BajaNomad - Loreto Bay - the June 2007 Version

Loreto Bay - the June 2007 Version

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oldhippie - 8-28-2007 at 03:55 PM

Quote:

Originally posted by bajalou

Quote:

Originally posted by oldhippie
"Many of these homes are longer term investments for gringos and will be rented to those working in these towns (service industry)."

So do like they do in other areas - rent to the Time Share and Real estate sales people. And all the other hanger on's that show up in town when it's growing.
:biggrin:

don't attribute that quote to me - that's cajhawk's idea. Your idea might work, there's a sucker born every minute.

But the boom is over and a lot of suckers have been suckered in. Selling/renting these places is going to be hard work. Any fool could have sold real estate in the past 5 years, looks like things are swinging back to normal.

Clarify

cajhawk - 8-28-2007 at 04:21 PM

Tough crowd! What I am talking about is the people who buy homes for use in 5 to 10 years in Nopolo that can rent it out for some (small) cashflow. Service employees was meant as people who work in the Beach Club, own shops, etc. These are usually gringos who want to work and live in Baja but don't want to buy anything. These are a lot of the "service" type jobs I'm talking about. Am I wrong? Do you think a huge influx of Mexican Nationals are going to move to Loreto because of a few thousand people in Nopolo? I don't. Many who buy second homes or retirement homes are looking for when they can use them in the future, not today. That hasn't been the dynamic in Loreto before, but will be with LB to some extent.

backninedan - 8-28-2007 at 05:42 PM

Are you wrong? Yes....

flyfishinPam - 8-28-2007 at 06:03 PM

I am only here briefly but I printed up the desal report and it is an eye-opener.

From this link: http://www.pacinst.org/reports/desalination/index.htm (PDF file)

I printed up this desal report and am still reading it but here are some highlights that caught my eye and may cause some discussion. I’ll put them below:

Page 23:

Box 3: The Experience of the Tampa Bay Desalination Plant 7

In March 1999, regional water officials in Florida
approved plans to build an RO plant with a
capacity of 25 MGD (95,000 m3/d). Claims were
made by project proponents that the cost of water
would be very low and competitive with other local
sources. The project and the apparent breakthrough
in price excited desalination advocates.
The desalination facility was to be privately owned
and operated and upon completion would supplement
drinking water supplies for 1.8 million retail
water customers. The plant was considered necessary
to help reduce groundwater overdraft and to
meet future demands.

The planning process for the plant began in
October 1996. In early 1999, Tampa Bay Water
selected S&W Water, LLC, a consortium between
Poseidon Water Resources and Stone & Webster.
Their proposal called for construction of the plant
on the site of the Big Bend Power Plant on Tampa
Bay to begin in January 2001, and for operation to
begin in the second half of 2002 (Heller 1999,
Hoffman 1999). A total of 44 MGD (167,000
m3/d) of feed water would be used to produce
around 25 MGD (95,000 m3/d) of potable water
and 19 MGD (72,000 m3/d) of brine. The desalinated
water would then be added to the municipal
supply.

The agreement called for desalinated water to be
delivered at an unprecedented wholesale cost of
$1.71 per thousand gallons ($1.71/kgal), or $0.45
per cubic meter ($0.45/m3), for the first year, with a
30-year average cost of $2.08/kgal ($0.55/m3)
(Heller 1999). Southwest Florida Water
Management District (SWFWMD) agreed to provide
90% of the projected $110 million in capital
costs for construction of the plant and the cost of
the pipeline needed to transport the water to the
water-distribution system (U.S. Water News 2003,
Heller 1999).

The project has been fraught with difficulties, and
as of May 2006, it is still not in operation due to
serious management and technological failures. A
number of contractors declared bankruptcy, forcing
Tampa Bay Water to purchase the plant and
assume full risk. Excessive membrane fouling was
also problematic, decreasing the life of the membranes
and increasing costs. The plant also violated
its sewer discharge permit because additional chemicals
were needed to clean the fouled membranes.
In November 2004, Tampa Bay Water agreed to a
$29 million, two-year contract with American
Water-Pridesa (both owned by Thames Water Aqua
Holdings, a wholly owned subsidiary of RWE) to
get the plant running. Tests revealed that membrane
fouling was still a problem and many of the
water pumps had rust and corrosion problems.
Both problems have been attributed to cost-cutting
(Pittman 2005).

