- Mark B. Raven, Esq.
INTRODUCTION
This article is based on my experiences as a real estate lawyer representing U.S. investors in Mexican tourism projects, including marinas, since 1997.
The article starts from the broadest perspective — that of Mexico’s national tourism policy, next focuses on a particular federal agency, Fonatur, and then discusses particular projects in the Sea of Cortez and Baja California Sur.
NATIONAL POLICY
On the national level, throughout various presidential administrations in Mexico, including the historic change in the presidency from the PRI party to the PAN in 2000, tourism development has remained one of the highest priorities of the Mexican government. This is understandable in light of the fact that tourism consistently ranks among the top three sources of revenue flowing into Mexico. The other two are sale of petroleum and remittances from Mexicans living abroad. In addition, Mexico is the third most popular tourist destination in the world and would like very much to become second.
FONATUR
One of the most important ways the Mexican government has invested in promoting tourism is through Fonatur, a government agency founded in 1973 which selects and develops new resort areas on a massive scale. Examples of such developments are Cancun, Loreto and Los Cabos.
Key to these developments is the concept of public-private partnerships. Obviously the Mexican government cannot on its own provide the massive amounts of investment necessary. Its chosen role is to be the sparkplug, to get things going and attract private investment. What Fonatur typically does is to acquire the land, create a master plan, build key infrastructure such as roads and utilities and then sell off locations to private developers. At the same time, the government’s goal is to create sustainable, well-planned, coordinated projects rather than helter skelter development. Therefore, the privately built facilities, whether hotels, golf courses, condominiums or marinas, must conform to the development guidelines established by Fonatur and must be approved by Fonatur as well as other relevant government agencies, for example, the Mexican environmental protection agency in the case of an environmentally sensitive area.
ESCALERA NAUTICA
Every year Fonatur announces its five or six top priority projects. Since 2001 one of these top priorities has been the Escalera Nautica, or “nautical stairway,” surrounding the Sea of Cortez, also known as the “Golfo de California.” The importance of this project was reaffirmed once again by President Felipe Calderon Hinojosa upon taking over from President Fox at the end of last year and by Secretary of Tourism Elizondo upon his reappointment by President Calderon. The plan calls for 22 full-service marinas along both sides of the Sea of Cortez, 10 of them new. Of the 12 existing, seven are to be improved and five have been judged adequate. The 10 new marinas will be located on sites with natural shelter, or bays, a feature the peninsula has in abundance. Five of these are to be in Baja California, three in Baja California Sur, and one each in Sonora and Sinaloa. The reason it is called a “stairway” is because the idea is to be able to go by boat from one marina to the next in one day, or a distance of approximately 120 nautical miles. Visionary Arizona developer Donald Diamond, a longtime yachtsman and Mexico aficionado, decades ago dubbed this concept the “string of pearls.”
Fonatur’s market studies indicate that once completed, at least 52,000 American boat owners will set sail to those destinations and a good number will permanently moor in the various marinas. The Sea of Cortez, because of its climate, sheltered configuration and unusual natural beauty, is one of the best places in the world for boating. Fonatur estimates that 76,400 boats will be cruising Baja coastlines by 2010 and that by 2014 there will be 5.4 million nautical tourists. Fonatur actually first began thinking about the Escalera Nautica in the 1970’s. In 2001 a compact among the federal government and the four affected states, Sonora, Sinaloa, Baja California and Baja California Sur, was signed in La Paz, B.C.S. with President Fox signing for the federal government. I was honored to be invited to the signing ceremony.
The Sea of Cortes is extraordinarily environmentally sensitive. Jacques Cousteau once called it the world’s aquarium. It harbors unique species of acquatic life found nowhere else. Therefore Marina and associated real estate development will be subjected to close scrutiny by the authorities, will probably take longer per project and will have to be done in more carefully than in other less protected regions. Since there is no choice as to adhering to high standards of sustainability and protection, development in the Sea of Cortes will by necessity set a new, higher standard for the entire world. This can only benefit both Mexico and the development community.
