In a recent article published by the Press of Atlantic City questions were raised about an unpaid $20 million loan. The Casino Reinvestment Development Authority made the loan to DEVCO in 2005, but Devco has not made payments and is in arrears of $7 million.
The New Brunswick Development Corporation (DEVCO) is a nonprofit corporation engaged in real estate development. DEVCO was founded in the mid-1970’s to be a catalyst for the revitalization of the city. The New York Times called the company, “A powerful engine for economic growth”. DEVCO is a privately held company that has witnessed $1.6 billion of investment taking place in New Brunswick.
The dispute centers around the Heldrich Hotel that began operation in 2007, says Devco’s Chris Paladino. The timing could not have been worse for the 235 room facility as the economy was beginning its precipitous decline. Last year the hotel’s occupancy rate was at 63.5 percent; its largest account was with Johnson & Johnson, whose executives people the board of directors of the New Brunswick Development Corporation.
The Governor of New Jersey Chris Christie has recently signed into law a bill that would prohibit any state agencies from giving loans, state subsidies, or grants to any businesses that have previously defaulted on other state loans.
DEVCO has assured the state that these loans will be repaid. They have asked for leniency due to the dismal economic conditions that have severely restricted the American economy.