Regional Topics, the San Felipe Economy and more.....
...by Tony Colleraine
Tuesday May 31, 2011
It was a very good Memorial Day weekend for San Felipe. Hotels were almost 100% full and many of our beachfront condos and apartments were choc-a-bloc with happy visitors. The weather could not have been better - pleasant 80 degree shade (and sea) temperatures during the day and excellent sleeping conditions with low humidity at night. The crowd was in a spending mood and it certainly appears that the pall of austerity has lifted, at least temporarily.
There was a noisy aspect to it all but the elderly residents can handle it for a weekend. One thing that certainly seems to have changed is the swing away from fireworks at midnight. One group that I talked to said that they didn't see the point of burning $20 bills anymore. The money could be better spent on food and drinks at a decent restaurant.
A lot of visitors left town on Sunday night so they could be back home with the family for barbeques on Monday. One couple I know, who left on Monday afternoon, said the border wait was one of the worst they had ever been in. This is certainly a problem for the typical tourist and when I mention this problem at various tourism meetings, the standard reply I get is that everyone needs to get a SENTRI pass. While I agree that anyone who makes a half-dozen trips a year into Mexico can certainly benefit from going through all of the security checks and interviews to get such a border pass, it is infeasible for probably 95% of our casual visitors because it is likely that you will have someone in the party that wants to come on the spur of the moment and does not have a pass. However, an intermediate step is now to get a passport card (in lieu of a regular passport) and use the new READY lanes that are being instituted. Tijuana (Otay Mesa) now has such crossings which speed the flow of cars where all occupants have passport cards. We hope that a similar system will be implemented in the near future at Calexico. .
Saturday May 28, 2011
Town is busy and the beaches have more activity than I have seen in quite a while. Fortunately, this is not a time of very high tides and windy conditions so the broad expanses of sand during the day set the scene for visitors to capture their ideal Kodak moments. The waters are also clean and when I went for a swim this afrernoon, the sea temperature was 79F.
I had a business meeting and lunch afterwards at the BajaMar restaurant on the Malecon. Excellent food and powerful drinks. Octavio Ascolani and his team deserve high praise for putting on a consistently enjoyable dining experience. The passing parade of cars, quads and people on the Malecon is always a facinating sight, as AnitaNet is documenting on "Scene on the Malecon"..>>
Friday May 27, 2011
San Felipe has come alive for the Memorial Day long weekend. All around town you can see mud-spattered vehicles and you know that these visitors drove down from Mexicali and had to brave the construction zone in the km50-km70 area south of the state capital. Quad drag races are in progress on the beaches and there is not a safety helmet to be seen. Ice cold beers seem to be the preferred drink everywhere I look, but I will stick to my Margarita with lunch at Rosita's.
There is a lot of clean-up underway, clearing away the dead wood of what now seems to be a bygone era. On Mar de Cortez, opposite the glitzy "La Plazita", a crane was dismantling a sign for Jacques Bistro.
Some old-timers will remember the Bistro, it took over a coverted space of an earlier landmark restaurant "La Perla" that was the downtown place to eat in the mid-80's. Jacques did very good business for a while back around the turn of the century and I recall that there was a lamb dish that was extremely tasty and some prized bottles of wine. Like many businesses that start up here, the aim was to provide an exceptional experience for the customer. Unfortunately, our town is not yet a Cabo San Lucas where well-heeled tourists will pay hundreds for an aged tequila. Here the staple is still taco stands and T-shirt shops.
For those interested in the progress of the road construction, I am happy to report that it is going full-steam ahead and will probably be that way for most of the summer. The current 20 km section runs between the Rio Hardy and the north end of the Laguna Salada. Most of that distance is now on the desert hardpack. Parts at the north end are muddy due to the need to constantly water the surface to keep the blowing dust down. At least these sections are relatively smooth:
Further south you run into the really rocky parts where you have no option but to go slow if you do not want to shred your tires:
There are places where there are some substantial rocks. I scraped the bottom of my sedan but you are probably OK if you have a truck or other relatively high clearance vehicle. The work is now being extended alongside the existing road across the Laguna Salada and it is pretty clear that they are going to continue cutting drainage channels through the old road for when the floods come. The temporary road is on the west side of the causeway (which is the berm on the left hand side of this picture below) and, in places, there are quite steep up and down ramps to get back on the existing roadway in between the cuts for the new bridges.
