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These stories were published Monday, Jan. 24, 2005, in Vol. 5, No. 16
Jo Stuart
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Nation confronts a sizzling market
How high can skyrocketing land values go?
By Garland M. Baker 
Special to A.M. Costa Rica

Tourists arriving in Costa Rica this year have another attraction besides the beautiful beaches: soaring property values.

Potential investors in property are finding themselves confronted with land prices that are skyrocketing.  The phenomenon is everywhere.  Even tourists notice the flurry about them. Buyers have to hold on tight to offers as prices float even higher. 

A.M. Costa Rica forecasted the growth in Guanacaste last January at the completion and opening of the Río Tempisque Puente de Amistad or Friendship Bridge built by Taiwan.  The bridge in concert with the Daniel Oduber International Airport in Liberia has made an otherwise remote area quickly accessible. 

Professional people, along with the common Joe, from the United States or Canada can wake up and be sick of the snow, hop a plane and be surfing Playa Guiones near Nosara at sunset. 

The question is: Will Costa Rica boom or bust?

Markets do burst and crash.  Real estate is a market like any other.  Remember the stock market fueled by the Internet?  KaBOOM!

There are a number of theories to explain the growth cycle that tourism destinations go through over time.  As a destination matures and attracts differing types of tourists, its growth process is likely to change. 

This has happened since the time of the Romans.  New-found paradises go through a defined cycle:  The phases to the cycle are exploration, involvement, development, consolidation, stagnation and, decline and/or rejuvenation.

Tourist attractions do not exist during the exploration phase. Nosara was just a dream, Manuel Antonio was desolate and no one had even heard of Dominical.  There were no tourists around anywhere.

Little by little, the drifters and explorers, common to this phase involve locals into providing tourism services.  Over time, visitors arrive and there is more and more development. 

Tourism officials and business persons invest heavily in advertising and the development of tourist attractions catered specifically to the individual and mass-market traveler types.  As a result, the destination benefits from increasing rates of arrivals growth.

Does this sound familiar?  Just look around Costa Rica.  Type the words "Costa Rica" into any Internet search engine.  Advertising is exploding about this country.  E-mails inundate the cyber highway about fabulous real estate deals every day.

Time passes and, at a point, the market beings to consolidate and visitor numbers slow.  Aging infrastructure characterizes the destination.  Around the time when peak arrivals numbers are at their highest, the market becomes unfashionable and things start to turn around.  Stagnation sets in and it becomes difficult to maintain arrivals.  After the stagnation regime, the destination enters the decline stage, where it either dies or rejuvenates.

Where is Costa Rica in this cycle?  What are the risks to investing in this country?

Costa Rica has already had one mini setback in its recent history.  Old timers remember.  In the 1970s Costa Rica was in a development phase.  It was during this time the country gave incredible incentives to invest here.  Tax-free status given to tourism companies for up to 12 years to make investment made projects flourish.  Liberal tax exonerations enticed retired and independently wealthy people to make Costa Rica home.

Then came the war in Nicaragua in the 1980s.  Tourism dropped off heavily.  Real estate prices fell fast.  The world forgot all about Costa Rica until Oscar Arias won the Nobel Peace Prize in 1987 and put the country back on the international map.

Over the past couple of years, Costa Rica has canceled almost all of its incentives.  Immigration laws are so unwelcoming it is embarrassing.  This picture is not one of encouraging more growth from the outside.

The point to this essay is, do not invest blindly into anything just because it has a pretty package.  If Costa Rica is of interest as an investment, understand it is in a cycle.

It could be on the up side or the down side.  Consider the external factors to any investment.  Right now, there are grumblings again in Nicaragua.

When investing, do a sensitivity analysis.  This means study the possible effects adverse changes may have on a project.  Determine a risk reward ratio.  In other words, know how much you have to gain vs. how much you have to lose.

Good vision is what makes the world go round and money.

Garland M. Baker is a 33-year resident of Costa Rica who provides multidisciplinary professional services to the international community. His e-mail address is  Baker has undertaken the research leading to these series of articles in conjunction with A.M. Costa Rica.

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Environmental ministry
will take over zoo

By the A.M. Costa Rica staff

The environmental ministry will take over management of the Parque Zoológico Nacional Simon Bolívar.

That is the outcome of an arbitration triggered when the current manager, Fundación Pro-Zoológicos, did not accept the termination of the contract that was ordered last May.

