HARLINGEN, Tex. -- Study this carefully. Here's the recipe to develop colonias -- shantytowns without the amenities of urban slums, such as sewer or water service and paved roads.

First, pick one of the nation's poorest counties, most likely one along the thousand miles of Texas-Mexico border, where many residents earn poverty-level wages in migrant farm, factory, and service jobs.

Grab cheap land located on an unincorporated, isolated floodplain where officials don't regulate development.

Then tell poor Mexican immigrants and other folks that they can own their own plot, their piece of America, for a down payment of $25 or the change in their pockets. Set up a contract of sale so buyers won't own equity until the last payment is made in 10 years. If they skip a payment, just keep reselling the same parcel until you make a financial killing.

Promise -- but don't provide -- sewer services or paved roads in the development, a haphazard collection of shacks or houses that, in some cases, are built out of materials scavenged from landfills.

Allow inadequate septic tanks and privies to leak raw sewage into the soil and water wells and trigger outbreaks of hepatitis, cholera, and gastrointestinal problems that approach third-world levels.

Farfetched? No.

This type of scenario was described by municipal and state government officials in interviews and speeches at a recent colonias conference in Harlingen, Tex., near the Mexico border. They said it has been played out hundreds of times in Texas, where almost 1,200 colonias with about 300,000 people have sprouted up, primarily in the last several decades.

After largely ignoring the problem in the past, government officials are now launching initiatives to curb the growth of colonias and trying to develop funding sources to clean up existing ones. Fueling the push to improve colonias' conditions is the congressional debate on the proposed North American Free Trade Agreement, which has highlighted environmental and health problems on the U.S.-Mexico border.

"The magnitude of the task to improve colonias cannot be overstated," said George Latimer, director of the special actions office for the U.S. Department of Housing and Urban Development.

In Texas alone, between $700 million to $1 billion would be needed to provide basic sewer and water services to the colonias, according to Texas Water Development Board estimates. In border states, almost double that amount could be needed to modernize conditions for the more than 500,000 colonia residents, according to Cipriano Garza, who was recently appointed to head a HUD program on colonias.

To cope, state and federal officials are proposing several initiatives or suggesting the acceleration of existing programs, although officials said their efforts still fall well short of the money needed.

Among the initiatives: a proposal to boost HUD funding; possible expansion of a unique Texas program that uses state general obligation bonds to improve colonias; and a wave of lawsuits by the Texas attorney general's office to sue developers and recover some damages.

The HUD proposal represents the latest initiative. Earlier this year, HUD Secretary Henry Cisneros was shocked when he visited colonias near El Paso, Tex. "He came back full of anger and commitment," said Latimer.

In a recent speech, Cisneros said, "We are talking about the poorest of the poor. Take the worst unit in any public housing project in this country and set it in many a location of colonias along the Mexican-U.S. border and you may mistake it for a mansion."

To improve conditions, Cisneros has asked for a $200 million colonias allocation in the fiscal 1995 federal budget. If Congress approves it, the HUD program would be an unprecedented effort to devote federal dollars to such an effort in the border states, Garza said. Garza, a former project supervisor for the Dade County Public Schools, would oversee the program in his position as special assistant for migrant farmworker housing and colonias.

HUD officials said Cisneros has proposed flexible funding so that the HUD money will complement existing funding scattered throughout other federal programs, such as the Environmental Protection Agency and Farmers Home Administration. The funds also could work in tandem with state programs, such as Texas' Economically Distressed Areas Program, which provides bond-financed funds for water and sewer programs.

"There is no state better mobilized than Texas to address the problems of colonias," said HUD's Latimer. "Texas is out ahead of the country and the federal government."

He said the Texas distressed areas program could be a model for other states seeking to improve conditions in colonias.

Under the program, which voters approved about two years ago, the state is allocating $250 million in general obligation bond financing to provide water and sewer improvement grants and loans to poor communities. It is the first time a state has backed such improvements with GO bonds, state and federal officials said.

Operated by the Texas Water Development Board, the distressed areas program is supplemented by $70 million from the state and the Environmental Protection Agency. The program targets 27 eligible counties along the Texas-Mexico border, where poverty and high unemployment have spurred the growth of colonias.

During the past two years, more than $200 million has either been spent or committed for 36 sewer or water projects in Texas colonias, Water Development Board officials said. Most are in the planning stages, although a few have been completed or are under construction.

For example, the first project that provided water and wastewater service for almost 1,300 colonia residents in Edinburg, Tex., was completed for $1.45 million this past summer. Nearby, adjacent to the city of Brownsville, a $6.65 million project is under way to install wastewater treatment and water for almost 4,400 residents of the Cameron Park colonia.

Despite the progress, Tom Brown, deputy executive administrator of the water board, said more federal or state funding is needed to provide sewer and water systems in colonias.

"Our current funding is inadequate," Brown said. "We only have about half the amount that is needed." Moreover, Brown said Texas should not have to pick up the whole tab for improving colonias.

"The federal government has got to be involved to come up with more money," he said. "It's an international border."

Meanwhile, the Texas attorney general's office has assembled a strike force of about 12 lawyers and six investigators for a legal crackdown. The team is planning a "wave of lawsuits" within the next several weeks to recover damages from developers, said Javier Guajardo, special assistant to the attorney general and director of the colonias strike force.

"If we can't eliminate the growth of colonias, at least we can slow it down," Guajardo said.

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