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Photographer: Spike Johnson for Bloomberg Businessweek Photographer: Spike Johnson for Bloomberg Businessweek

It takes about an hour to drive from downtown Houston to Plum Grove, Texas, the kind of reasonable commute that’s attracted oil industry executives to other northern suburbs such as the Woodlands. Trey Harris, whose company, Colony Ridge Land, is developing 9,000 lots in Plum Grove, is after a different market: poor Latino laborers who can’t afford the city.

A cleared plot in the Grand San Jacinto subdivision. Plots are sold as bare earth, requiring the owners to build. Many make do with trailers or lean-to structures. Photographer: Spike Johnson for Bloomberg Businessweek

Harris is selling half-acre patches of dirt at $25,000 apiece with basic water and sewage hookups. Colony Ridge’s website advertises several subdivisions in Plum Grove with names like Grand San Jacinto and Camino Real, and notes commuters to Houston will soon have access to a newly built highway nearby. “You have no place to raise your little animals?” says one Spanish-language ad the company is running on Facebook, accompanied by images of blue skies and women on horses. “You lack space in your apartment?” Colony Ridge offers financing in return for as little as $500 down, with no credit check, though interest rates run as high as 12 percent. “We sell to them at a price point that’s significantly lower than they can find anywhere else,” says Harris. “It’s an opportunity for them.”

Bare-bones developments are nothing new along the U.S. border with Mexico, where they’re known as colonias—Spanish for neighborhoods. They emerged during the migrant labor boom of the 1950s, when agricultural workers first came in large numbers from Mexico. While colonias can be found in Arizona, California, and New Mexico, Texas has by far the most people living in them—about 400,000, according to state figures.

$25,000

Cost of a half-acre lot in a Colony Ridge development. The developer offers 20-year financing at 12 percent interest with $500 down.

In 1989, amid concerns about a potential cholera outbreak along the border, Texas cracked down on colonias, passing strict model subdivision rules, including requirements that lots be properly drawn into plots and equipped with water and sewage. In exchange, counties with colonias received state funds to improve water service. The rules led to better living conditions in border colonias but gave rise to a new problem: subdivisions where lots have basic infrastructure but lack everything from sidewalks to street lights. “People have substandard housing and either cannot afford to connect to utilities or their house is not up to code and they’re paying fines for noncompliance,” says Jordana Barton, a senior community development adviser at the Dallas branch of the Federal Reserve, which refers to the developments as “new colonias.”

Angie Espinoza and her family barbecue in the afternoon sun. With four children, and pregnant with her fifth, she was looking for more space to raise her family. After a move from Baytown, Grand San Jacinto will be their new home. “I was looking for somewhere quiet,” she said. “Now we just need to get a trailer down here.” Photographer: Spike Johnson for Bloomberg Businessweek

Built on newly cleared timberland, the Colony Ridge development in Plum Grove, which is part of Liberty County, is the largest of the new colonias, which usually cover fewer than 300 lots. People already live there in trailers or under tarps tossed over peeled pine logs or tool sheds. “I haven’t seen anything at this scale anyplace else,” says John Henneberger, an expert in housing laws at Texas Housers, an Austin-based nonprofit that’s tracked new colonias outside Austin, Dallas, and San Antonio.

Plum Grove’s 600 longtime residents, almost all white, oppose Colony Ridge’s building plans. They fear their new neighbors—who could number as many as 30,000 once all the lots are sold—will overwhelm local schools and public services, as well as bring crime into the area. “They’re playing their mariachi music so loud your house is thumping at two in the morning,” says Plum Grove city councilwoman Lee Ann Penton-Walker, who is proposing a municipal tax to pay for a police force to patrol the development.

$221,000

Median price for a single-family home in the Houston area

Harris shrugs off the opposition, chalking it up to racism in a part of Texas where many residents fly the Confederate flag. “Some of the Rebel flag flyers, they don’t like the color of my people’s skin,” he says, meaning his customers. Liberty County officials, who are also trying to slow developments like the Colony Ridge projects, say that’s not so. “To me it’s not a racial issue—I speak Spanish as good as I speak English,” says Liberty County Judge Jay Knight. The county is moving to increase the minimum subdivision lot size to one acre, which would make new colonias financially unfeasible. “I’m gonna put it this way,” says Knight. “John Steinbeck could not write a better book.”

The bottom line: A housing crunch in Houston is pushing Latino laborers to buy land in rural areas with only basic municipal services.