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Southwest Border Colonias: Housing and Sustainable Development in the 21st Century

A Regional Conference of the United Nations Habitat III Effort

Image of a city skyline in the shape of the United States with the Habitat III logo superimposed.

The United Nations Conference on Housing and Sustainable Urban Development (Habitat III), to be held in Quito, Ecuador, in October 2016, will focus on the global impact of cities on people, the environment, and governments as well as on the need to create a modern urban agenda. In preparation for Habitat III, housing advocates; nonprofit developers; and representatives from academia, local and state governments, the U.S. Department of Housing and Urban Development, and the Federal Reserve Bank of Dallas gathered at the University of Texas at El Paso on June 26, 2016, for the Southwest Border Regional Conference. The conference was the last of five U.S. convenings hosted by HUD to solicit input on sustainable urban development for Habitat III. In addition to local and regional practitioners, residents of area colonias were present to add their direct and invaluable perspective on their daily challenges and offer a more complete picture of the housing and community development issues facing the communities along the United States’ southwest border.

A colonia is an unincorporated settlement located along the U.S. border with Mexico that is usually developed on plots sold by private developers and typically lacks access to basic utilities such as running water, electricity, sewage, and even paved roads and designed drainage. Model subdivisions usually provide access to basic services such as potable water and drainage but have few building codes and lack many infrastructure elements. These substandard communities are usually located close to larger urban areas (and the jobs they provide) but outside city limits, thereby avoiding the zoning requirements and building codes that cities typically enforce. Immigrant and low-income families often see colonia communities as an affordable way to become homeowners and build wealth. In Texas alone, an estimated 500,000 people reside in colonia communities, and residents of these communities have homeownership rates of 77 percent, well above the national average.

The promise of homeownership that draws residents to colonias, however, comes at a heavy price. Only 11 percent of colonia homes or lots were purchased through banks. Instead, subprime lending instruments and contracts of deed, often with interest rates of 15 to 18 percent, dominate the market. In addition, many colonia residents — 60 percent in the El Paso area alone — live in extreme poverty. For these families, the loss of a job or even a short-term lack of pay due to illness can be devastating, creating a ripple effect of unpaid bills and missed housing payments. Without access to the conventional banking system, colonia families often turn to payday loans with interest rates as high as 300 percent out of desperation, triggering a cycle of untenable economic burden. As a result, the conventional benefits of homeownership, such as wealth building, often do not materialize for colonia households.

In addition to lacking the basic infrastructure that most neighborhoods and communities take for granted, many unincorporated border communities have limited access to educational opportunities. For many children living in colonias, English is a second language, and Spanish-language classes are not universally available at their schools, which burdens both student and school. These students are further disadvantaged because modern classrooms often require Internet access to interact with teachers; receive grades and homework assignments; and apply for special programs, scholarships, and colleges and trade schools. Families without access to either computers or high-speed Internet service at home are forced to improvise. In some more fortunate communities, children share computer and Internet access at local libraries or community centers. Approximately 50 percent of Texas border communities have no access to broadband Internet. Less fortunate colonia families have no Internet access at all, which inhibits students’ ability to learn and keep pace at school. The combination of poverty and lack of access to critical services creates an ongoing disadvantage for colonia residents that can potentially persist for generations.

Although it is important to note that people choose to live in colonias, that “choice” is often forced by a lack of other affordable housing options. In addition, the negative consequences of these substandard communities are borne primarily by Hispanic populations. In the conference’s keynote address, HUD Assistant Secretary for Fair Housing and Equal Opportunity Gustavo Velasquez emphasized the importance of fair housing and the recent court rulings that have substantiated the Affirmatively Furthering Fair Housing rule and the disparate-impact mechanism. On a more basic level, however, he said that addressing inequities in these substandard communities, which disproportionally affect minorities, was the right thing to do.

Panelists identified several best practices for improving conditions for colonia residents. The Texas A&M Colonias Program works with residents to provide affordable water filtration systems. These systems take water collected from rain or other sources and use ceramic and straw filters to generate 2.5 liters of drinkable water per hour. One demonstration program, Digital Opportunity for the Rio Grande Valley, aims to bridge the digital divide in Colonias communities. Run by the Pharr-San Juan-Alamo School District and the city of Pharr, the project is building a network that will increase broadband connectivity throughout the area. In addition, the school district will provide computers, broadband access, bilingual training, and technical support for students and their families.

To address financial needs for Colonia residents, La Puerta Centro de Oportunidad Económica, a service of the Community Development Corporation of Brownsville in Texas, provides colonia residents with housing and foreclosure counseling. La Puerta also offers financial education seminars, one-on-one coaching, and income tax assistance. The financial education seminars focus on money management, planning, and conventional banking, helping colonia residents avoid financial crisis and foreclosure. Another organization, Project Vida, takes a holistic approach to improving the health and wellness of border communities near El Paso. In addition to offering programs addressing education, affordable housing, gang prevention, and homelessness. Project Vida has built wellness clinics in or near colonia communities to provide residents with quality, low-cost healthcare.

Anna Alvarez Boyd, senior associate director of consumer and community affairs at the Board of Governors of the Federal Reserve, summarized the Southwest Border Regional Conference’s mission: to collectively assess the state of border communities, focusing on a better life for all citizens with an inclusive approach to housing and community development. The participants focused on the need to enforce fair housing laws and improve access to federal funding — in particular, HUD’s 15 percent set-aside in local Community Development Block Grant program funding, which jurisdictions can use to improve colonias and other substandard communities. Participants also emphasized the need to encourage cooperation between city and county governments; zoning and building code requirements often encourage the formation of colonias in county jurisdictions, but residents typically are employed in cities. Attendees also suggested that county governments should be held accountable for conditions in communities that lack infrastructure and services. Participants also proposed a massive public education campaign to inform the public about colonias and provide colonia residents with the information and tools needed to make good financial decisions, along with improved access to conventional mortgage instruments.