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. 

GS September 07, 2011 at 11:14 AM
making some units Affordable Housing" to rent for seniors with good rental and credit history would be very appropriate and appreciated in the baby boomers loosing their homes in todays economcy in Collingswood! its a tax credit (a huge credit) to the owners of the property! thanks.
DoneWithNews September 07, 2011 at 11:34 AM
Taxpayers were given optimistic assurances, and things have not quite worked out as planned. Now we are being sold a new plan, wherein we switch gears from real estate planner to landlord. I'm not optimistic. I'm not a real estate professional, but here's a theory: nobody wants to buy the properties for that price. From where will these people materialize who will rent same properties for an adequate amount to cover Collingswood's continuing losses? I appreciate the mayor's effort to develop our downtown. I believe his heart is in the right place, but that and $1 will get you a cup of coffee.
john q public September 07, 2011 at 01:17 PM
Collingswood should NEVER have been involved in this project in any way, shape, form, or manner - but apparently our politicians (and those that continue to vote them back in) failed to recall the bitter lessons learned when Collingswood owned the Sutton Towers. BIG GOVERNMENT = BIG FAILURE
john q public September 07, 2011 at 01:19 PM
Sorry Steve, you're gonna need more than a dollar for that cup LOL
Porterincollingswood September 07, 2011 at 01:38 PM
Didn't they make money off of the towers by the library? Not that that could be replicated in today's market...but at least there was some precedent I guess. Betting on housing was a bad idea, but I'm not sure anyone could have expected the slump to last so long. What a mess.
BobG September 07, 2011 at 02:07 PM
While I understand that the borough's trying to maximize Collingswood's appeal by having no emplty units, right now any real estate speculation (especially with public $) is a bad idea. I can't think of any long-term success stories wherein municipalities entered the rental business, just good intentions that turned into a dog's dinner (and not the tasty kind served up by La Pooch Pattisserie.)
Porterincollingswood September 07, 2011 at 04:09 PM
Forbes recently wrote that doing just that - buying and developing properties - was a key to the borough's revitalization. Which is why they named us a top 10 community in that category. That's not The Nation, or Mother Earth News. That's Forbes who hailed this practice.
john q public September 07, 2011 at 08:00 PM
@ Porterincollingswood - first, understand that the Forbes reporter relates data to the "old" real estate market, NOT the current one, and CERTAINLY NOT with the news of having to buy out 14 units because they can't sell them. The Forbes article was also put together BEFORE our illustrious mayor shelled out another 6 million in loans to the contractor that took over after the first one went out of business. Now this buy out is an ADDITIONAL $6 million over the the other $6 million - so that's 12 million in the hole. The town made a $3 million profit on selling the Sutton Towers so that puts us only $9 million in the hole. Finally, when the towers were sold it was the PRIME real estate market, so showing a profit of only $3 is paltry, considering how long we owned it, and how much was put into renovating it.
john q public September 07, 2011 at 08:04 PM
@ Porterincollingswood - and let's not forget the pending lawsuits by the tennant's association over the leaking roofs ! who's gonna pay ? - the taxpayer's that's who !
David Maynard September 07, 2011 at 08:16 PM
the The real and in the end only question at this point is what should be done with vacant units and a level of inventory that current market demand will take a long time to run through and that the Borough is making debt service payments on. A plan whereby the Borough brings in some income in the short term to maintain servicing requirements, avoids asset depreciation from neglect and problems associated with unoccupied units and in theory introduces new people at hopefully above AMI seems worth serious look. However, the numbers should be re run based on a larger rental inventory than previously existed, my gut say 1,400 to 1,800/month sounds more realistic
Joe September 07, 2011 at 09:14 PM
To piggyback on David's point above, the article notes that the five owners who moved out are ASKING $1,800 to $2,100 per month but is anyone actually renting at those rates? I want to get more information but this seems like a colossally bad idea, like buying a new $6.0 million home with a wild fire burning a mile away. I guess the rub is that the Borough appears to be guaranteed to violate the loan covenants and that could end up an even bigger issue.
Porterincollingswood September 07, 2011 at 09:18 PM
Absolutely, they went to the well too often. I think your sweeping point was a reach is all. Do you know the 'net' profit on Sutton? Would that be posted somewhere?
Porterincollingswood September 07, 2011 at 09:20 PM
Porterincollingswood September 07, 2011 at 09:26 PM
Who did we "purchase" these from, and was the price based on "asking price" or "negotiated". If we paid what no one else was willing to pay on the open market, that's a problem. The prices should have been discounted since this is a buyer's market, there is little demand, and we bought fourteen units.
john q public September 08, 2011 at 01:10 PM
good questions porter - my neighbor was a CPA/Comptroller for major companies and had extreme difficulties attempting to not only access what SHOULD be public information, but also had several points of contention regarding those financial records regarding Sutton Towers HAS ANYONE NOTICED THAT WE (THE TAXPAYERS) HAVE HAD ABSOLUTELY NO SAY IN THESE MATTERS IN ANY WAY ?!?! - KEEP VOTING THE PARTY LINE FOLKS - GOOD JOB
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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