Federal dollars to help Elgin neighborhoods hit by foreclosures

Elgin leaders are mulling how to use some $2.2 million in federal funds to help neighborhoods that have been hit hard by clusters of foreclosures.

The money comes from a $3.9 billion pie being split up by the U.S. Department of Housing and Urban Development through its Neighborhood Stabilization Program.

City leaders learned they are eligible for the funding and are focusing on a Dec. 1 application deadline.

"You can't just turn your back on it," said Elgin City Manager Femi Folarin. "So we'll go after it and see how we can use it to better our community."

Once received - probably sometime in early 2009 - the money must be spent within 18 months.

It may be used for three purposes: to buy and group several small lots into one large one; to rehab and resell or demolish abandoned and foreclosed homes; or provide buyers with down payment assistance or help with closing costs.

The city officials likely will opt for the middle option.

The money is not for current homeowners that are behind on their payments or on the brink of foreclosure.

Jerry Deering, the city's community development director, said there are foreclosures across the city, but many of them are concentrated in the older sections of town, such as in the southwest, northwest and northeast sides.

The money could buy up to 20 homes, which the city could then renovate and resell.

"The idea is to get them reoccupied and fixed up to the benefit of low to moderate income (families)," Deering said. "It's going to be more effective if you concentrate where you do it, but that decision has not been made (yet)."

Profits, if any, would be channeled back into a master fund and used to buy more homes. By 2013, the balance will be turned over to the city's Community Development Block Grant program, which assists area social service agencies.