(c) Housing Assistance Council, 1998

ISBN 1-58064-084-2

Permission is granted ONLY to nonprofit community-based organizations to reproduce and/or adapt this document, and only for their own use.

VII. RECOMMENDATIONS

Each of the case studies described in this report highlights a unique approach to addressing the problems faced by residents of colonia communities along the U.S.-Mexico border. While each case study represents a response to very specific socio-political conditions prevalent in a particular geographical area, several common themes emerge.

The experiences of the players involved offer valuable lessons and insights to others interested in devising successful interventions along the border. Specific advice for local nonprofit groups working to ameliorate conditions in the colonias is included at the conclusion of each of the case studies.

Similarly, each case study indicates that several critical ingredients are necessary for putting together a successful project to serve the needs in the colonias. Nonprofit organizations are always in search of operating support, flexible funding sources, and training and technical assistance. Almost all of the local groups interviewed confirm this. While these needs are echoed by groups everywhere in the country, in the colonias they are complicated by the magnitude of the problems and a long history of neglect. Clearly, greater attention has to be paid to sustaining local, nonprofit organizations.

Most local experts and colonia advocates, including HAC and the Border Low Income Housing Coalition (BLIHC), contend that local, self-sufficient, community-based institutions are a crucial vehicle for accomplishing the fundamental goal of empowering local residents to undertake development activity and solve their own problems. With this as the guiding principle behind development efforts in the colonias, national organizations and other players should provide funding and technical assistance to local groups to assist their implementation of development projects, rather than approaching them with preconceived solutions. Such a relationship could represent an opportunity for change in the colonias.

In addition, local capacity needs to developed. This will facilitate collaborative partnerships between local groups, the government and private sectors in order to improve conditions in the colonias. This includes the creation of new groups to undertake development in the colonias. The BLIHC recommends the creation of two new institutions: a Border Community Development Bank and a Border Low Income Community Development Commission, in order to expedite the creation of 50 new community-based organizations in the colonias where none currently exist. The Community Development Bank could be operated as a nonprofit organization by the Texas Department of Housing and Community Affairs until it gained the experience to be an independent entity, perhaps overseen by a consortium of stakeholders from each of the four affected states. The Bank would be able to create a secondary market for loans to nonprofit organizations and individuals through the use of TDHCA’s tax exempt bond authority, through securing direct grants from the state and federal government, and will be able to provide reduced interest and credit enhanced loans by using CDBG, residual value bond funds, Fannie Mae, tax credits, and other funds. Most importantly, low-income colonia residents would be able to borrow directly from this bank. The Border Community Development Commission will be a policy coordinating body composed of representatives of federal and state agencies. The Commission will be able to provide comprehensive planning and analysis for the housing and community development needs of the border, and resolve policy coordination problems among the agencies seeking to address those needs.³⁷  Also, the creation and ongoing functioning of self-help centers, modeled after Proyecto Azteca initiative, needs to be supported. Development of local capacity will have long-term and enduring benefits for the border region.

Based on prior experience and intimate knowledge of the colonias, a number of public and private agencies and coalitions active along the border have developed detailed program and policy recommendations for addressing problems in the border colonias. While these recommendations may vary in their suggested approaches to implementing solutions, most agree that any colonia assistance efforts must be comprehensive and community-based in order to be effective. Most groups also concur that a coordinated public and private effort by local, state, and national organizations is key to improving conditions in the colonias. In other words, in order to be successful, a colonia assistance plan must involve the broadest range of participants and resources. The experiences and needs highlighted by these case studies in many ways support and endorse these claims.

HAC believes that a comprehensive assistance effort would provide a unique opportunity for the development and strengthening of community-based social service, development, and advocacy infrastructure. This infrastructure would not only participate in the implementation of a colonia assistance effort itself, but would also be available as a resource for related parallel efforts.

Based on prior HAC experience in the colonias, an analysis of recommendations highlighted by other border organizations and coalitions, and insights gained from the case studies described in this report, HAC proposes some additional recommendations for addressing the needs in the border colonias. These recommendations are intended to support existing initiatives in the colonias and suggest a broad framework for designing a comprehensive assistance strategy for the border.

As mentioned earlier, federal legislation directly addressing the problems in the colonias was passed in 1990. Referred to as the colonias set-aside, Section 916 of NAHA requires that the four border states use a percentage of their state CDBG funds to assist colonias. (The Secretary of HUD is to determine an appropriate percentage for the set aside, not to exceed 10 percent, to be instituted by each of the four states after consultation with colonia representatives and interest groups from each state.) This legislation was a definite step in the right direction. Unfortunately, this provision was previously in effect only for fiscal years 1991 to 1994. It has been extended permanently under the 1997 Appropriations Act. In addition, HUD submitted language in the 1997 appropriations legislation to provide permanent extension of CDBG help to the colonias. Similarly, USDA also set aside a portion of its program funds for use in the colonias. It is important that these funding sources be permanently available to the colonias. If possible, they should be expanded in order to create a more lasting solution to the funding needs along the border region.

