In the mid-2000s, many different developers took advantage of public funding available to developers willing to redevelop casino sites located across the State of New Jersey. The loans for the most part were made through the Improvement Authority, a designated organization that provided affordable debt to both profit and non-profit organizations.
While many of these loans were paid back successfully, or are on track to be paid back, one loan now appears to be in trouble. In 2005, a $20 million loan was made to the New Brunswick Development Corporation, a non-profit organization that targeted the redevelopment of a site to build The Heldrich, a hotel and conference center located in New Brunswick, NJ.
The hotel ended up being finished and opening on time, but the timing could not have been worse. It originally opened in 2007, just in time for the national economic downturn that had a significant affect on the hotel and conference industry. Since it has opened, the hotel has not done well and has not been able to attract the major conferences that it once sought.
The owners of the hotel even recently reported that they had to tap into reserve liquidity in order to make basic capital improvements and repairs, such as new mattresses and the replacement of carpets.