As Federal, State Lawsuits Bear Down, Troubled Houston Community Enjoys Development Boom

From a commercial development perspective, the stars are aligning for Colony Ridge Development's Liberty County subdivisions — despite ongoing legal entanglements.

The Department of Justice and Texas Attorney General Ken Paxton sued the developer last year, accusing it of predatory mortgage lending. Right around that same time, the subdivisions hit a high enough population level to catch the eyes of major operators.

Proving the old adage that there is no such thing as bad publicity, Colony Ridge staff say a slew of stores, restaurants and other businesses have flocked to its development since. And that publicity may have helped draw attention from key commercial players, like “your McDonald’s of the world,” Colony Ridge Commercial Sales Manager Justin Chaney said. 

“My phone started ringing a lot the first quarter of this year and the last quarter of last year,” Chaney said. “I think they see the [government] motive there, they can connect the dots. They’re smart business people.” 

The DOJ sued Colony Ridge in late December, accusing it and its marketing and sales arm, Terrenos Houston, of steering Spanish-speaking borrowers into seller-financed loans to buy flood-prone properties without verifying income or ability to pay, then taking back a significant proportion of those properties through foreclosure and starting the cycle again. Paxton followed with a similar lawsuit in March, calling the business model a “foreclosure mill.” 

The lawsuits and press attention last year made some businesses less bullish, Chaney said, adding he would be naive to say it had no effect. But a critical mass of commercial operators sees the growing population as potential customers and clients nonetheless.

County Road 5270, a main thoroughfare in the Santa Fe subdivision, is beginning to shape up as a bustling commercial strip, local Spanish-language news website El Amanecer Texas reported in March. A Pizza Hut, First Liberty Bank, Subway and a new gas station and health clinic have opened in the past year, while a Family Dollar/Dollar Tree, an AutoZone Auto Parts, a doughnut store and a skating rink with an arcade are also on track to open in 2024. 

“I can look at the timelines and follow those,” Chaney said. “I think at [the time of the media attention] is when I had a lot of my bigger players step up to the plate. … It’s put us on a bigger scale.”

Colony Ridge subdivisions are home to more than 50,000 residents across 34,000 acres. This is up from 40,000 people last year, and a population of 250,000 is eventually expected. The timing of completion is dependent on lot sales, but there is room to build for the next 12 years, company officials said.

A recent marketing map outlines the commercial growth that has rolled out over the past six to 12 months.

The growth is coming quickly. About 150 rooftops are added to the Santa Fe subdivision monthly, according to company literature. Visits to Colony Ridge communities totaled 10.4 million in 2023, up from 9.4 million in 2022 and 7.7 million in 2021, according to Placer.ai data.

Colony Ridge CEO John Harris launched the business with his brother, Trey Harris, and their cousin Kevin Harris. The family has bought and sold residential lots around the Houston area for decades but started the Liberty County communities near the city of Plum Grove in 2011, John Harris told Bisnow.

Colony Ridge sells lots, not homes. This means the owners are free to build on the land themselves, work with a homebuilder, live on-site in a mobile home or hold on to it for future use. Neighbors previously reported some people living on their property in tents. The developers install infrastructure for the subdivisions, including streets, water and sewer. 

Colony Ridge offers its own financing and sells to primarily Latino people.

The development’s turn in the spotlight began around September 2023 when that model drew attention from right-wing media and politicians who called the development a “magnet for illegal immigrants” and claimed the streets were overrun by crime, The Texas Tribune reported. 

Gov. Greg Abbott suggested the subdivisions were a “no-go zone” for law enforcement where the Texas ban on sanctuary cities isn't enforced. The comments came despite Trey Harris contributing more than $1M to Abbott's campaigns.

The statewide and national attention followed years of complaints by longtime Plum Grove and Liberty County residents that the developments have disturbed the city’s drainage, infrastructure and quality of life by so quickly building up its population. 

Former Plum Grove Mayor Lee Ann Penton-Walker said she has been raising a ruckus about the development for over a decade, charging that most of the land buyers are in the country illegally, The Texas Tribune reported. Colony Ridge itself estimates about 20% of its residents may be undocumented, although it notes it is illegal to ask about a potential buyer’s immigration status. 

Houston Landing published the results of an investigation into Colony Ridge’s foreclosures in mid-December, finding that the developer reacquired 45% of the 35,000-plus properties it had sold since 2012. The DOJ lawsuit followed weeks later, highlighting statistics showing that close to 1 in 3 Colony Ridge loans failed within the past three years. 