To further complicate matters, SWFWMD threatened
to withhold financing for the plant because of
a disagreement with Tampa Bay Water about the
capacity at which the plant would operate. In
January 2006, the water authorities agreed that the
plant could be operated at less than full capacity as
long as groundwater pumping was reduced.
Environmentalists and activists strongly opposed
the deal because they “felt cheated” (Skerritt
2006).

American Water-Pridesa expects the plant to open
in late 2006 for another assessment period, after
$29 million in repairs are finished, and expects the
plant to be fully operational in January 2008, six
years late. In a press release issued in early 2004,
the new cost was estimated at $2.54/kgal ($0.67
per m3), up from an initial expected cost of
between $1.71 and $2.08/kgal ($0.45 to $0.55/m3)
(Business Wire 2004). The recent decision to reduce
the amount of water that the plant will produce
and additional unforeseen problems will likely
drive the price up further.

Careful examination of the project’s cost claims
should caution desalination advocates against
excessive optimism on price, and indeed, cost-cutting
is in part responsible for the project’s difficulties.
Moreover, the project had a number of unique
conditions that may be difficult to reproduce elsewhere.
For example, energy costs in the region are
very low – around $0.04 per kilowatt-hour – compared
to other coastal urban areas. The physical
design of the plant – sited at a local power plant –
permitted the power plant to provide infrastructure,
supporting operations, and maintenance functions.
Salinity of the source water from Tampa Bay
is substantially lower than typical seawater: only
about 26,000 ppm instead of 33,000 to 40,000
ppm typical for most seawater. In addition,
financing was to be spread out over 30 years, and
the interest rate was only 5.2 percent (Wright
1999).

7 A more detailed review of the Tampa Bay
plant is provided in Appendix C, online at
www.pacinst.org/reports/desalination.

And here’s a coupla Zingers for you from the article too…

from page 66:

“Desalination project
proponents who claim
an environmental
benefit from their
project need to
describe the binding
mechanism by
which product
water will become
“environmental water”
rather than a new
source of supply for
future demand.”

Page 71:

“Experiences in Tampa
Bay and strong interest
by the private sector in
California highlight
additional need for
transparency and
accountability.”

Their conculsions also seem to mirror my concerns

“Perhaps the greatest barrier to desalination remains its high economic
cost compared to alternatives, including other sources of supply,
improved wastewater reuse, and especially more efficient use and demand
management. We do not believe that the economic evaluations of desalination
commonly presented to regulators and the public adequately
account for the complicated benefits and costs associated with issues of
reliability, quality, local control, environmental effects, and impacts on
development. In general, significant benefits and costs are often excluded
from the costs presented publicly. California should pursue less costly, less
environmentally damaging water-supply alternatives first.

Is desalination the ultimate solution to our water problems? No. Is it
likely to be a piece of our water management puzzle? Yes. In the end,
decisions about desalination developments will revolve around complex
evaluations of local circumstances and needs, economics, financing, environmental
and social impacts, and available alternatives. We urge that
such decisions be transparent, honest, public, and systematic.”

---------------------------
Here’s the organization and their website, interesting stuff:

Pacific Institute
654 13th Street
Preservation Park
Oakland, CA. 94612

http://www.pacinst.org

oldhippie - 8-28-2007 at 06:42 PM

and when you think about it for than minute you realize there's much more in coastal seawater besides H20 and NaCl. All the animals, both alive and dead, their excrement, dirt, chemicals from runoff, sewage, other dissolved minerals, and who knows what else has to be filtered out or chemically eliminated. It's a wonder that filters so small to block salt molecules and allow water molecules through don't get immediately clogged up. But I guess it works, sometimes, sort of. Distillation seems more workable, but it's expensive.

Plus nobody knows the recharge rate of the aquifers in the Loreto area. They could be running dry now with the current population. If so desalination will be the primary source of water.

Also, I read a post on another website by an American who once worked for Loreto Bay that the gray water system isn't being built. That's a completely different plumbing system built to water landscaping and perhaps to flush toilets. So if it's true, potable water will be used.

And there's the general notion that making something so vital as potable water much more dependent upon the burning of fossil fuels is just a dumb idea from the get go.

[Edited on 8-29-2007 by oldhippie]

Letter to the Pacific Institute

flyfishinPam - 8-29-2007 at 07:53 AM

To whom it may concern,

I am a resident of Loreto, Baja California Sur, Mexico and have come across your organization as a source of information on the desalination process in California, USA. I am currently reading the report "Desal with a Grain of Salt".

