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Texas Colonias Life Improving, But Challenges Remain, Says Dallas Fed Report

For immediate release: April 23, 2015

DALLAS—Life in Texas’ border colonias is improving but housing and other challenges remain, according to a report released today by the Federal Reserve Bank of Dallas.

Colonias are often isolated residential areas along the Texas–Mexico border that may lack some of the most basic living necessities, such as potable water, septic or sewer systems, electricity, paved roads and safe or sanitary housing, according to the Texas Office of the Secretary of State.

The comprehensive report, “Las Colonias in the 21st Century: Progress Along the Texas–Mexico Border,” finds improving infrastructure in the colonias. Since 2006, almost 290 formerly underdeveloped colonias have acquired basic infrastructure, such as paved roads, water systems and solid waste disposal.

The state of Texas invested tens of millions of dollars in colonias’ infrastructure between 2006 and 2014, the report notes.

Case studies highlight economic success stories in the colonias, including the growth of microenterprises, and innovative housing, education and health programs that are improving the quality of life for colonia residents.

Still, more than 40 percent of colonia residents live below the poverty line, and an additional 20 percent live at or near the poverty line, the report states. Median household income is less than $30,000 per year, compared with $51,000 in Texas and $53,000 in the United States.

The quality of housing has not kept pace with infrastructure improvements, researchers found. Colonias feature a range of substandard to well-built housing—from hybrid dwellings combining recreational vehicles with wooden or cinder block additions, to brick or stucco homes built on cement foundations.

Informal home financing through contracts for deed—effectively rent-to-own financing arrangements that are legal in Texas—persists throughout the Texas colonias, the report says. Contracts for deed typically carry higher interest rates and lack many of the legal protections of a standard home mortgage.

In addition, nearly 340 colonias still lack basic infrastructure, leaving about 38,000 colonia residents without safe drinking water, according to the report.

The report focuses on the six Texas counties with the highest concentration of colonias: Cameron, El Paso, Hidalgo, Maverick, Starr and Webb. Those counties are home to an estimated 369,500 of Texas’ 500,000 colonia residents.

The report was authored by Jordana Barton, Emily Ryder Perlmeter and Elizabeth Sobel Blum of the Dallas Fed and Raquel R. Marquez of the University of Texas at San Antonio using both qualitative and quantitative data.

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Media contact:
Alexander Johnson
Federal Reserve Bank of Dallas
Phone: (214) 922-5288
Email: alexander.johnson@dal.frb.org