After five years of having arrears, The Middlesex county improvement authority still failed a 20 million loan from casino reinvestment development authority. In a report by the Press of Atlantic City, the loan was made in 2005 in a bankrolled construction of Heldrich. The corporation has been advertised as an example of what can be done when public funds are funneled through private firms to execute large scale development. The New Brunswick is also a model for the Atlantic City development corp. Christopher Paladino is an attorney who heads both corporations. The attorney arranged the 20 million Heidrich loan. He reported that the CRDA would be paid after a couple of years.
Heldrich has struggled to attract guest since it was opened in 2007 as economic downturn set in. Last year it had a tenancy rate of 63.5%. According to Paladino, the hotel tapped about 776000 dollars to fund basic capital expenses. The 20 million loan was part of a 107 million in financing put together to build Heidrich. The package included a local loan worth 70 million bonds issue by Middlesex county improvement authority which is to be repaid by revenue. Despite that, the hotel has performed anemically.
According to schedule holder of $ 30 million in senior bonds have been repaid with a 5% interest. The Atlantic County Improvement author is preparing to issue 120 million dollars in bonds for the gateway project in May. Stockton University satellite campus will be built using the bonds which are to be repaid through the sale of tax credits and doom room revenue. John Cantalupo, Atlantic improvement authority bond counsel, reviewed the Heldrich financing and said they won’t experience the same shortages.
Gov. Chris Christie signed an act in December that bars agencies from issuing loans, grants and other subsidies to businesses. Maria Parto said that the Devco CRDA loan documents revealed that the loan is secured and will be paid only from available project revenues after payment of senior public bond holders. Maria, who is the spokeswoman for improvement authority, is optimistic that as the economics of the project improve it will satisfy its obligations. John Palmieri, the executive director of CRDA, acknowledge that the loan repayment has not yet been made as planned. He said that there were measurable impacts of the credit to the economy. Paladino said he would be happier with the project once it paid its debts.