# Presentation: 323596

## Use of HUD Resources To Assist Colonias

- NOTICE CPD-03-10

- HUD has been providing assistance to colonias over the past 12 years.
- In February 2001, the Department established Task Force on the SWBR, Colonias, & Migrant/Farmworker Communities.
- Committee comprised of representatives from each of the major HUD organizations.

- Background

## Definition of Colonia

- Within 150 miles of the U.S.-Mexico border in Arizona, California, New Mexico, & Texas.
- Lacks a potable water supply, inadequate sewer systems, & a shortage of decent, safe, and sanitary housing.

- Background

- The greatest number of colonias are in Texas.
- Hidalgo County – largest colonia population.

- Background

## CDBG & HOME funds play a major role in providing assistance to colonia families.

Almost all CDBG funds spent in colonias are administered through the State CDBG program.

- Almost all CDBG funds spent in colonias are administered through the _**State**_ CDBG program.

- Background

- State CDBG program regulations also allow spending in metropolitian areas of less than 1M people, such as Hidalgo County.

- Background

## 
ORCA is the lead entity that administers the Colonia-Set Aside program.
Colonia Set-Aside is set at up to 10% of State CDBG allocation.
State of Texas provides 12.5% for Colonias
TDHCA-OCI administers the additional 2.5% for Colonia Self-Help Centers (CSHC)

- ORCA is the lead entity that administers the Colonia-Set Aside program.
- Colonia Set-Aside is set at up to 10% of State CDBG allocation.
- State of Texas provides 12.5% for Colonias
- TDHCA-OCI administers the additional 2.5% for Colonia Self-Help Centers (CSHC)

- Background

## 5 Areas for Use of Needed Resources

- Contract for Deed Conversions
- Alternative Building Technologies
- Needed Infrastructure
- Individual Development Accounts
- Self-Help & One Stop Service Centers

## Contract For Deed Conversion

- Similar to a mortgage loan...it allows a buyer to purchase a parcel of land from a seller.
- Caveat – the buyer does not receive title to the land until the full price, with interest, has been paid.

- Colonia fair land sales act of 1995 – sellers are required to record & counties are required to keep track of contracts for deed.
- The law requires that developers provide a statement of available services...water/sewer/other needed infrastructure...

- CFDC

**Notes:**
TDHCA –OCI has spent +7M in HOME money and committed 9M overall for the conversion of hundreds of contracts for deed.  This equates to approximately +350 contracts for deed conversions into lower interest mortgages.  OCI partners with the local governments, public housing authorities, nonprofits/for profit entities and gather eligible applicants to participate in the program & provide completed packages to OCI for review.

- The provision of _**legal services**_ to facilitate contract for deed conversions to traditional mortgages is an eligible **Public Service** activity in the CDBG program.
- Community Resource Group, Inc. (Starr County).

- CFDC

**Notes:**
CRG, Inc., received two RHED grants that leveraged USDA, TDHCA and other national and local foundations.  The group has provided clear marketable titles to 2,392 lots for colonia families.  CRG, Inc., is the court-appointed receiver in the largest title regularization efforts in the country.

## Alternative Building Technologies

- Housing & CD Act of 1980, as amended, was amended to emphasize the program's role in improving energy efficiency.
- Expanded categories of eligibility to include design features that promote energy efficiency...public facilities such as utilities, rehab of buildings...energy conservation as a public service, grants to neighborhood-base nonprofits to carry out energy conservation.

- Proyecto Azteca – Self-Help housing contstruction.
- HOME program supports the **Affordable Sustainability Technical Assistance (ASTA) **web site (homeasta.org)
- Partnership for Advancing Technology in Housing (PATH).

- ABT

| Cob | Straw Based  |
| --- | --- |

| Rammed Earth | Straw Bale |
| --- | --- |

- ABT

- _CDC Brownsville_
- currently administers a PATH demo project on design and construction of a number of homes that meet local building codes, energy efficient and cost effective.