I don´t know if you have ever heard of our town but we´re located 700 miles south on highway one on the Eastern side of the Baja Peninsula on the Sea of Cortez. Within the last four years this has become a boomtown for real estate, speculation and mega development. This concerns many citizens here because we have a very limited water resource, the San Juan Londó aquafer 30 miles to our North, in the mountains.

The first and largest developer is about four years into their project and is planning on constructing 6000+ retirement homes and hotel rooms 9 miles away from a town of 13,000 (our town has since grown to 17,000). They are marketing their properties as a sustainable village and have published the fact that they were granted all the water rights of the San Juan Londó aquafer by the government. However they claim that they will produce more water than they consume and plan to do this various ways, the main being desalination.

without going into too much detail, the page II in your grain of salt report states:

"The Pacific Institute strives to improve policy through solid research and consistent dialogue with policy makers and action-oriented groups, both domestic and international. By bringing knowledge to power, we hope to protect our natural world, encourage sustainable development, and improve global security."

When I read this I think that I am addressing the right organization. I value your comments and look forward to further correspondence with you.

signed
resident of
Loreto, BCS MEXICO

oldhippie - 8-29-2007 at 09:10 AM

Pam,

Excellent idea. You may want to mention that Loreto Bay claims that the Pacific Institute recommended the desalination "system of choice" for the development. I've always wondered whether or not this is true. If it's not true, I imagine the Pacific Institute would not be happy about the claim.

See page 5

http://www.loretobay.com/loretobay/LBC%20Sustainability%20Ov...

Ask them about it. It will get their attention.

wilderone - 8-29-2007 at 09:17 AM

cajhawk: "the people who buy homes for use in 5 to 10 years in Nopolo [the 'Village"?] that can rent it out for some small cashflow" ?? Is it true that most of the rentals in LB village are to the full time employees of LB Co.? What percentage of the 150 homes are vacant? Of the full-time homeowners, do they intend to live there 365 days/year? Who else, then, will be renting long-term (since it is a fact that there is no short term rental, and requisite management of such) offered or available? The rentals are $1,200-2,000/mo. Who wants to rent at Nopolo for those prices with ongoing noise and dust from construction surrounding them, miles from the authenic Mexican town of Loreto which has all servcies and amenities available to them versus the nothingness that the Village offers now (with no definite plans for stores or staffed, stocked facilities in the future)?
"Many who buy second homes or retirement homes are looking for when they can use them in the future, not today." This is what you tell your clients, I presume. And you blithely tell them they can rent it out in the meantime when there is no viable, proven business plan for such a statement. "That has been the dynamic in Loreto before, but will be with LB to some extent." Again - says you - without any qualification for such a statement.

The monthly rent is too high for local Mexican citizens who work in Loreto.
The monthly rent is too high for east coast gringo snowbirds.
The majority of gringo snowbirds, or Canadian snowgeese live in RVs parked in RV lots.
The LB Village is not finished and has no amenities, which makes it a poor choice for someone who is willing to pay $1,500 per month to rent a dwelling long term (more than 4 months), thus the competitive nature of that rental market will keep renters at LB Village at bay.
The the people who will own shops and work at the Beach Club at LB Village - wouldn't they be Mexicans living in Loreto (see Point No. 1 above)?
How many retail shopkeepers are you talking about? When will ALL of the shops be built? For that matter, when will the Beach Club be finished, stocked with towels, liquor and sunscreen and lounge chairs for ANY of the residents there? Whose employees will they be? Paid for by HOA fees (as with property management companies hired by HOAs?), or independent contractors?
As you know, all amenities and common areas of the Village will need to be paid for by the HOA fees of the homeowners. This will get more and more and more expensive as "build out" occurs. What is the limitation on HOA fees? None you say? How much money does it take to fund a small village of 6,000 units, with an estuary, 2 golf courses, non-native landscaping everywhere, an orchard, RO water facility and its staff, etc.? Where is the Village HOA budget and financial statement with proposed future expenses? When the 1,000th homeowner considers purchasing a unit, and finds out the HOA dues are $1,000/mo., do you think this will be a deterrent in choosing to buy?
Have you analyzed today's real estate market in Florida, i.e., overbuilding, overpriced, glut of homes sitting empty, new construction with high costs, thus high rent - most with concomitant required golf course fees? Do you see parallels with the Baja CA. real estate market? The point being that, yes, maybe LB Village will be built (or continue to be built for a while until people wise up), but does that mean that people will be living in them and paying for them? Read: bank-owned foreclosure, vacant, no HOA fees leading to decline and ruination of the development - as is the case in Florida and elsewhere. After all, it is the homeowners who will be paying for everything - not the tax base derived from the Loreto citizens.
Tell me the facts that will contradict this analysis.

cajhawk - 8-30-2007 at 02:25 PM

The people who will rent homes in LB will be friends of people who bought, in many cases Snowbirds. They do so because they want to be close to their friends. People will also stay out in Nopolo because of a lack of rentals in Loreto proper.