PRIVATE DEVELOPMENT
As with the other Fonatur-sponsored developments I have mentioned, the long term goal of the Escalera Nautica is to attract private investment on a massive scale. You may ask, is boating an activity important enough to justify such a project? The answer is “not by itself.”
That is why the basic concept of the Escalera Nautica project is that each marina will become a focal point for private development on the surrounding land. The hotels, condos, stores, restaurants and homes which are expected to be built as the result of the attraction of the marina are in turn expected to create jobs and generate other much-needed revenues for the state and local areas. The feasibility of this concept has already been shown in the private sector. Numerous private master-planned projects are, or would like to be, anchored by a marina. For example, the magnificent Puerto Los Cabos development of Eduardo Sanchez-Navarro, now under construction in San Jose del Cabo, is anchored by a 550-slip marina. It will also feature a world-class marina complex, two signature golf courses designed by true legends of the game, and an array of five-star hotels. It embraces a unique tropical nature preserve, miles of white sand beach, a traditional village with fresh fish and farmers’ markets, and a variety of ownership opportunities. (Description taken from developer’s materials).
The advantage for a private developer of participating in an Escalera Nautica location is that the basic marina infrastructure, in many cases, will already be built, at government expense. This infrastructure includes dredging the basin as well as extensive, and very expensive, breakwaters and other protection from waves, tides and storms.
As an example of how challenging it can be to build the necessary infrastructure, in constructing the marina at Puerto Los Cabos, which is a totally private project and not part of the Escalera, three breakwater structures are being built. Once the excavation progressed the basin filled up with primarily fresh water from the existing water table. Although this was visually impressive, the engineers knew they still had a long way to go, using dredging, to remove further material and achieve the necessary depth. The basin would only be opened to the sea during the last phase, when the temporary lake would finally be connected to the tides and salt waters of the Pacific. This could take place only when the breakwaters were ready to absorb the wave action that would otherwise make the passage impossible.
Extensive underwater sonar surveys had already taken place, as well as computer modeling, to determine the best placement for the three breakwater structures. It was known that a submarine canyon near the proposed entrance could be used as a natural advantage for the approach to the marina, and this was incorporated in the final placement of the breakwaters (also known as jetties).
Actual construction of a “rubble mound” breakwater involves three different sizes of rock. Medium sized rocks were used first (1-3 feet in diameter), which were brought in by dump truck from a nearby quarry site. Once the medium rocks were in place, smaller rubble was dumped in to help lock them in place and to allow construction vehicles to drive further out on the structure. The process was continued until the largest cap rocks, some over 30 tons, were put in place by crane. These cap rocks will absorb most of the energy from ocean waves (including hurricanes) before they get to the medium rocks that form the nucleus or core.
Even before construction began, a continual convoy of dump trucks was employed to bring in the thousands of tons of rocks that would comprise the jetties. These trucks ran 6 days per week for 8 months just to keep up with the quantities needed to finish the largest private breakwater ever built in Mexico. (Description taken from developer’s materials).
CONCLUSION
Many have expressed frustration with the seemingly slow pace of development of the Escalera Nautica. There are of course reasons for this, including the way government functions as compared to the private sector as well as the need to reassure the environmental community regarding massive development in such a sensitive area.
Nevertheless, the basic idea of the Nautical Stairway is such a great one that it is probably inevitable. Without waiting for the Escalera to be completed, Narciso Agundez, the dynamic governor of the State of Baja California Sur, is planning to build a series of major cruise-ship terminals along the Pacific coast of that State, each of which will undoubtedly spark development in the surrounding area. This exciting project will be a joint public-private venture.
And as often happens, when government reaches a barrier, the private sector steps in. This activity will succeed in creating, if not a full public-private partnership, at least a mix of public and private initiatives that, taken together, will transform the economic and touristic role of the entire region surrounding the Sea of Cortes.