- ABT

**Notes:**
CDCB contact persons:  Don Curry, Executive Director or Nick Mitchell Bennett, Housing Coordinator, at (956) 541-4955

## Additional Funding Sources

- Rural Housing & Economic Development (RHED).
- Housing Opportunities for Persons w/Aids (HOPWA).
- USDA, Rural Housing Services (RHS)
- Department of Energy (DOE) Weatherization Program

- ABT

**Notes:**
RHED – competitive program offered through the SuperNOFA – 25M annual budget.
HOPWA – FY 2003 appropriation >$290M.
RHS – loan program for low-income borrowers to  purchase innovative housing units & systems that do not meet existing published standards, rules, regulations & policies.  FY 2003 funding totaled $1M.
DOE – 1-800-DOE-3732 or www.eere.energy.gov/building/weatherization-assistance

## NEEDED INFRASTRUCTURE

**Notes:**
Refer to page 8,9, & 10 for historical and statistical data.
Even when water & waste water lines exist and nearby, many families cannot afford the $700-$800 hookup fee & will not qualify for the hook up unless it is part of the overall rehab of their homes.  
CDBG funds can be used to complement the HOME program since hook up fees can be funded thorough CDBG without accompanying rehab.

## Section 108 Loan Guarantee

- Section 108 loan guarantee program is available to finance a wide range of activities in colonia areas.
- Subpart M, Section 701 of the Regulations.
- Massive borrowing limits – up to five times Entitlement or State allocation.

- Needed Infrastructure

**Notes:**
See page 10 for additional information.

## OTHER FEDERAL RESOURCES

- EPA
- USDA
- COMMERCE
- HEALTH & HUMAN SERVICES
- STEP (Small Towns Environment Program)
- NADB/BECC

- Needed Infrastructure

**Notes:**
See page 11 & part of 12 of Notice.
EPA provides the largest amount of funding for small/rural communities to assist in designing and the building of wastewater systems-several programs are available to border communities – Colonias Wastewater Assistance Program, Clean Water State Revolving Fund, Hardship Grants Program for Rural Communities, Drinking Water State Revolving Fund – for additional info call (214) 665-7149 or (202) 260-2268
USDA- Rural Utilities Service Water & Waster Disposal Program –loans/grants to rural communities (<10,000 residents) – focus is on water, wastewater, solid waste & storm drainage projects. Rural Housing Service (RHS) –loan program for low-income borrowers to purchase innovative housing units & systems that do not meet existing published standards, rules, regs & policies.
Commerce – provides grants for public works activities (water/wastewater facilities)
HHS – RFPs issued and seeks applicants capable of providing technical assistance/trainining on a region-wide basis within the US to help small/rural communities in the construction of water/wastewater systems.
STEP –Private foundation – contact Texas Office of Rural Community Affairs – (512) 475-3900 or www. rinstitute.org.
NADB/BECC – work dedicated to finance projects dealing with potable water supply, wastewater treatment/municipal solid waste management along the border region. (nadbank.org)

## INDIVIDUAL DEVELOPMENT ACCOUNTS (IDAs)

- Dedicated saving accounts that can be used for purchasing a home, paying for education or job training expenses, or capitalizing a small business.
- Savings program over a pre-established time period & matched by private/public sources.

- Use of CDBG funds as matching funds is OK based on the purposes for which the funds in an IDA are to be used – to buy a home, start a business, or pay for education/job training – are **eligible activities under the CDBG program.  **
- CPD Notice 01-12, August 14, 2001.
- Caveat–CDBG $ may not be deposited in an IDA.

- IDA-CDBG

- HOME funds OK for use as  down payment assistance along with an IDA, when the purpose of the IDA is to purchase a home.
- _Caveat – HOME $ may be not deposited in an IDA – statutory requirement that funds must be invested in AH within 15 days of draw down from Treasury._

- IDA-HOME

**Notes:**
Other possible resources include U.S. Department of Health & Human Services, Office of Community Services (see page 13 & 14) & Treasury CDFI program.

## Self-Help & One-Stop Service Centers

- CDBG funds can fund the construction of these facilities – centers’ operating costs can be paid for with CDBG under the **Public Service** eligibility category.
- Funding from Colonia Set-Aside – 2.5 % beyond the 10% Texas CDBG Colonia Set-Aside.
- Self-Help Homeownership Opportunity Program (SHOP)

**Notes:**
Self