Borough Leasing LumberYard Condos to Reduce Debt

To offset debt generated by 14 LumberYard Condominium units that remain unsold, the borough will purchase them and lease to renters.

Despite previous reports of , 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 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 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; 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 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. 

Steve C September 09, 2011 at 04:24 PM
Judging by those figures the borough is paying top dollar for these units, well above market value since they aren't selling. I agree there should have been much room bargaining in there. That being said... I may be wrong but I believe the Borough IS the developer for the project. So, are we basically buying these units from ourselves so we can rent them to avoid default on all the loans we took out to build them? I'd also be surprised if they get $1800-$2100 per month, especially since these units are located in such close proximity to the train tracks which the others aren't.
john q public September 09, 2011 at 08:00 PM
Section 8 housing, anyone?
Christopher Gass October 04, 2011 at 11:17 AM
Our town looks great, we have something here. I think real estate now is a little rough going but it will turn around. The borough began speculating in Peter Lumber Yard real estate years ago when the market was not really hot. Then it got really hot and now it has cooled off. It has gone up and down and it will again. It has always come back. There will be a change in DC and the economy will bounce back. Real estate pays off.
M October 09, 2011 at 03:08 AM
I'm in the market for housing along the PATCO, Septa rail lines to Center City & NYC. I looked at the townhouses & apartments for rent and was shocked at what they're asking. I have no idea what the realtors are thinking with no amenities to speak of, a deck that is 40 feet away & eye level to the PATCO lines and the fear of possible neglect due to mismanagement or lack of funds. I can get a luxury condo with pool, gym & free shuttle service & much more at many places throughout the Delaware Valley for the same $2,000+ a month. When something breaks will anyone answer the phone? Whoever hired these folks to run the rental program, please be aware they have no idea what is going on in the marketplace and what others have to offer at the same or better price. $2,000 for a condo & $2,500 for a townhouse is laughable in this area. I wish the taxpayers luck, but i see empty units until they reduce the rents or offer extraordinary amenities / extras. FYI, also look into www.suredeposit.com, most new apartments are using them, and its a great way for new tenants to save some $ which they'll need at these rates.
15 yr resident March 31, 2012 at 05:31 PM
i still believe the lumber yard was a good idea but at a bad time. they should have finished the plan to have more condos above shops on haddon ave and powell st. across from the first phase they built. land along the tracts could have been a city paid parking lot, a park or even one level strip stores. better rentals from stores. now powell st. has an empty lot on one side.could have been its own littte shopping area. i hope they finish the third phase someday. i still believe in collingswood.


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