A three-person panel of arbitrators found for the Ministerio de Ambiente y Energía, the ministry said in a news release. The decision is final because under terms of the arbitration neither side would seek judicial review.

The foundation now has eight days to name representatives to serve on a commission overseeing the transfer of the zoo to the hands of the ministry. The transfer must take place in nine months, under terms of the agreement, the ministry said.

The ministry also will name an internal committee from the Sistema Nacional de Áreas de Conservación to begin to prepare for a new bidding process to pick a new management for the zoo, said the release.

The arbitration panel found that the ministry had made known its decision to not renew its contract with the foundation in a timely manner. This was a key point in the dispute between the ministry and the foundation.

A  foundation spokesperson has said the ministry owed the organization more than $500,000 for expenses of caring for the zoo and the animals since the termination of the contract. The zoo is in north San José a block north of the towering building occupied by the Instituto Nacional de Seguros. The zoo’s condition has been criticized repeatedly by the ministry and outside groups.

The arbitration panel was Elías Soley Soler, Gonzalo Fajardo and Cinthia Cavallini.

Although the ministry did not say so in its release, the management takeover is believed to include a conservation area being managed by the foundation in Santa Ana.

New tax plan will cut
evasion, Pacheco says

By the A.M. Costa Rica staff

The proposed tax reform package is an important weapon against tax evasion, President Abel Pacheco told Costa Ricans in his weekly television address Sunday.

The president said his administration was waging a battle against tax evasion, contraband, phony billing and other ways that irresponsible persons avoid their tax responsibilities.

He said that tax authorities have turned over to the public prosecutor 32 complaints of tax fraud during the last several months. The amount involved is 6.3 billion colons or $13.6 million. In addition, Pacheco said that 12 businesses have been raided and 38 more have been closed for not issuing approved payment statements or facturas.

Such evasion affects the money available for education, health, housing and social security, Pacheco said.

Pacheco said it was important for the Asamblea Legislativa to pass global tax as part of the tax reform package to prevent individuals, mainly high executives in businesses here, from receiving the bulk of their salaries elsewhere to avoid paying Costa Rican tax.

Pacheco said that nearly all of the Costa Ricans who earn a salary of 1 million colons or less a month will not pay tax or will pay less. That’s $2,174.

Even though he talked about a global tax, Pacheco never said in detail how the proposed tax plan would increase collection. The latest drafts of the proposal, which has been stalled in the legislature for more than two years, called for strengthening the tax police, among other measures.

Some Costa Rican companies frequently will produce incorrect bills showing lower prices paid to reduce their taxable income and sales taxes. This practice is called subfacturación in Spanish, and Pacheco called it a crime.

It’s Patriots and Eagles
 for next Superbowl

By the A.M. Costa Rica staff

Philadelphia cleared its way through two feet of snow to play winning football Sunday. The National Football League conference finals played out Sunday afternoon in freezing temperatures and the threat of more snow.

The New England Patriots also emerged as a winner and will meet the Philadelphia Eagles in the Super Bowl Feb. 6 in Jacksonville, Fla.

Both conference final games were held in Pennsylvania this year. The Pittsburgh Steelers hosted the Patriots and the Eagles hosted the Atlanta Falcons. In Pittsburgh and in Philadelphia, crews worked through Saturday night until Sunday morning, shoveling snow out of the open-air arenas.

The Eagles quickly shut down Atlanta’s swift and nimble quarterback, Mike Vick. Philadelphia was able to keep pressure on Vick throughout the game, preventing Atlanta from getting into offensive rhythm. The Eagles offense, however, kept the chains moving and never trailed in the game, finally winning 27 to 10.

Later in the afternoon, the Patriots continued its march toward a second consecutive Super Bowl. The Patriots won the Super Bowl in 2002 and 2004. A third championship in three years would cement their place in football history as one of the all-time elite teams. 

The Patriots took an early 10-to-0 lead behind solid play from their offense and their defense. Pittsburgh tried to play catch-up for four quarters, but turnovers kept their offense grounded. New England dominated the tone of the game and played mistake-free football for 60 minutes. The final score was 41 to 27.

Refinery will increase
asphalt donations

By the A.M. Costa Rica staff

The municipalities will receive  a donation of $585,000 to help repair damaged roads throughout Costa Rica. The donation is from the Refinadora Costarricense de Petroleo, known as RECOPE, and for the asphalt that will be used to resurface roads. 

