DEVCO or New Brunswick Development Cooperation is a nonprofit real estate development company started in the mid-1970’s by Johnson and Johnson following the economic downturns that the city experience in the 1960s and early 1970s. Today, the company acts largely on its own to beautify and improve areas of the city with the goal of revitalization. Since the company was started, it has overseen almost $1.6 billion in renovations all over the city. DEVCO strives to read the pulse of the city and work at projects that will make large-scale, sustainable impact by capitalizing on space and creating areas of mixed-use development. They use properties that are less attractive to other developers and turn them into useful, revenue-generating, beautifully contributes to the city.
One such example was covered in an article originally written on NorthJersey.com. The article discussed the development and financial situation of the Heldrich Hotel in New Brunswick, a project arranged and coordinated by DEVCO. They helped the Middlesex County Improvement Authority secure $20 million to move forward with the hotel which was opened in 2007. The Improvement Authority was scheduled to start repayment on the loan, principal and interest, in the amount of $1 million, but was unable to meet this financial obligation as the hotel has not performed as well as was expected with occupancy statistics at a meager 63.5 percent for 2015. DEVCO, has also had to step in to prop up the slumping project with nearly $800,000 of its own money.
Senior Lein bond holders of the project have been paid with about a 5 percent increase, while other non-senior holders and the Casino Reinvestment Development Authority(CRDA), the lender, have seen no returns at all. The Improvement Authority says that the terms of the loan state that repayment is to be made from available project revenue. CRDA acknowledges that they knew the loan was a risk and states that these are the types of loans they regularly make in order to make it possible for senior lenders to participate in such projects.