Colony Ridge attracts those who typically can’t get a loan anywhere else, helping them achieve the American dream of homeownership, John Harris said in his original statement responding to the DOJ lawsuit. A Montebello subdivision resident backed up that assertion to El Amanecer Texas. 

“Who else is going to give people with no documentation or credit a chance?” Yolanda Martinez told the publication. “People have paid for their properties, so it is possible.”

But other residents began speaking out about Colony Ridge’s “deceptive practices” years before the lawsuits, including Suellen and Keilah Sanchez. The sisters founded Terrenos Houston Demanda in 2021 to advocate for Colony Ridge residents after they said they were lied to about flooding and utility hookups at the eight lots they bought. They told Houston Landing that Colony Ridge took money before accusing them of missing payments and filing for foreclosure. 

Many residents are immigrants who aren't familiar with local norms and regulations, Keilah and Suellen Sanchez said in a statement to Bisnow. They often sacrifice to raise cash, only to encounter similar unforeseen difficulties.

But the organizers said they recognize the critical need for businesses, resources and services in the community, “which has been historically neglected and redlined.”

“We advocate for more responsible and transparent development practices that prioritize the safety and stability of the community,” the statement says.

Yet they warned that investments made by businesses could face significant issues, including flooding and other infrastructure issues, health and safety risks from potential water contamination, and fallout from the ongoing lawsuits. 

“These legal actions and investigations reflect broader systemic problems that may jeopardize the future viability of the community,” the statement says. 

John Harris declined to comment on the status of the lawsuits to Bisnow, but he said he was “offended at the implication that our customers are dumb.” 

Harris said he believed the development had been targeted for political reasons.

“Most of it’s BS. … We’re confident that we will still be here helping people for a long time,” he said.

When Chaney joined Colony Ridge’s staff in 2022, it was an underserved community from a business perspective, he said. He had no idea how to market it because it was so big, broad and under the radar, Chaney said. 

The Grand Parkway opened in 2022 and made it easier to get to Liberty County. A handful of businesses started opening then, Chaney said. 

“My biggest obstacle is the whole penguin effect. No one wants to be the first one in,” Chaney said. “Once we got through the initial couple of businesses opening, the doors kind of opened.” 

The last six months have seen a lot of momentum, he said. Colony Ridge typically sells land for third parties to develop on, but it built some Class-A retail for tenants to prove the model and get the ball rolling, Chaney said. One of those retail centers is mostly leased to tenants including Subway, Pizza Hut, a liquor store and a bank. 

Colony Ridge also plans to build big-box sites on a 166-acre property that will be its town center. Once it gets commitment from an anchor, it will build out the interior and heart of the infrastructure, Chaney said, adding that he has “warm leads” on a major grocer.

Donny Long operates Clínica Familiar Río Grande, a health clinic in Santa Fe that treats people regardless of circumstances, including lack of documentation. Long has known the Harris family for decades and has wanted to open the clinic for about five years, but he was waiting for the population to grow. 

Although he isn't familiar with the exact details of the lawsuits’ allegations against Colony Ridge, he said he’s there for the long haul, whether they are true or false.

This isn't Long’s first clinic for the Latino community, and it has always been important to him to take care of that population, he said. Some of his patients have been in vehicle accidents but haven’t sought care because they’re scared. 

The number of people who visit his clinic in Santa Fe has made it profitable, something Long said many of the businesses in the development are seeing, since the first month it opened in January. But that's just a bonus, he said. 

“These people are sick and they have nowhere to go,” Long said. “People are scared down here. … Some people that are documented, undocumented, it doesn’t matter. I treat the individual.” 

Colony Ridge acquired the last of its 34,000 acres and broke ground on Santa Fe’s first phase in 2017. The communities grew quickly and quietly for years, not garnering much outside attention, as it was “out in the woods in Liberty County,” where no one tended to venture, Harris said. 

Most of Colony Ridge’s customers come from word of mouth, he said. Even during the height of the pandemic, the development set up drive-thru sales appointments and masked tours, Harris said, gaining more and more residents. He expects growth to continue and attract more commercial development, especially now that the community is better known. 

“People just didn’t notice it until all of a sudden, they did,” Harris said. “It was because you could see it on satellite photos.”