Federal money may aid deconversions in Elgin

As Elgin leaders prepare to use federal money to buy and rehab foreclosed homes, they are even targeting single-family homes that have been carved up over the years into apartments.

City Manager Sean Stegall says foreclosures on rental properties, many of them with inflated past sale prices, shows how deep and wide the effects were when the housing bubble popped.

The city also has more than 1,000 single-family homes in foreclosure.

"The real estate bubble caused problems in both areas," Stegall said.

Restoring multiunit buildings back to the original single family homes - also known as a deconversion - for years has been a city goal to improve quality of life and reduce overcrowding.

The city has used grants to stimulate that process, but lagging casino receipts have put a damper on the grants doled out.

Elgin has been awarded some $2.1 million in Neighborhood Stabilization Program funds from the U.S. Department of Housing and Urban Development.

City officials hope to buy, rehab and sell 12 homes.

"We've got offers out on several," Stegall said. "I suspect we'll be closing on a handful in December."

Elgin also has applied for $2.44 million in additional funding from HUD for the same purpose and likely will find out by the end of 2009 whether the city was awarded it.

The funding is part of a $3.9 billion federal pie.

The Elgin City Council also is expected to put two appraisal firms, Krueger Appraisal Services and Ovington Appraisal Services, on retainer this week.

In a memo to the council, Planning Manager Matthew Fitzgibbon said each home bought with federal money must be purchased at not less than 1 percent less than the appraised value.

"It is the city's intention to alternate the appraisal assignments between the two firms as workload needs arise," Fitzgibbon wrote.