Litleton Bolton, the president of the refinery said, "This support that we give the municipalities, through donations of asphalt, represents the best way that RECOPE can help the communities of the country. Bolton said that because the refinery is aware of the countries needs it has decided to increase the donation by $44,000 for 2005. 

Cuban dancer seeking
political asylum here

By the A.M. Costa Rica staff

The principal dancer of a Cuban company that presented "The Nutcracker" at Christmastime here is seeking political asylum. He is Carlos Caballero, who presented himself and made the appeal at the foreign ministry Friday.

Caballero said he was being persecuted in his own country. He entered the country with other performers Dec. 2. The group is the Centro Prodanza de Cuba.

A release from the Ministerio de Relaciones Exteriores y Culto said that the application would be evaluated.
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Balmy weather returns to the frozen Central Valley
By the A.M. Costa Rica staff

After weeks of cold weather, Costa Rica finally appears to be easing its way into summer. Last week, Ticos and Gringos alike were searching for extra blankets. The temperature hung in the high 50s and low 60s (14 to 17 degrees Celsius) in San José and a strong wind whipped through the streets. Saturday, however, the city finally found a break in the weather.

Sunday afternoon, temperatures reached the low 80s (27 degrees Celsius) and the sun finally broke through the clouds. People opened their windows, bars opened up their doors, and, once again, the city began to look like a tropical haven. 

The outlook over the next few days seems to suggest 

that summer may finally have arrived. With temperatures floating around the low 80’s during the day, San José looks like it may have weathered a bitter January.  Costa Ricans call the dry period between December and April "summer."

In the north, however, residents have not had it quite as easy. As the Central Valley began to anticipate a heat wave, the midwestern and northeastern United States were slammed by one of the worst snowstorms in years. 

Throughout the Midwest at least a foot of snow fell, and in the Northeast, the results were worse. Parts of Massachusetts received three feet after the storm moved out over the Atlantic Ocean, regained strength, and returned, said wire service reports. 

For good or bad, building up credit for the future
Hoy por ti y mañana por mi

"Today for you, tomorrow for me." This is a very wise dicho because what it’s teaching us is that today we may do something to help others for tomorrow we may be the ones in need of help. 

I’d like to use this dicho to illustrate a particular point. Since late December we’ve been hearing about the horrible devastation in Southeast Asia resulting from the terrible earthquake and the resulting tsunami that literally washed away the lives of tens of thousands of people. Closer to home we have more of a first-hand connection with the terrible disaster that has befallen Limón and much of Costa Rica’s Atlantic coastal region where floods left close to 10,000 people homeless. 

One begins to wander why such terrible things seem so often to happen in poor areas. Remember Hurricane Mitch? Though most of Central America felt the effects of the storm, it was Honduras and Nicaragua, the two poorest countries in the isthmus, that bore the brunt of Mitch’s fury. 

In Costa Rica the province of Limón is probably the place where more poor people live, even though in reality Limón produces a tremendous amount of wealth for the country. Unfortunately, it is the "forgotten province" as far as the government is concerned. That is, of course, until election time rolls around. I think that hoy por ti y mañana por mi would be a great slogan for a fund-raising campaign to help our brothers and sisters on the Caribbean side of Costa Rica to recover from the flooding over there.

Last year we visited Bribri in the southeast corner of Limón province where my mother, who was an indigenous Costa Rican, was born. Naturally, I feel a special closeness to this region. Not long after we had entered the indigenous preserve we stopped at a tiny house to ask where we might buy locally made handicrafts. A young man came out of the house and told us that he had some things for sale. 

Upon entering the dwelling we encountered the young man’s great grandfather, an elder in the community. He immediately walked straight up to me and said, "I know you." I replied that I didn’t think so. But he said it again, and this time he asked my mother’s name. When he heard it he said, "Oh yes, you see she is my cousin. Your mother is the daughter of Erenestina." And sure enough, that was my grandmother’s name! 

I was stunned. I knew that my grandmother came from this very place, but it never occurred to me that anyone there would remember her, let alone recognize me because of some strange family resemblance. And, of course, this man and his great grandson were my relatives too! It was one of the most wonderful moments in my life. Suddenly, I felt more connected with this land than ever before. I felt so proud of my background and so proud of my country. 

way we say it

By Daniel Soto

On the way back to our hotel I was elated over this very emotional and spiritual experience! But I was in for a rather rude reality check when we stopped at a small convenience store in Puerto Viejo to buy a few provisions. I wanted to celebrate the occasion with some guaro! One of our traveling companions needed to use the restroom, so I asked the owner at the cash register where it was located. "This is a place of business not a public toilet," was his surly reply in heavily accented Spanish that clearly identified him as a foreigner. 

