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New Brunswick Redevelopment

Paladino, Christopher Summary

 

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DISCUSSION SUMMARY (PDF Version)

Christopher Paladino is the current president of the New Brunswick Devel­opment Corporation, a position he has held since 1994. In the 1970s and 1980s redevelopment in New Brunswick focused on fostering economic and social stability, with the close involvement of Johnson & Johnson. Because of that early foundation and the revitalization of a formerly bleak New Brunswick, in recent times Devco has been able to pursue more ambitious projects independent of the auspices of Johnson & Johnson, including Rockoff Hall (a Rutgers dormitory), the Heldrich Hotel & Conference Center, and the Gateway Transit Village.

Paladino was born in New Brunswick at Saint Peter’s Hospital and grew up in North Brunswick, one block outside of New Brunswick, which as a kid was “the center of the universe.” [11] Paladino referenced the commercial and cultural vitality of New Bruns­wick in the early and mid-1960s: “You came here to go to church. You came to New Brunswick to buy your school shoes. You went to the doctor. If you were lucky, you got to eat at the lunch counter at Arnold Constable or P. J. Young’s. It's where you went and bought clothes.” [12] However, much of this changed quickly: By the late 1960s it was where “Your parents told you ‘You're in New Brunswick—lock the doors when you drive through.’” [12]

Paladino attended North Brunswick High School, Rutgers University in New Brunswick, and then law school in Camden, New Jersey. Working at a law firm in Roseland shaped why he thought an urban experience was important: The area was very automobile oriented, and “it took 25 minutes to get a tuna fish sandwich.” [14] He later worked for Governor Florio and then served as the deputy director of the New Jersey Economic Development Authority, where he became involved “by total happenstance” in real estate. At some point, George Zoffinger—New Jersey's commissioner of Commerce and Economic Development—called Chris Paladino with a job prospect. The New Brunswick

Development Corporation was “kind of screwed up”; the former president, Christiana Foglio, had been gone for eighteen months. Johnson & Johnson wanted Zoffinger to take the chairman position, which he agreed to only if Paladino would become president. “So I told my wife I was going to do it for a year and then I would get a real job,” Paladino said. “Thirteen years later I’m still—she’s still waiting for me to get a real job.” [18] He recalled that when he started in 1994 Devco had “110 dollars in the bank, we owed Johnson & Johnson something in the neighborhood of 10 million dollars, and we had about 4 billion dollars of unsecured debt.” [18] During this time, Johnson & Johnson was shifting away from leading Devco to more of a participatory role. Johnson & Johnson would continue to fund the operational side of Devco, but it was understood that after Christina Foglio left and Paladino took leadership, Devco would become more independent. [19]          

Chris Paladino spoke about what Devco was like before his arrival, based on personal observations and talking to people who were involved earlier. Johnson & Johnson, according to Paladino, “never thought that they were going to make money on projects they invested in.” [20] What they did do, though, was protect their major real estate investment—the Johnson & Johnson world headquarters—by investing in projects in the surrounding area and creating a positive critical mass. In creating Kilmer Square, across Albany Street from headquarters, J&J needed the project completed but “They didn't want to do it themselves,” Paladino said, “so they had Devco do it.” [22] Devco’s role in implementing real estate projects was beneficial for the city; New Brunswick did not have much money to spend on urban planning, so Devco could assume some of those responsibilities by using grant money, Paladino commented. He also spoke of the close involvement with J&J: The company was financially involved in real estate deals with nearby projects, and meetings with real estate partners included J&J executives. [22] Paladino maintained that the financial involvement of J&J was critical: “If they weren't coming in and leveraging, allowing the private sector to leverage what they were doing, this never would have happened.” [23]          

Paladino discussed some of the more recent real estate projects in which Devco has been involved. He provided much detail about how these projects were funded and also how the projects fit in with a “broader public policy goal.” [26] One such project was the UMDNJ building—Liberty Plaza—on Livingston, George, and Liberty Streets. This used Certificates of Participation, “a unique mode of financing that the private sector can use to do public/private partnerships with the government [so] that it’s really an installment sale.” [25] UMDNJ agreed to lease the building for 30 years; that lease was financed by Wall Street. Then after the 30 years, the government gets the building for a dollar, with the mortgage paid off. [25] This project is notable because Wall Street financed the private credit, a service that Johnson & Johnson had provided in the past. Paladino described how many of the buildings in the government district were revitalized and reconstructed using this method. [27–29]    

An important, though often overlooked, aspect of redevelopment in New Brunswick has been the role of the New Brunswick Parking Authority. Paladino noted a partnership with the authority in which Devco does “almost all our projects with them now.” [32] Devco builds and sells the parking structure to the Parking Authority, freeing the developer of that cost. This creates a situation where the Parking Authority has “people paying for parking in garages that are paid for,” as Paladino explains, which “allows them to be aggressive.” [33] They help with land-acquisition costs and are “able to maximize the economy of the structures.” [34]            

Chris Paladino talked about how the city has been transformed through different projects. About the Rockoff Hall dormitory, he noted how students enrich the local economy and create a level of outside human activity; “tempo,” “rhythm,” and “pulse” are keywords that he used to describe the change. [35] Another key aspect of the redevelopment model in New Brunswick is a “sense of common purpose.” [37] Paladino contrasted his close relationships with key New Brunswick figures—the president of Rutgers, the presidents of hospitals, senior Johnson & Johnson executives—to a less cohesive situation in Newark: “I don't think on a regular basis the president of UMDNJ and the president of Rutgers and the chairman of Prudential and the mayor sit down and talk. Everybody sends their squires, and they’ve got organizations for everything.” [37]          