My estimation is that the work on the Salada section is going to take most of the summer. One interesting scenario that could play out is that the snowpack in the Rockies will melt so fast this summer that the Colorado will go into flood for the first time since 1983. In that year, we had the entire Salada covered with water and the causeway was a narrow ribbon of asphalt that crossed this giant lake that became a temporary home for hundreds of thousands of migrating birds. If you look to the east and west around km80 you will see the remains of the drainage channel that the Government had to construct to empty the water back to the Sea. The giant lake extended all the way up to the road that runs between Mexicali and Tecate and for several years there was a fishing camp at the km80 bridge on the San Felipe highway.
Wednesday May 18, 2011
A pretty sobering piece can be found on the latest Mexicomatters website ...>>. On the one hand, it makes the valid point about San Felipe being "the safest place on Planet Earth" - maybe a little hyperbole here but nevertheless consistent with the feelings of many local residents:
Further down in the article, however, the true devastation that has been wreaked on San Felipe becomes clear. The loss of confidence by Americans in the viability of real estate investment for retirement living in San Felipe has caused ruinous declines in property values. While the article mentions golf-course condominiums, originally valued at half a million dollars now selling for under $100K, the market statistics are so closely guarded that it is difficult or impossible to discover what real deals are actually being made.
Hopefully, now that San Felipe has an AMPI association for realtors in town, there will be more transparency in what true market prices are.
Tuesday May 17, 2011
There is a current press release from Marketwire that is touting the increase of real estate sales in the Tijuana-Ensenada corridor (what has been dubbed the "Riviera Baja").
There are still many complaints from the people who bought into the failed Trump Ocean Resort Baja in the same area near Tijuana. This project, that was to have been a 3 tower, 25 story, 526 unit condo-hotel, collapsed financially in 2009 and buyers, who had put down deposits of $200-300K per person, lost all of their money.
While we have had some problematic developments in the San Felipe area, nothing on the scale of the Trump failure has occurred. There is a lot to be said for buying an existing house or condominium, rather than relying on fanciful pictures that sell a future vision of what could exist.
Wednesday May 11, 2011
The big news of the week has been the capture of the Sinaloa drug cartel's chief financial officer for Baja California in Mexicali. Hector Eduardo Guajardo, "El Güicho", was arrested after a high speed chase and gun battle through the city on Monday. He is believed to have been living in Mexicali for the past 5 months. A second member of the cartel, responsible for taking care of "safe houses" for the storage of weapons and drugs, and for the flow of narcotics was captured after a shootout with the state preventative police (PEP). "El Güicho" was designated as successor to the once-feared Teodoro Garcia Simental, known as "El Teo" , at the time leader of the Arellano Felix cartel, who was responsible for at least 1000 violent deaths in Tijuana. Follow-up arrests have been made on Tuesday in Tijuana.
San Felipe is very remote from all of this action and remains tranquil and unaffected by these developments.
In the United States, the economic outlook continues to be uncertain with the latest housing numbers indicating that prices are still falling and that the decline will not end for another year. Jobs are still very hard to find with four applicants for every announced vacancy. A particularly worrying trend is to see that 20% of all men between the ages of 25 and 54 are no longer going to work. The Bureau of Labor Statistics indicates that 35 percent of those without a high school diploma are out of the labor force, compared with less than 10 percent of those with a college degree. Basically, this group of American men are said to lack the emotional and professional skills they will need to contribute to the changing market.
Latin America, by contrast, is booming. In Brazil, for example, property prices in many big cities have risen 80% in the past three years. Office rents in Rio de Janeiro are now the highest in the Americas as businesses scramble to be part of what is likely to become the center of one of the worlds largest oil economies, and there are spectacular opportunities that will be associated with hosting the Olympics in 2015. In Lima, Peru, housing prices in the good neighborhoods have recently doubled and a similar effect is being seen in Columbia. Panama is gearing up for boom-time development as the new super canal proceeds. Personal friends of mine are now looking to move to Panama as part of their retirement strategy.
