The latest from the Press of Atlantic City indicates that the Authority in charge of county improvement in Middlesex has defaulted on their loan repayments to the Casino Reinvestment Development Authority. The interest amount that is in arrears amounts to $1million. The most shocking bit is that for the past five years, the county has not honored a payment and the amount has accumulated to $7million.
The loan, which was offered in 2005, went to the construction of the Heldrich hotel located in New Brunswick. The main aim of the building was to serve as a conference center. Unfortunately, the hotel has not brought in the returns that would have seen it recover the amount that was offered as loan and the interest accrued thereafter. The person who has been selling the idea of state contracts being handed over to private investors is Stephen Sweeney. The company in question is a branch from the Atlantic City Development Company. The mother company is in charge of projects worth more than $200 million.
The company and its subsidiary are headed by Chris Paladino. He is also the person that planed the $20million loan. In his statement, Paladino asserted that the CDRA would be paid, but was quick to mention that it would take at least one more year to make this happen. The problem that created the defaults is the fact that the hotel has been completely unable to attract the occupancy rates it had been projected to have. The situation is so dire that the average occupancy rate is around 63 percent annually. The reality is that the cash issue is so serious that the corporation has to dig into its pockets to provide mattresses and other basics for the hotel.
The full amount that had been taken to fund the project was $107 million. The rest was sourced elsewhere, like the municipal bonds that bearers haven’t been paid for in years.
The Devco company was set up in the mid seventies with the aim of developing the poorer parts of the city. They have taken part in a lot of products and had even been hailed as a very important engine for economic growth.