Colonias History

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Since 1991, HUD has made funding available specifically for colonias communities in the four Border States. Generally, HUD and USDA Rural Development both define colonias as rural communities within the US-Mexico border region that lack adequate water, sewer, or decent housing, or a combination of all three. This definition is broader than the iconic image of a colonia as a scattered rural homestead on inappropriately subdivided land, with housing made of salvaged materials, and no utilities. The definition encompasses other types of communities as well, such as dense settlements of modular housing or trailer homes. Equally diverse is the siting of colonias in jurisdictional terms; some are incorporated communities under the control of the city, some are unincorporated under control of the county, and others may be in extrajurisdictional territories of cities which share some level of control with the county. In many cases, the jurisdictions play an important role in terms of the level of public controls related to factors such as the initial formation of the colonias, their ongoing conditions, and the political initiative to improve their conditions. The political motivation to improve the lives of colonias residents has led to a variety of projects that combine funding from multiple federal and non-federal sources as well as local resources. Some have even chosen to further expand the definition of colonias, using their own state or local funds in marginal communities that would otherwise be considered colonias except that they are near large urban areas, over 150 miles from the border, or formed more recently than 1990 (per restrictions on the use of CDBG funds under Section 916). One of the most important factors to consider is that no matter how or where colonias formed, they typically form in response to a need for affordable housing that gives people a sense of ownership.

Colonias: State by State

Texas

Texas has the most colonias of the four Border States, with over two thousand individual communities considered eligible for one or more of the colonias funding sources such as HUD, USDA, and state or local funding. Many of Texas colonias were settled as homesteads, the iconic colonia settlement pattern that served as the inspiration for the legislation establishing the CDBG colonias set-aside. Given the circumstances, Texas has led the Border States in terms of specifically outlining these communities down to the neighborhood/subdivision level and surveying their needs. Texas has also provided innovative programs and services beyond the basic activities that are eligible under the State CDBG program. Most notably they have developed a system of Self-Help Centers, administered by local non-profits that provide on-site technical assistance to colonias residents. Texas also provides assistance for the conversion of contracts for deed to help residents get out of these rent-to-own-style contracts and protect their equity. Additionally, Texas has made numerous legal reforms since 1989 to the laws governing subdivisions and the provision of utilities. In 1990, cities and counties were given the authority to require developers to post bonds to cover the expense of water and sewer utilities if the subdivision didn't include them. In 1991, they closed a loophole that limited the regulations regarding subdivision and utilities to just those plots of one acre or less, expanding the applicability of the law to plots of five acres or less. In 1993, the Texas Office of the Attorney General gained the power to sue developers for the costs necessary to bring a subdivision up to code. In 1995, tougher laws regarding contract for deed were enacted, requiring enhanced disclosures to purchasers (including in Spanish), annual account statements, limits on late fees, and protections for purchaser's equity. Additionally, the TDHCA developed a consumer education program on contracts for deeds. In 1997, the restrictions were relaxed regarding the provision of utilities to unapproved subdivisions. In 1999, county platting laws were expanding to cover any subdivision of two or more, for residential use, located anywhere outside city limits in any of the counties near the border. In 2001, laws were enacted to strengthen contract for deed safeguards, increase flood plain management code, and expand colonias-related programs such as the Owner-Builder Loan Program, the new Colonias Initiative Advisory Committee, the new Colonia Model Subdivision Program, outreach to non-border colonias, and the new Colonia Self-Help Program.

New Mexico

In New Mexico, about 150 colonias have been identified as eligible for one or more of the different colonias funding sources: HUD, USDA, etc. Most are unincorporated long-standing communities. Many of the New Mexico colonias consist of rural small towns that were designated as colonias via county resolutions that cited a lack of adequate water, sewer, and/or safe and sanitary housing. This designation process was pursuant to the original version of Section 916 of the National Affordable Housing Act of 1990 which included a requirement that colonias be designated as such by the respective state or county. This designation requirement was repealed in 1992; however the State found it useful to continue using the designations as a method to assess whether or not those communities met the other requirements of Section 916. Consequently, New Mexico has two distinct types of colonias: entire small towns designated as colonias and subdivision-level colonias. The subdivision-level colonias vary in terms of typology; some are trailer home communities while others follow the iconic homestead colonia development pattern. Much like Texas, many of the plots were sold using contract for deed; and, much like Texas, colonias developers were taking advantage of loopholes in subdivision law. Before 1990, New Mexico law allowed property owners to subdivide their land into four parcels without triggering laws and regulations that control subdivision. After two years, property owners could split their land again, and this process could continue indefinitely, ultimately subdividing large areas into small plots without any requirements for utilities, proper roads, etc. In the early 90s, the New Mexico Attorney General and Doña Ana County began filing lawsuits against developers. Eventually, the subdivision law was amended to be applicable to land divisions into two or more parcels, thus closing the loophole utilized by colonia developers.

Arizona

In recent years, Arizona has made significant improvements to the way it administers the CDBG colonias set-aside funding. Like New Mexico, Arizona had relied upon county resolutions that served as designations of certain communities as colonia due to lack of potable water, adequate sewer and/or decent, safe and sanitary housing. Consequently, many of the colonias were designated at the town-level. Following an audit by HUD's Office of the Inspector General in 2008, Arizona began a colonias survey to better define the colonias boundaries and measure their needs. In order to give "priority to colonias having the greatest need for such assistance" per Section 916, Arizona made changes to the manner in which colonias funding is distributed; instituting a competitive funding process that scores applications based on need in terms of water, sewer and housing. In general, the colonias in Arizona were never like the iconic homestead settlements found in Texas and New Mexico; however they were built on a similar legal loophole which allows a property owner to subdivide up to five times before triggering subdivision regulations that require roads, utilities, etc. The difference is that this loophole wasn't used exclusively by unscrupulous colonia developers. The subdivision law was taken advantage of by developers who built communities for a variety of family incomes, retirees, etc. In a February 2000 report, "Impact of Unregulated Development on the Pima County Tax Base", the Pima County Administrator's Office found that approximately 41 percent of new development in Pima County was occurring through the unregulated process. This form of subdivision in Arizona is known as 'wildcat', and has been heavily criticized for passing costs to the public for roads, utilities, etc.; costs that would otherwise be borne by the developer and purchaser.

California

California is unique among the four Border States. It has the shortest section on the US-Mexico border. On top of that, much of the border area doesn't qualify as the 'US-Mexico Border Region' per Section 916 which excludes the metropolitan statistical areas of Los Angeles, San Diego and Riverside due to their populations. Therefore the number of communities that qualify as colonias per Section 916 is only 15, and these communities are well served by the CDBG colonias set-aside. Consequently, California sets aside 5 percent of their annual CDBG allocation, while the other three border states set-aside the maximum allowable per Section 916 of 10 percent.