A recent article on the Press of Atlantic City website, pointed out that the long acclaimed and respected DEVCO may be embroiled in a mire of controversy the likes of which the area has never seen. The whole thing started in 2005 when the Middlesex County Improvement Authority undertook a loan of $20 million to build The Heldrich, a much anticipate New Brunswick upscale hotel & state of the art conference center, which was developed by the nonprofit New Brunswick Development Corp (DEVCO). The project was at that time cheered by all and was thought to be yet another feather in the hat of the successful efforts of Devco to re-develop the urban sector of the greater New Brunswick area. The loan was issued by the Casino Reinvestment Development Authority.
The project was completed, but Devco’s Atty. Chris Paladino says with the worst possible timing. The 235 room luxury hotel and business conference center which opened in 2007 was stricken with misfortune right from the start. As it began operation right when the worst of the economic downturn was starting to affect Americans everywhere. The loan was paid on time for the first few years with a bit of difficulty, but starting in 2011, payments began to be missed culminating in the most recent controversy associated with the CDRA loan and the project as a whole, a missed $1 million dollar payment of principal and interest for 2016. This is on top of the fact that the Middlesex County Improvement Authority has been in arrears for more than five years in total racking up a bill of missed payments totaling over nearly $7 million.
This isn’t the only economic disparage that the project has seen. The subordinate holders of public bonds that were used in part to find the remainder of the construction beyond the $20 million have not seen a payment of principal or any interest in years. This is due to the fact that at its best the hotel has seen a peak occupancy of no more than 63.5 percent and the largest holder of contracts for services was held by Johnson & Johnson. All of this has brought to bear the question as to the health and continued viability of DEVCO as a development partner in the area.
DEVCO is a nationally recognized model for modern urban renewal and development. The organization claims, to administer is programs based on sound public policy. DEVCO was founded in the mid-1970’s as a private non-profit intended to serve the needs of the greater New Brunswick community to assist in urban redevelopment and renewal. The concept that drives the organization is that a city never finished. DEVCO has been regarded as a powerful engine for economic growth by the New York Times, and indeed has been a very significant factor in the assistance of the city of New Brunswick to enjoying a renaissance of development and growth in the past 20 years.
With over 1.6 Billion dollars worth of investment in the greater New Brunswick area since its founding the organization has been a leader in the real estate and financial growth sectors of the city, without a doubt. With projects such as the Rockoff Hall University Apartments, Skyline Tower, Old Bridge Long-Term Care Facility and others, DEVCO is diversified in its efforts to make greater New Brunswick a better place. Most recently DEVCO has undertaken a new project in the College Avenue Redevelopment Project.
The question remains as to whether DEVCO as a partner in the real estate redevelopment efforts of New Brunswick. Senior management at the organization admit that there have been stumbling blocks and that efforts are being made to right the ship. But with the realities of economic responsibility becoming more and more important in the minds of everyday people, is it possible to make the project, and subsequently the organization healthy again, or is a repeat showing of lack of performance coming in the form of the Gateway project issuance of bonds to build the Stockton University satellite campus? Only time will tell.