Mexico stands somewhere between the U.S.A. and the rest of South America - solid growth with good gains in the job market but with concerns that are increasingly being expressed by the population as a whole as a result of the ongoing war on the drug cartels. At present, the strong peso (or weak dollar) are making Mexico a tough sell in the international tourism market but it has improved the demand for U.S. goods, which helps the government in Washington.
On the local San Felipe scene, things are pretty stable. Many of the workers who were involved in the real estate construction field have moved on to work in the gold mine just north of the Ensenada Road. This mine, which has become a very lucrative jewel in the crown of the richest man in the world, is now in full production as a result of the skyrocketing price for the precious metal. The mine is a big source of employment for people who travel from both Mexicali and San Felipe to work every day. Many of the higher-paid employees now rent houses and condominiums in San Felipe.
Town is gearing up for the Memorial Day weekend and I am told that you cannot book a room on the beach for under $100/night. However, travelers can benefit from the fact that regular gasoline here still sells for around $3/gallon, far below the $4.29/gallon average in Calexico, and you can still have a great lunch with a Margarita for around $10 at Rosita's on the Malecon .
Tuesday May 10, 2011
Spring has finally arrived in San Felipe. It was late this year but we will almost certainly catch up as the rapid rise in temperature of the Sea of Cortez hits its stride.
Our local climate is completely dominated by the water environment. In winter, the sea hovers in the low 60's and the total humidity (technically, the saturated vapor pressure) is low. To our bodies, it feels cold and dry; the slightest breeze creates a cooling effect that is noticeable to elderly joints. As the sea warms up to around 80F, the saturated vapor pressure in the air doubles and the environment feels warm and pleasant. The relative humidity in the air rises to the ideal of around 50% and San Felipe is the place to be. We experience daytime temperatures of around 80 F and pleasantly cool night-time temperatures in the low 70's.
In another month, the sea along our beaches will be approaching 90F and the amount of water in the air will again double. Relative humidities will typically be in the 60-70% range and it will start to feel "muggy". Still ideal for a day on the beach or out fishing, but in the evenings the house will feel clammy and we will want to turn on the air conditioners for sleeping.
By late July, the town will have gone into "sleep mode". Average temperatures are not that high - typically around 88F in July, August and September - but the humidity becomes overpowering. If you have ever lived on the East Coast of the United States, you will recognize the feeling. The only difference is that we do not typically experience their frequent thunderstorms that would help cool off our town in the afternoon and clear the dust from the air. However, you can look to our west and see those huge thunderheads in the mountains and appreciate that they are dropping rain in the verdant agricultural valleys between us and Ensenada.
The month of May (and the early part of June) are the times when San Felipe can be a really appealing holiday destination to the unfortunate people who live along the coast of Southern California in cities such as San Diego. There, the late spring and early summer is dominated by strong onshore flow of air that is caused by the heating of the deserts. This onshore flow gives them the "May Gray" and "June Gloom" when it is foggy for a couple of months along the beaches. I am always amazed at the number of East Coasters and Europeans that come to California for beach holidays at this time of year, only to be disappointed by the lack of sunshine and cold Pacific water temperatures. They need to divert to San Felipe!
By the way, the roadwork chaos is back on the Mexicali road between km50 and the north end of the Laguna Salada as more cuts are made through the old road to install drainage pipes. When I traveled that way last Thursday I had to stay below 10 mph to traverse some terrible rocks, and my car was covered in mud because of the need for so much watering to keep the dust down.
Tuesday May 3, 2011
With the recent success in removing Osama bin Laden from the international terrorism scene, the flow of email is again raising questions about whether U.S. citizens will be targeted in retaliation, in particular whether it will make any difference in travel to Mexico.
