Americans Stake Claims in Baja Land Rush

New York Times Sunday Addition

By Tim Weiner
Mexico

Slowly but surely, acre by acre, Mexico's Baja Peninsula is becoming an American colony.

"For Sale" signs are sprouting all over the 800-mile-long peninsula, offering thousands of beachfront properties. Americans are snapping them up. They have already created communities where the dollar is the local currency, English the main language and Americans the new immigrants transforming an old culture.

"Everything's for sale, every lot you can imagine," said Alfonso Gavito, director of a cultural institute in La Paz, the capital of Baja California Sur, a state with 400,000 citizens and some of the last undeveloped beaches in North America. "It's like 20 years of changes have happened in three months."

This new land rush, involving billions of dollars, tens of thousands of Americans, and hundreds of miles of coastline, is gaining speed despite the fact that Mexico's Constitution bars foreigners from directly owning land by the sea.

Mexico's government wants foreign capital as much as Americans want a house on the beach — maybe more. So it worked around the Constitution. In 1997, it changed the law to allow foreign ownership through locally administered land trusts. A Mexican bank acts as trustee, the foreigner its beneficiary.

It took about four years before that new system worked smoothly. But now, most often, it does. One result has been a boom in migration, speculation and permanent vacation. "It's human greed — it's human nature," said David Halliburton, who owns a hotel outside Cabo San Lucas, on Baja's southern tip, where uncontrolled growth already strains the social fabric. "The amount of money coming in here through overzealous developers and buyers is staggering."

Baja is closer by land and air to the United States than it is to the rest of Mexico; state officials recorded more than 30 million trips by Americans who spent well over $1 billion last year. They say they have no idea how many Americans are living in Baja today, because a certain number are illegal immigrants who never register their presence. Anecdotal and statistical evidence suggests that the number is more than 100,000, probably far more, and growing fast since the Sept. 11 attacks and the souring of the economy in the United States two years ago.

"Since 2001, we have seen a boom in real estate sales, and the full-time population of Americans is growing rapidly," said Tony Colleraine, an American in San Felipe, about 160 miles southeast of San Diego. He said about one-quarter of the town's roughly30,000 residents were Americans, many of whom want to "get away from the regulations and rhetoric, and get out of the bull's-eye" in the United States.

In Rosarito, an hour's drive south of the United States border, about one-quarter of the 55,000 residents are Americans. "An increasing number of Americans are moving here to escape their government's policies and the costs of living," said Herb Kinsey, a Rosarito resident with roots in the United States, Canada and Germany. "They find a higher standard of living and a greater degree of freedom."

At least 600,000 Americans — again, an acknowledged undercount based on government records — are permanent residents of Mexico. That is by far the largest number of United States citizens living in any foreign country.

Americans living throughout Baja say their new neighbors include professionals in their 30's and 40's putting down roots, not just retirees in recreational vehicles. In Rosarito, the new home buyers include lawyers and members of the military who commute across the border to San Diego, where housing costs are about five times higher. A pleasant house by the Pacific in Rosarito can cost less than $150,000; property taxes are about $75 a year.

The Americans living in Rosarito set up a municipal office in April. Two members are Ed Jones, an entertainer, and Rita Gullicson, a teacher.

Americans "want to claim Baja as part of the United States, and they always have," Ms. Gullicson said. Mr. Jones finished her thought, saying, "And now they are doing it with money."

Baja's future, Mexican officials say, lies in American land investment. The government strongly promotes foreign direct investment, which is the only reliable source of economic growth in Mexico.

The site of a failed government-backed tourist development, Nopalo, which means "place of vipers," lies just outside the town of Loreto, founded in 1697, population 11,000. American and Canadian developers plan to build 5,000 new homes for 12,000 fellow citizens.

Their master plan depicts a particularly affluent suburb, with houses selling for up to $2 million each. The developers plan to break ground in January. They envision a $2 billion investment over 15 years.

"People will come by the hundreds of thousands" to Baja, said one of the developers, David Butterfield. "Mexico gives you an opportunity to build something you cannot build in the U.S. or Canada today. You cannot build great things in America today. Regulations and litigation prevent change."

There are limits to change in Baja, too. They are set by nature. It rains five inches a year or less in many parts of the peninsula. A barrel of water here is effectively worth more than a barrel of oil, and it takes many millions of gallons to sustain a golf course, much less a suburb.

There is no drinking water in Loreto, it is piped in from 16 miles away, and no place for thousands of construction and service workers to live. Many Mexicans wonder if the new community will truly be the "sustainable development" its backers promise. "I'm not sure there's anyplace in the modern world that's sustainable," Mr. Butterfield said. "I hope we're going to create one."

Homero Davis, Loreto's mayor, supports the project, somewhat warily. "The quality of life is a moral issue here," he said. "The culture is at stake. We don't want to be like Cabo San Lucas," where hotels and condominiums have swamped what was once a little village.

But that scale of development is precisely what Fonatur, the federal agency that promotes tourism in Mexico, has in mind for Loreto and the rest of Baja.

Fonatur, which conceived and built mega-resorts like Cancun, envisions marinas for American yachts, four-star hotels and fancy golf courses ringing the peninsula in a plan called the Escalera Nautica, or Nautical Ladder, which involves $210 million in public money and hopes for $1.7 billion in investment from developers.

"The whole premise of the Escalera Nautica is to create a land rush, and I'm not sure that's good for anybody," said Tim Means, who has lived in La Paz for 35 years and runs a respected ecotourism outfit called Baja Expeditions.

Baja was isolated from the outside world until the government paved a road through the peninsula in the 1970's and 80's. The road connected Baja more closely to the United States than to the Mexican mainland. That connection is deepening as more and more Americans move here. So is a sense of remoteness, of difference, from the rest of Mexico.

"People on the mainland don't know we exist," said Doris Johnson, the daughter of a Mexican mother and an American father, who runs a hotel in Mulege. "They ask, `Do they speak Spanish in Baja? Do you need a passport to go there?' "

Ms. Johnson wonders what will become of Baja as it becomes more and more of an American place. "We have our own culture here," she said. "But we don't have much influence over what's changing our culture."

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