? Just over $775,000.
Attorneys for Devco say it that the loan will be paid within a couple of years, but suspicion and speculation still plague the firm and the hotel associated with the project. Only time will tell what the long-term ramifications will be of this contentious situation.