My sense at this moment is that all is quiet on the border and there are no new concerns for our visitors and residents of San Felipe. Life in town is just as tranquil as ever and many shops and markets are looking at the approaching summer as a time to do a little stock-taking and maybe use employees to get a fresh coat of paint on some of the walls when things are slow.
While the outlook for national tourism is good for the summer, with an expected influx of visitors each weekend from Mexicali, Tijuana, Ensenada and Sonora, the U.S. tourist is holding off. Their prime concerns continue to be:
While many people will list these in a different order of priority, the vast majority who know San Felipe and have been here before are less concerned with the drug cartels and more concerned with accidents, breakdowns and travel time on the highway. One continuing (indeed, strongly increasing) theme, however, is that visitors from the US want to be able to fly into the airport here and avoid virtually all of the concerns I listed above.
A round trip by road from San Diego to San Felipe (500 miles) may only cost some $80 in gasoline, plus $50 for a weekend of Mexican car insurance, but the reality is that with wear and tear, the true cost is close to 60 cents/mile for a typical Toyota Camry; so a $300 hit to the wallet when all is said and done. (For comparison, even a round trip bus fare between Tijuana and San Felipe costs the better part of $100).
For a couple coming for a weekend escape to lie on the beach and enjoy the casual dining of the town, it would be better to pay a $200-250 per person round trip ticket on an air shuttle and save 12-14 hours on the road and the associated perils. Until San Felipe gets an air connection to the outside world, its development as a tourist destination is on hold.
I know I shall get a lot of letters about this from retirees complaining that there is no way they would be able to bring all their groceries and shopping with them from the border region but the other reality is that they must start spending their money locally in our shops and markets here. There are still Americans that prefer to go to El Centro and buy frozen burritos in the supermarkets there because they do not trust the hygeine in some of the shops here - but that is another topic for another day. Items that cannot be bought in town need to be able to be ordered and shipped here. Large stores in Mexicali must take notice of San Felipe and start offering to deliver down here (Costco already has a weekly delivery truck so it can be done!).
Very preliminary estimates show that, as a first step, a morning and evening shuttle between San Felipe and Mexicali, with connections to San Diego, Las Vegas and Los Angeles would be viable. Many local business people would use a shuttle service to get to Mexicali if it would save them from 5 hours on the road. The big problem is that Mexicali itself, the state capital, does not have any international connections. As a powerhouse in the maquiladora industry, with the rise of its "Silicon Border" industrial park catering to aerospace, photovoltaics and similar high-tech ventures, it needs a connection to the Southern California research and development environment of San Diego county. It also needs the connection to Las Vegas, the capital of discount flights from all over North America - there are even $99 specials from Canada to Vegas which would make wintering in San Felipe an excellent option for a whole new breed of Snowbirds. Our real estate industry could boom again with sales to this sector and their strong Canadian dollar.
Let's start a campaign to get air service to our little town!!
Sunday May 1st. 2011
In many countries around the world, May Day is celebrated as Labor Day. In Mexico it is a National Holiday and this year, because of the very late date for Easter (last weekend), many people have taken the opportunity to have an extended vacation. San Felipe was packed for the Semana Santa celebrations and even during the past week we have had families camping on the Malecon beach.
In Mexico City, the Senate, last Thursday, approved in a unanimous vote the new antitrust code, and sent it to the Executive Branch for implementation. The move modifies the Federal Law of Economic Competition, along with certain provisions of the Penal Code and the Fiscal Code.
With the changes, the antitrust watchdog, the Federal Competition Commission (CFC) will be empowered to apply fines of up to 10% of consolidated sales to those companies found to have engaged in absolute monopolistic practices, in addition to penal responsibilities.
Various senators highlighted the benefits to the consumer. A basic food basket is 40% more expensive in Mexico than in countries with a similar economic clout, and the new antitrust code will level the playing field, they said. Thus, on paper the CFC gets more teeth, but in practice, it was not clear that the agency will get additional resources and manpower to implement the new law and the sanctions it implies.
previous months news - - April 2011 - Mexicali traffic tickets, anniversary of the earthquake, the road construction project, Easter