HUD 2016 BUDGET PROPOSES INCREASED SUPPORT TO ‘COLONIAS’ IN TEXAS, NEW MEXICO, ARIZONA AND CALIFORNIA

HUD 2016 BUDGET PROPOSES INCREASED SUPPORT TO ‘COLONIAS’ IN TEXAS, NEW MEXICO, ARIZONA AND CALIFORNIA

Spending plan seeks to improve housing, development in underserved border communities

WASHINGTON, D.C. – February 9, 2015 – (RealEstateRama) — As part of President Obama’s Fiscal Year 2016 Budget, the U.S. Department of Housing and Urban Development (HUD) is proposing to increase the amount that states along the U.S.-Mexico border can use to promote affordable housing and community development in severely distressed communities known as Colonias.  The budget would authorize the states of Texas, New Mexico, Arizona and California to set aside up to 15 percent (from the current 10 percent) of their Community Development Block Grant (CDBG) funding for these rural border communities that often lack adequate water, sewer, and/or decent housing.

“This change addresses the urgent need to transform our communities along the border,” said HUD Secretary Julián Castro. “HUD is firmly committed to working with states and colonia residents to leverage resources for infrastructure – from housing to clean running water, community development, jobs and training. We’re going to ensure that every family in America has a chance to move ahead and share in the promise of America.”

In accordance with the Cranston-Gonzalez National Affordable Housing Act (NAHA) of 1990, HUD defines a colonia as a community within 150 miles of the United States-Mexico border in Arizona, California, New Mexico and Texas that was in existence before November 28, 1990, excluding metropolitan areas with populations exceeding one million.  In addition, a colonia must include a “lack of potable water supply, lack of adequate sewage systems, and lack of decent, safe, and sanitary housing.” Some colonias are incorporated communities under the control of the city, some are unincorporated under control of the county, and others may be territories of cities which share some level of control with the county.

Although colonia set-aside funds may be used for any CDBG-eligible activities, basic infrastructure (water and wastewater treatment systems) and housing activities should have priority. States should only fund other activities if they are done in conjunction with basic infrastructure or housing activities.

“Colonia funding is critical to addressing the long term infrastructure and housing needs of these very low-income communities,” Texas Agriculture Commissioner Sid Miller said. “Providing potable water and sanitary sewer is essential to the health of the entire community. Safe housing is absolutely necessary for residents to develop and thrive as productive citizens.”

Texas has the most colonias, with over 2,000 individual communities considered eligible. The state has also developed innovative programs and services beyond the basic activities that are eligible under the state CDBG program, including Self-Help Centers administered by local non-profits that provide home construction and repair technical assistance, tools for borrowing, and financial literacy training and technology access to colonia residents. In FY 2014, Texas set aside the maximum allowable of 10 percent of its CDBG funds for colonias, which was a total of $6,149,458, plus an additional $1,537,364 for Colonia Self-Help Centers.

In New Mexico, about 150 colonias have been identified. Most are unincorporated long-standing communities. Many of the New Mexico colonias consist of rural small towns that were designated as colonias via county resolutions that cited a lack of adequate water, sewer, and/or safe and sanitary housing. In FY 2014, New Mexico set aside the maximum allowable of 10 percent of its CDBG funds for colonias, which was a total of $901,637.

In Arizona, significant improvements have been made to the way it administers the CDBG colonias set-aside funding. The state had relied upon county resolutions that served as designations of certain communities as colonias due to lack of potable water, adequate sewer and/or decent, safe and sanitary housing. Consequently, many of the colonias were designated at the town level. Following an audit by HUD’s Office of the Inspector General in 2008, Arizona began a colonias survey to better define the colonias’ boundaries and measure their needs. In FY 2014, Arizona set aside the maximum allowable of 10 percent of its CDBG funds for colonias, which was a total of $914,695.

California is unique among the four border states. It has the shortest section of the US-Mexico border. Much of the border area does not qualify as the ‘US-Mexico Border Region’ that excludes the metropolitan areas of Los Angeles, San Diego and Riverside due to their populations. Therefore the number of communities that qualify as colonias is 15. In FY 2014, California set aside 5 percent of its CDBG funds for colonias, which was a total of $1,476,486.

In addition to the CDBG set-aside funds, HUD’s Border Community Capital Initiative (“Border Initiative”) is a partnership among three Federal agencies – HUD, the Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) and the Department of Agriculture – Rural Development (USDA-RD) to increase access to capital for affordable housing, business lending and community facilities in the chronically underserved and undercapitalized U.S./Mexico border region. Grant funding of $2 million announced last year is part of the White House Rural Council. The Council was launched by President Obama in 2012 to help create jobs and expand opportunities in rural communities.

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Elena Gaona
(202) 708-0685

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U.S. Department of Housing and Urban Development (HUD) is the nation’s housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development, and enforces the nation’s fair housing laws.

Contact:

Brian Sullivan
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