The town of Camden wants to reduce the length of its 40-year mortgage in order to cut down on the amount of interest that taxpayers pay. But town officials want to proceed with caution and make sure they can afford to pay an extra $2,000 to $3,000 toward the principal of the loan.
Camden Town Council renewed discussion on reducing its 40-year mortgage for the Camden Municipal Complex by increasing monthly mortgage payments by $2,000 to $3,000.
The town has less than 37 years left on its mortgage, but it could save money for future expenses by paying extra toward the principal of the $3 million loan, Councilman Kevin R. Casquarelli said at council's Monday night meeting.
Camden Town Finance Officer Patrick Cullen first looked into possibly refinancing per the instructions he received from council at the July meeting, when it thought refinancing might save it money. Camden has a fixed interest rate mortgage with a rate of 4.375 percent with the U.S. Department of Agriculture, Cullen said.
Cullen concluded that refinancing was not in the town's best interest. Be he advised council members to consider paying extra toward the principal of the loan in order to reduce what would be astronomical amounts of interest as part of the loan's amortization.
Camden currently has a monthly mortgage payment of $13,246, he said.
Camden would save $1.365 million in interest and cut the life of the loan by 14.33 years if it paid an extra $3,000 per month, it, Cullen said. The town would save almost $1.1 million in interest and cut the life of the loan by 11 years if it paid an extra $2,000 per month, he said.
The renewed discussion on reducing the life of the loan came as a result of town officials vacating the third floor of the Camden Municipal Complex and finding new tenants for that space. Town Manager Aaron Chaffinch said the new tenants would bring in at least $2,300 per month in base rent. But that number could climb to almost $3,000 when other fees were calculated, he said.
Councilman John W. Green Jr. said this was "a phenomenal idea." But he urged council to proceed with caution and to wait until November for action.
"I think we have to have a concrete number in place and know what's in front of us," Green said. "I'll feel better once we have the cash in hand."
Green added that the town did not have to spend revenue just because it found it.
Councilman Larry L. Dougherty Sr. said he was not opposed to paying more in principal in order to reduce the life of the 40-year mortgage. He just wanted to ensure council did not raise taxes next year to keep up with this commitment.
"Let's be cautious with all this," Dougherty said.
Mayor W.G. Edmanson said he agreed despite his wish to cut down on what he termed "a ridiculous 40-year mortgage" that was bad for the taxpayers of Camden.
"I'd like to wait just a little bit," he said. "We're in the hole with the move we just made. We don't need to jump on it this month."