SANTA ROSA, Texas – At least $78 million of the $300 million appropriated by Congress during the 1990s to improve Texas' colonias has not been spent, according to a recent EPA audit. And with construction costs and other expenses soaring, numerous colonias have had to scale back or give up on some projects.

ERIC GAY/The Associated Press

More than 400,000 people live in colonias, including this woman gathering her laundry at her home near Santa Rosa, Texas. Many colonias lack basic services such as safe drinking water, sewer or electricity.

The Environmental Protection Agency says some small-town governments lack the professional staff needed to pull off some of these complex projects, while other ventures have been torpedoed by local infighting and bungling. The audit also accused the EPA of lax oversight that allowed projects to drift.

More than 400,000 people in Texas live in colonias, often-ramshackle communities on unincorporated land, most of them close to the border. The colonias consist of shacks, trailers and some well-kept frame houses. Many lack safe drinking water, sewer systems or electricity. During the 1990s, as cities looking for tax revenue began to annex colonias, and their residents gained citizenship and voting power, state and federal officials began dispensing millions to lift colonia residents out of their squalor.

Lionel Lopez, founder of the South Texas Colonia Initiative, a nonprofit organization that works to improve conditions in colonias, said he was shocked to learn there was so much money sitting unspent.

"To me, it's mind-boggling," Mr. Lopez said. "The bottom line is the little people are the ones who are going to be hurt."

In Santa Rosa, Javier Mendez, the former city administrator, said a sewer project was foiled by a delay in land acquisition and confusion over the new housing codes the city was supposed to adopt. Also, turnover in the city attorney's office resulted in conflicting interpretations of the rules governing the project, Mr. Mendez said. The 2002 grant for nearly $4 million expired.

Santa Rosa annexed Grande Acres – on low-lying land about 12 miles north of the Rio Grande – about six years ago and brought residents city water service a few years ago.

Three years ago, Grande Acres residents were told that sewer service would follow, but soaring construction costs kept it from being built.

After a recent rain, Jose L. Rico, a 39-year resident of Grande Acres, pointed with disgust at two holes filled with a fetid stew above his septic tanks in the center of his otherwise neat back yard. It costs $80 to pump out each hole after heavy rains swamp his tank.

"The city says there's no money," Mr. Rico said. "All these waters are going to come and we'll be battling."

A new Santa Rosa city administrator is seeking new funding for sewers. But soaring costs for items such as pipe and concrete have forced the city to scale back the project dramatically.

EPA officials overseeing the colonias wastewater program say they have started keeping closer tabs on projects and have set the end of 2010 as the goal for spending the remaining money.

"When this effort is complete, 150,000 folks will have received a benefit from this program," said Susan Spalding, an EPA official in charge of water projects for the region. "The funds will not go away."

Six miles south of Santa Rosa, grant money has brought sewer service to about 2,000 people in eight colonias in and around La Feria.

But La Feria decided to delay the next phase – a new wastewater treatment plant – because of climbing construction prices. Bids requested by the city two months ago came back double what was originally planned, city officials said.

So the city has requested an additional $6.3 million.

"It's not a lack of projects or interest from the communities – the need is here," City Manager Sunny Philip said. "This is one of the key elements of improving the health standards."

Christopher Sherman,

The Associated Press