Paladino observed that redevelopment in the method of Devco is difficult because many parties are unwilling to give up power. If Devco builds a county administration building, there will be friction with the county engineer and county administrator. [41] “And when you build a dormitory for Rutgers, there’s resistance from the people who run dormitories, because if you start to do it too well—you know?” Paladino commented. [42]

KEY QUOTATIONS

[Quotations have been edited for grammar and alphabetized by topic]

Devco, Leadership

I think [Christiana Foglio] kind of lusted after some of the support that I ended up getting that she didn't get here because she was caught in (and Frank Nero would also kind of agree) this kind of pull-and-tug between Johnson & Johnson and City Hall. [18-19]

Devco, Role in Redevelopment

         John Lynch really couldn't afford in the early days to spend a lot of money on staff in City Hall to do planning. Devco really played that early role of using grant money to be able to do some of the urban planning, early urban planning that got done in the city. [22]

Hospital Buildings (Good Civic Design)

Trying to get those organizations to really think about the greater good, the greater design—just turning the Child Health Institute around and letting one of the hospital buildings face French Street was a huge thing, because hospitals all want to be insular. That building was originally designed for the middle of the block facing the other way. [32]

John Heldrich

         New Brunswick wouldn’t be what it is today—you could finish that sentence with a lot of things—if it weren’t for John Heldrich. If it weren’t for John Heldrich . . . continuing to badger and be a pest to Dick Sellars that, “We've got to do this. We have to do this. We have to do this. We should stay in New Brunswick”— those types of things.

Johnson & Johnson

One of the things I try to explain to the people in Newark when I've been involved there is that you have to wade into this business and you have to wade in a big way—it’s a philanthropic adventure, and don’t think you're going to make money on it. Prudential has gone into litigation where they thought at Hanes & Griffith they were going to make money, and they weren’t sure if it was a donation or if it was a gift. Johnson & Johnson never thought that they were going to make money on projects they invested in, in Devco. And they never called loans. They forgave loans. [20]

If they weren't coming in and leveraging, allowing the private sector to leverage what they were doing, this never would have happened. That’s why, again, when I go back to the Newarks of the world and say, “You know, it’s not about a couple million dollars and the donation”—as important as the money was letting them roll their sleeves up and be involved. They were smart people who had some good business sense and who had stature, and I think that probably was as important as the money. Because this was becoming a worldwide company, and they were worried about the 16 condominiums on Hiram Market. And they were worried about them because they had an investment. They worried about them because their name was on it, but it was right there—it was part of the plan. They were very big on the plan, which changed there early on. I could be at a meeting in the corporate dining room and say something about Church Street, and they would kind of look at me, and I would have to take somebody to the window to show them. The people who were here in the early days at J&J—they were part of the community. They lived here. They worked here. This was not the multinational company that it is today. I mean, there are people in those executive offices [now] who know far more about Beijing than about New Brunswick, and understandably so. It's a different place. Also, the culture has changed in that that the people who moved up in that company back in the day probably worked for the General [“General” Robert Johnson, who became president of J&J in 1932]; they probably lived in this community, and they knew the streets. It’s just generational change. [23]

Leveraging Investments

Rutgers, the hospitals, Middlesex County, the City of New Brunswick really should not be making investments unless they take a hard look and say, “How else can this be leveraged?” [32]

Momentum (in Redevelopment Process)

I’m very cognizant of the fact that you can't be too critical of people who are trying to do things; I have had the wonderful benefit of time, and I've picked this up. They had been doing it for 15 years by the time I got here. I was given a huge running start, a head start, because there had been so much good work done here. So we’ve been able to leverage what was done before. But cities are very fragile places. You're never done, and if you're not moving forward you’re definitely moving backward. Every day you have to try to make incremental progress. If you're not opening a project, in construction of another one, planning something, and trying to figure out the financing of another one, you're probably falling behind. [40-41]

Political Stability in New Brunswick

         New Brunswick wouldn’t be today if it hadn’t had consistent, intelligent leadership in City Hall. I think the fact that we've had two mayors since 1977 is probably important—good mayors and people who got this business. [30]

Mayor James Cahill is a real partner; he’s more than just a leader. What I’ve found quite often when I get stumped on a project, often on design issues or trying to make something work, I just go over to City Hall to sit down and talk to Jim, and he has a whole new perspective on it because he gets this business. [34] 

Redevelopment Process

What they understood here was critical mass, right from day one. They created a critical mass at the corner of George and Albany Street. That intersection—they changed New Brunswick forever. [21]

What we immediately tried to do was say, “Look, all of our projects should support the whole critical mass theory. All of our projects should be multiuse because we have limited resources, so you aren't ever going to build an office building anymore. It’s going to have parking. It’s going to have retail. We're going to change the streetscape. We’re going to do those things.” I mean, Liberty Plaza, in some ways—I say this about every project we’re doing—is probably the most significant project we’ve done to date. We pushed the building back. We established a new design concept or streetscape. We got outdoor dining. We also started to show that if you develop, if you build quality retail space, you can get good tenants. We’ve had GNC. We’ve had Radio Shack. We’ve had Dunkin’ Donuts. We had Soho. Outdoor dining. But we’ve always kind of endeavored that our projects should meet some broader public policy goal. [25-26]

Transferability

What they were able to do here—and this goes back to the John Lynches and the John Heldriches and the Jim Cahills of the world—is keep everybody together. New Brunswick had turned so bad at one point that everybody really needed each other. Even when they started to then have some success, John Heldrich’s quarterly meetings at the guest house really paid off. We just do things because we see a vacuum to fill. [31-32]

Urban Development Action Grants (UDAGs)

In the era of Jimmy Carter and the Urban Development Action Grants, New Brunswick probably used UDAGs more wisely than any other city in New Jersey. [21]

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