HUD has also sought to set aside specific funds for special needs areas. This initiative, entitled the "Developing Communities Initiative," represents a collaboration between HUD and USDA. It is designed to provide financial support to nonprofit organizations for projects assisting severely impoverished communities, especially in the colonias, farmworker communities, Hawaiian homelands, and Native American communities. One of the goals of this initiative is to leverage significant private and other public funds for projects in these communities. Unfortunately, funds for this initiative were not appropriated in the federal budget in fiscal 1997, 1998, or 1999. This type of public-private partnership, if instituted, represents a tremendous opportunity for addressing the problems in the colonias, and should be supported.

Providing access to governmental resources is only half the solution. Various regulations and eligibility requirements associated with federal programs need to be carefully examined for their relevance to conditions prevalent in the colonias. Where possible, requirements identified as impediments should be relaxed to facilitate maximum use of these funds at the local level. For example, an agency serving the colonias may make exceptions to its definitional requirements.

In addition to federal efforts, enabling legislative action at the state level also represents a positive opportunity for the colonias. For instance, the recent legislation enacted by the states of Texas and New Mexico to prevent further proliferation of undeveloped colonias should provide impetus to the other states to follow suit.

Design Flexible and Creative Financing Mechanisms

In designing any colonia assistance effort, especially one that targets housing and infrastructure development, it is important and necessary to understand the culture of the market that is being served. While many colonia residents suffer from low incomes, high rates of poverty, and seasonal employment, they possess a very strong desire for ownership. They also have a deeply rooted ethic of sweat equity, adding to and improving their homes as their savings and income permit. Generally, they or their children tend to move out of colonias as they stabilize their lives and incomes.

HAC believes it is possible to develop financing mechanisms that take into account the patterns of employment and income of colonia residents, and simultaneously facilitate their upward mobility. These financing mechanisms would have to be creative and flexible. For example, they might incorporate ideas from USDA programs where families initially get deep subsidies, then "graduate" and move on. Another approach might be to combine low interest loans with critically needed grants to fill the gaps in the financing needed to implement a project.

Some international non-governmental organizations (NGOs), such as the Cooperative Housing Foundation (CHF), have been experimenting with alternative housing structures and financing mechanisms in the colonias on the Mexican side of the border. For instance, CHF makes multiple, three-year term, home improvement loans to families in the colonias. This enables families to improve and add to their dwellings as their savings and income permit. In addition, CHF has been focusing on involving maquilas in a community housing partnership venture, urging them to contribute financially towards improving the housing conditions of their employees. These efforts by CHF and others should be examined for their relevance and replicability on the U.S. side.

Similarly, the feasibility of establishing community-based credit systems, such as credit unions or community development banks, could be explored. These would encourage savings by residents and provide loans that are less restrictive than government loans and are more responsive to the needs of the community. Such mechanisms have been implemented in informal settlements in many developing countries, and may offer possibilities for replication in the colonias.

As mentioned earlier, the BLIHC recommends the creation of a Border Community Development Bank in order to provide funds to local nonprofits involved with community development work in the colonias. This effort should be encouraged and supported. Similarly, the involvement of private lenders should also be encouraged as a means for delivering capital to the colonias. Perhaps a housing guaranty fund could be created to provide security to lenders willing to commit to the colonias. Private lenders may then be persuaded to relax their loan guidelines, and adopt special criteria designed to fit the characteristics of the colonia population.

Finally, improving access to funding in the colonias also requires flexibility in implementing regulations and reporting requirements. Each of the projects studied for this report reveals that local groups utilize multiple funding sources and struggle to meet conflicting requirements set forth by each of these sources. With the current emphasis on leveraging, no single funder wants to be responsible for the entire financing of any project. Given this situation, public and private lenders need to make greater efforts at working together in ways that enable local groups to combine these financial resources.

Encourage a Bi-National Regional Effort

HAC urges that the bi-national, regional nature of this problem be recognized. No initiative aimed at addressing the problems only on the U.S. side will be truly successful. Ideally a regional commission should be created in order to comprehensively address the problems of the border region. Precedent for this approach exists in the prior regional bodies created to tackle similarly intractable problems with regional impact. The Tennessee Valley Authority and the Appalachian Regional Commission are examples of such regional initiatives. A border commission would be able to coordinate a series of bi-national deliberations focusing on the action steps needed to improve living conditions along the border. This type of bi-national cooperation would present an opportunity for beginning collaborations between groups active on either side of the border.

Similarly, NAD-Bank and BECC, though incipient organizations, are important players in this arena, and represent the first step towards recognizing that this problem exists on both of the border. Unfortunately, at the time this research was conducted, they had not been able to devise effective methods for meeting the needs of border residents. Consequently, both these institutions were facing severe criticism from local advocacy groups and the media. (Since the Bank was created by the U.S. and Mexico, it had not made a single loan until 1996. In addition, its interest rates were set too high to be affordable to the communities with greatest need.) Although this censure is justified, these organizations also need constructive advice on how to re-focus their priorities, and structure their programs to address the problems in the colonias more effectively. The governments of the United States and Mexico need to provide leadership in re-directing these organizations.

In conclusion, HAC strongly supports the creation of a bi-national, regional commission, and other bi-national efforts to tackle the problems along the U.S.-Mexico border in a comprehensive manner.

Appendix A

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