Despite previous reports of slow-but-steady sales, commissioners introduced an ordinance Tuesday night in hopes of reducing $8.3 million in debt generated by unsold LumberYard Condominium units.
Under the ordinance, Collingswood will appropriate $5,992,246 to purchase the remaining 14 units, located in building three of the complex, and lease them out to renters.
"(The price at which Collingswood will purchase remaining units) varies with each condominium. The figure is $4.4 million, divided by 14 (condominiums)," said Mayor James Maley of the equation, which works out to a little over $314,000 per unit. "The remainder (of the $5,992,246 will secure) final upgrades to units, and closing costs for extend periods (anywhere from two to three years). We won't be borrowing funds all at once."
The decision arises just as the borough nears the end of a construction financing extension created over a year ago. The original contract, which Maley said was formed five to six years ago, was extended last year for an 18-month period.
With the extension ending this October, borough officials said its requirements, including selling 12 units and reducing construction debt to $4 million, have not been met.
In fact, officials confirmed a current $8.3 million debt, and the sale of only three units. Those shortcomings have caused commissioners to rework plans before October hits.
"Units are selling extremely low in the world we live in today, but we still have to pay off this debt," said Maley. "In the last four to five months, a lot of folks have asked if we'd consider renting out any LumberYard Condominium units (as opposed to selling them). Today, people either don't have the money to put down (to purchase a home), or they're not sure if they have job security."
According to officials, the borough's decision to purchase and lease-out its 14 vacant condos will help solve the LumberYard dilemma.
After purchased by the borough, the remaining units will still be available for resale, via direct sale or lease-purchase agreement.
"Rental income from leasing will cover our debt service—and let us generate anywhere from $100,000 to $150,000 to help pay the debt," said Maley.
"In building one (of the LumberYard Condominium complex), five owners have—for whatever reason—moved out, but continued to rent out their condos," said Maley. "They're asking (renters to pay) anywhere from $1,800 to $2,100 per month.
"We're going to do the same, because in today's (real estate) market, you've got to be really creative and different," said Maley. "We think we'll rent them out very quickly; Main Street Realty already has a waiting list of people interested in renting at LumberYard. And by leasing, this will not have an affect on us, from a (municipal) budget standpoint."
At its next meeting on Monday, Oct. 3, commissioners will hold a second reading and vote on the ordinance.
Residents wishing to voice comments or concerns on the topic may also do so before next month's commission meeting. A town forum meeting will be held in the Scottish Rite Auditorium Grand Ballroom—located at 315 White Horse Pike—beginning at 7 p.m. on Wednesday, Sept. 14, during which the LumberYard lease incentive will be discussed.
Maley said the borough will purchase the remaining 14 units by the end of this year.