I said that we intended to buy some things, but my friend also needed to use the restroom. But the man just ignored me and continued talking loudly and becoming more agitated and angry. He said we had better get moving and just get the hell out of his store. 

I said again that we wanted to buy some things, but he said he didn’t care and for me to "Get out of here, you Indian mother------." 

Again I was stunned, but not exactly in the same way I had been earlier in the afternoon by my encounter with my indigenous relations. It suddenly struck me that this man — this outsider — was standing here upon land that had belonged to my indigenous ancestors right here in my own country insulting me in the most unspeakably offensive racist manner. 

It was a moment I shall never forget if I live to be 1,000 years old. 

Hoy por ti mañana por mi, can be applied to many situations. One example is that it means that we, the more fortunate ones, can demonstrate kindness and generosity to the poor victims of the floods along the Atlantic coast, then one day when we may be in need someone will be there to help us out as well. 

Another is an English equivalent of the expression that perhaps the owner of that convenience store would understand better than today’s dicho: "What goes around comes around."

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A string of mostly unoccupied wooden buildings at Avenida 8 and Calle 7 burst into a smoky fire Saturday and covered much of the downtown with a pungent haze.

Firemen could do little but control the spread of flames because the wooden structures were 80 to 100 years old and constructed of bone dry wood.

The buildings were leveled.

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Savings Unlimited operator stars on television replay
By the A.M. Costa Rica staff

Louis Milanes was his old self Sunday morning. 

The fugitive casino operator and financier was a star player on World Poker tour that aired on cable channels here.

But no investigator rushed to the Casino Europa in north San José to snag the elusive and bulky poker player. The show was a rerun of the Oct. 19, 2002, poker tourney that saw Milanes place second to a Costa Rican player.

The taping took place less than a month before Milanes cleaned out his Paseo Colon office, took whatever Savings Unlimited money he could find and fled.

Savings Unlimited was another of those firms that promised creditors from 3 to 4 percent a month interest. Many expats were customers.

The show Sunday morning was a blast from the past. The exuberant and towering Milanes would jump up from the finals of the poker event when he won a hand. 

For most of the event he had more chips than the other three players. But he lost the final hand doing what Milanes does best: betting it all on a single event.

Milanes operated the Europa Casino, and the fact that he participated in the tournament raised a few eyebrows at the time. The consensus was that Milanes was such a driven gambler that he just had to test his skills.

The way the final hand played out, Milanes thought that he had won before the final card became visible. He jumped up again and accepted the cheers of his own private fan club. Some held "Milanes" posters.

The love Milanes has for poker is so well-known that investigators have viewed hours of World Poker Tour footage and other shows in the hope of finding fugitive Milanes at the tables or in the audience. 

A November report by auditors for the Judicial Investigating Organization said that money transfers from Savings Unlimited to offshore banks suggested that Milanes was planning his departure long before the October poker tournament. Several of his associates later were jailed for preventative detention but have been released.

Petroleum from ship at Caldera taken off as a safety measure
By the A.M. Costa Rica staff

A ship had to unload its petroleum cargo during bad weather at Puerta Caldera, the Refinadora Costarricense de Petroleo announced Friday.  The operation went smoothly and there was no environmental damage.

Some 70,000 barrels of diesel were removed from the ship between Jan. 18 and last Thursday, the refinery said. Bad weather on the Atlantic coast had made for bad conditions at sea. To prevent the ship from running aground and losing the fuel, Kiwi Spirit, another cargo ship towed it to safety.  Some 30 tanker trucks were needed to transport the cargo safely to the nearby Barranca refinery. 

The refinery said that environmental officials were called to ensure that there was no oil spillage into the sea. Firemen and the Cruz Roja were also at the scene as well as officials from the Fuerza Pública. 

Litleton Bolton, the president of the national refinery, said, " The bad weather that has dominated the Atlantic seas this month has forced us to carry out this safety measure. It is something which tells the country it is time for a petrol terminal in the Pacific that is better equipped to deal with such events." Caldera, near Puntarenas, is a cargo port but does not have commercial petroleum capabilities. All the country’s petroleum usually is unloaded at two ports on the Atlantic and then piped across the country.

Jo Stuart
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