El Cenizo, Texas – The people who live in this small subdivision next to the Rio Grande are quickly turning half-built, often-improvised shacks into finished houses. At press time, a group of five families building with the help of La Gloria Development Corp. planned to be done with their homes by March. Another nine families planned to finish theirs by September.

El Cenizo is a colonia. In Spanish, that word can simply mean a neighborhood, but in Texas the word usually refers to hastily built groups of single-family homes that are often lacking even basic utilities. About half a million Texans live in 1,450 colonias scattered along the U.S. side of the border between Texas and Mexico, according to the Texas Health and Human Services Commission.

These communities often shock visitors with open sewage, lack of sanitary water and drainage, and dusty unpaved roads, according to sources like Ariel Cisneros, a senior community affairs adviser at the Federal Reserve Bank of Dallas.

But at El Cenizo, after years of work, the roads have been paved, most houses have water and sewer connections, and the 100 vacant lots that are left among the 900 houses here are slowly filling – with decent housing.

El Cenizo was first developed in the 1980s when a developer sliced his land into lots about six miles south of Laredo, Texas.

Families bought their lots with a downpayment of just a few hundred dollars and began building houses a little at a time. They owned the land under a “contract for deed” structure, meaning the developer never transferred the title to the families; if they were even slightly late on a payment, the developer could seize the property, including the family’s house.

La Gloria helps these families by originating a 0% interest, 30-year loan of up to $30,000 through the Texas Bootstrap Loan Program run by the Texas Department of Housing and Community Affairs (TDHCA). TDHCA will often blend this loan with another $10,000 loan from a private mortgage lender, usually at a reduced interest rate of 3% to 4%.

The loan package replaces the family’s original contract for deed agreement so that they can receive the title for their land. It also pays for the house that the family builds. Nearly all of the work is done by the families.

La Gloria has helped 306 families build their homes. The families receive guidance from a professional builder who checks their work every day, though many of the people at El Cenizo already have jobs in the construction business.

“They’re excited about building their own homes,” said Alfredo Torres, program coordinator for the nonprofit La Gloria. Torres lives in El Cenizo.

When the families are finished, the homes average about 1,000 square feet in size, with three bedrooms, and appraise for about $54,000, Torres said. The homeowners also receive financial literacy training, to help them hold on to the equity they’ve built.

The slow pace of change

There’s reason to think that most colonias will eventually become fully functioning communities. El Cenizo is already well on the way.

In Mexico, neighborhoods that spring up quickly without utilities tend to evolve, so that within 15 to 20 years they have often become integrated, working-class districts with paved roads and services, according to Peter Ward, professor of public affairs and sociology at the University of Texas at Austin.

But many advocates wish the process could go a little faster in Texas. For example, it’s probably safe to say that few colonias, if any, included working sewer systems when they were first developed – and many still don’t.

As of the end of last year, the state had run water and sewer lines through 431 colonias through the Texas Water Development Board’s Economically Distressed Areas Program. But that still leaves hundreds of colonias housing as many as 200,000 people with systems that aren’t finished yet or that haven’t even been started.

“The first thing is getting water,” said Homero Cabello, director of the Office of Colonias Initiatives for TDHCA. That’s because none of the main housing programs designed to help colonia residents can be used if the property lacks basic water and sewer service. As a result, even though a few colonias are well on their way to becoming functioning neighborhoods, the work has barely begun in many others.

So far, the state has committed more than $500 million in grants and loans to building water infrastructure, and it could be argued that much more investment is needed.

The housing investment, in contrast, has been helpful but relatively modest. The Bootstrap Program receives about $3 million a year from the Texas general budget.

The state Contract for Deed Conversion program claims another $2 million a year from the state’s HOME funds. A third program, the Colonias Self-Help Centers, which support local nonprofits in the colonias, receives about $2 million a year in Community Development Block Grant money. All these programs were created in the late 1990s and are effective, though advocates are anxious to see them expand.

Other housing programs, like the low-income housing tax credit, have been used in the colonias, though they have had relatively little impact so far. The very small nonprofits that work in the colonias often hesitate to shell out the $50,000 it takes to apply for tax credits. Also, colonia residents are much more interested in owning their homes, whatever way they can, than they are in renting.

“There is a very strong desire to own land,” said John Henneberger, co-director for the Texas Low Income Housing Information Service.

Residents believe in homeownership

A lot of Texans believe that the colonias are filled with illegal aliens from Mexico. But in reality, about 85% of colonia residents are U.S. citizens, according to Cabello. Nearly all of the households are homeowners.

It’s a fair question to ask why an employed citizen of the U.S. would choose to live in a place without working plumbing – but for a worker earning the minimum wage who is committed to buying a home, “a $40,000 house is all they can afford,” Cabello said.

The Texas Legislature passed laws in the 1990s that first slowed and then finally stopped the development of new colonias. At the time, many colonias were barely occupied, with hundreds of vacant lots on huge development sites.

However, the population on the border continues to grow relentlessly and today the existing colonias are rapidly becoming overcrowded, in addition to all their other problems.

“It’s like putting a lid on a pressure cooker,” Henneberger said.

A few builders are trying to relieve the pressure by building communities of self-help housing on new sites outside the colonias. Lower Valley Housing Corp., based in Fabens, Texas, for example, helps the families in its programs to build about 75 houses a year at a cost of about $49,000 per house for households earning an average of $14,500 to $15,000 a year. The families pay for these homes through the mortgage programs of TDHCA or the Department of Agriculture Rural Development.

Since they started in 1990, the families have built 1,000 homes with Lower Valley’s help. Only six have been foreclosed.