Colonias FAQ's (Frequently Asked Questions)
This material is from the Federal Reserve Bank of Dallas Office of Community Affairs’ publication
"Texas Colonias: A Thumbnail Sketch of Conditions, Issues, Challenges and Opportunities"
Where are colonias found?
Colonias can be found in Texas, New Mexico, Arizona and California, but Texas has both the largest number of colonias and the largest colonia population. Approximately 400,000 Texans live in colonias. Overall, the colonia population is predominately Hispanic; 64.4 percent of all colonia residents and 85 percent of those residents under 18 were born in the United States. There are more than 2,294 Texas colonias, located primarily along the state's 1,248 mile border with Mexico.
How were colonias developed?
The development of Texas colonias dates back to at least the 1950s. Using agriculturally worthless land, land that lay in floodplains or other rural properties, developers created unincorporated subdivisions. They divided the land into small lots, put in little or no infrastructure, then sold them to low-income individuals seeking affordable housing. Colonia residents generally have very low incomes. Per capita annual income for all Texas counties bordering Mexico-where most of the colonias are located-tends to be much lower than the state average of $16,717. In border counties such as Starr, Maverick and Hidalgo, per capita annual incomes in 1994 were $5,559, $7,631 and $8,899, respectively.
Why do people buy land in colonias?
A limited supply of adequate, affordable housing in cities and rural areas along the Texas- Mexico border, coupled with the rising need for such housing has contributed to the development of new colonias and the expansion of existing ones. People with low-incomes often buy the lots through a contract for deed, a property financing method whereby developers typically offer a low down payment and low monthly payments but no title to the property until the final payment is made. Houses in colonias are generally constructed in phases by their owners and may lack electricity, plumbing and other basic amenities. Colonia residents build homes as they can afford materials.
Why isn’t more done to improve conditions in the colonias?
The colonias' growth has challenged residents, as well as county, state and federal governments and others, to seek ways to provide basic water and sewer services and to improve the quality of life in the colonias. Local public funds and other resources are often limited and unable to provide service to the current and growing colonia population. Hidalgo County, which has the most colonias and largest number of colonia residents in Texas, is typical of many border counties. For basic health and human services, environmental services and capital improvements, colonia residents must rely on an often confusing combination of local, state and federal programs, many of which come and go, depending on the political and economic climate.
What are some of the issues and challenges facing colonias?
Access to Water and Sewer Service. Because of the potentially serious consequences for public health and its effect on quality of life, one of the greatest concerns regarding the colonias is the lack of wastewater infrastructure and potable water.
Many colonias do not have sewer systems. Instead, residents must rely on alternative, often inadequate wastewater disposal methods. Septic tank systems, which in some circumstances may provide adequate wastewater disposal, often pose problems because they are too small or improperly installed and can overflow. The problem is exacerbated by the poor quality of colonia roads, which are often unpaved and covered with caliche or their materials that prevent thorough drainage. During heavy rains, water collects because of inadequate drainage systems, elevation and topography. These conditions, combined with inadequate septic tanks, often result in sewage pooling on the ground.
Even if the colonias had adequate sewer systems, the border area lacks sufficient facilities to treat wastewater. In many places, there are no treatment facilities at all. Consequently, border communities often discharge untreated or inadequately treated wastewater into canals and arroyos (a creek or stream), which then flow into Rio Grande River or the Gulf of Mexico.
Securing potable water also presents a challenge to colonia residents. Many must buy water by the bucket or drum to meet their daily needs or use wells that may be contaminated.
Colonia residents often find themselves in a catch-22 situation. Even when water lines and sewer systems are in place, many cannot access the services because their homes do not meet county building codes. Many homes, built without regard for indoor bathrooms or plumbing, are treated as substandard or dilapidated by housing inspectors. These homes cannot pass inspection to qualify for hook up to water lines, and residents cannot afford the repairs or improvements necessary to bring them up to code.
Housing. Housing in the colonias is primarily constructed by residents little by little, using available materials. Professional builders are rarely used. Residents frequently start with tents or makeshift structures of wood, cardboard or other materials and, as their financial situation allows, continue to improve their homes. Housing in older colonias tends to be better developed because residents have had more time to make improvements.
Health. Dilapidated homes, a lack of potable water and sewer and drainage systems, and floodplain locations make many colonias an ideal place for the proliferation of disease. Texas Department of Health data show that hepatitis A, salmonellosis, dysentery, cholera and other diseases occur at much higher rates in colonias than in Texas as a whole. Tuberculosis is also a common health threat, occurring almost twice as frequently along the border than in Texas as a whole. A lack of medical services compounds health problems in the colonias. In addition to a shortage of primary care providers, colonia residents' difficulty in accessing health care is compounded by other factors, including having to travel long distances to health care facilities, fear of losing wages for time spent away from work, inconvenient health care facility hours, lack of awareness of available health care programs and no health insurance. As a result, many colonia residents' health care problems go unreported and untreated. For children, these barriers can be devastating and may result in slow growth and lower educational development rates.
Unemployment. The unemployment rate in some colonias is more than eight times the state rate. A 1993 Texas A&M study discovered that unemployment in five Lower Rio Grande Valley colonias ranged from 20 percent to 60 percent, compared with the overall Texas unemployment rate of 7 percent. In addition, many colonia residents often cannot find year-round work due to the seasonal nature of their primary occupations. Fieldwork represents 29.5 percent of their jobs, construction work, 24.4 percent, and factory work, 14.9 percent.
Contract for Deed. Since the 1950s, the contract for deed has been the most frequently used financing mechanism in the colonias because many individuals have neither a credit history nor the resources to qualify for traditional bank or credit union financing. A contract for deed is a financing arrangement, often at high interest rates, whereby land ownership often remains with the seller until the total purchase price is paid.
Traditionally, contracts for deed, unlike deeds of trust, were not recorded with the county clerk, making it easy for the developer to reclaim the property, as well as making it difficult to enforce any commitment of the developers' part to provide infrastructure. If the buyer fell behind in payments, the developer could repossess the property, often within 45 days, without going through the traditional foreclosure process. Developers also could claim any improvements made on the property.
Steps are being taken to remedy some of the inequities inherent in contracts for deed. In 1995, Texas legislators passed the Colonias Fair Land Sales Act to protect those who must rely on contracts for deed to finance property. The legislation requires developers to record the contract and counties to keep a record of contracts for deed. It also requires developers to provide a statement of available services, such as water, wastewater and electricity, and whether the property is located in a floodplain. Developers must provide property buyers with an annual statement-including amount paid, amount owed, the number of payments remaining and the amount paid to taxing authorities on the purchaser's behalf.
Although the legislation sets a minimum standard for contract for deed land sales, other problems with this method of financing remain.
Contracts for deed make it difficult for home owners to secure financing to build a house or make home improvement. Because title to the land often does not transfer to the buyer until it is fully paid for, an applicant cannot use the property as collateral when applying for a loan. Therefore, financial institutions are reluctant to lend money to improve the property.