I respect your opinion, but the comparison of Florida and Baja is not a good one IMHO. Loreto Bay homes are being paid for in cash while in FL most were heavily leveraged. Bank foreclosures for unpaid dues just aren't going to happen with that kind of investment,whereas they will happen a lot when people get upside down on a mortgage.

I don't think that $1500 a month for a house in Loreto Bay is terrible for snowbirds. My in laws spend $1300 per month to stay outside of Palm Springs in a "park model" mobile home. If they had friends in Loreto they would be thrilled to stay at LB instead. Prices for rentals have gone up everywhere and Loreto seems to be a value for ocean property to many compared to other places in the States. One of my best friends rents out their place in Punta Nopolo about 50% of the time, so I know that there is SOME market for independent rentals.

I for one don't think that LB is going to be a "ghost town". It may not develop all of the units and may not be an economic success for the builders, but that is a far cry from an abandoned ghost town. Time will tell if you or I are right about this!

CaboRon - 8-30-2007 at 03:31 PM

Yes, Time Always Tells Everything ......

Loreto "Rube Goldberg" Bay

oldhippie - 8-30-2007 at 07:30 PM

A part of the Rube Goldberg award winning Loreto Bay plan is a wind powered electric generating station on the other side of the peninsula in a just above marginally windy area. The facility doesn't exist, and who knows if it ever will. But it is going to supply all the electricity the development needs, maybe.

Well, maybe not. This is from the German magazine Der Spiegel. Germany is the world leader in wind power.

"After the industry's recent boom years, wind power providers and experts are now concerned. The facilities may not be as reliable and durable as producers claim. Indeed, with thousands of mishaps, breakdowns and accidents having been reported in recent years, the difficulties seem to be mounting."

http://tinyurl.com/23kkfq

Rube was an amazing person, I think.

http://en.wikipedia.org/wiki/Rube_Goldberg

Here's a modern Rube Goldberg machine to open curtains. Have fun!

http://www.flixxy.com/best-rube-goldberg-machine.htm

Pescador - 8-31-2007 at 06:35 AM

Pam, the report from Tampa Bay indicates some really serious problems with their desal plant. But we should not worry, that was a problem in the United States with the EPA and the Florida State Dept. of Health, Water Quality Control Division breathing down their necks. What Loreto Bay will do is to dump this stuff right back into the sea and when we see serious depletion of sea life and ocean ecosystem, LB will obviously deny any wrongdoing on their part. If LB can somehow come up with the rights to the entire San Juan Londo aquifer, then a little bit of dumping brine should really present no major obstacle.

oldhippie - 8-31-2007 at 07:03 AM

"If LB can somehow come up with the rights to the entire San Juan Londo aquifer, then a little bit of dumping brine should really present no major obstacle."

I hope everyone understands the sarcasm in that sentence.

805gregg - 8-31-2007 at 07:11 AM

I drove through Loreto Bay 2 weeks ago, ugly is the only word to describe the attached housing. All the units I saw had common walls with their neighbors, a very small front entry or kind of court yard maybe 5'x15' or none at all just a front door right on the street. My wife said it reminded her of France, maybe thats why we say so many French and Itialian tourists. Selling this mess in Europe.

oldhippie - 8-31-2007 at 07:35 AM

Quote:

Originally posted by cajhawk
I don't think that $1500 a month for a house in Loreto Bay is terrible for snowbirds. My in laws spend $1300 per month to stay outside of Palm Springs in a "park model" mobile home.

Loreto vs. Palm Springs?? That's apples and oranges. $1300 in Palm Springs is a much better deal than $1500 in Loreto for people who enjoy a Palm Springs like winter retreat.

Think about it, there's no services in Loreto. What happens if one of your in-laws get seriously ill or has a bad accident in Loreto? Or, perhaps they want to watch a football game in English? Or maybe want to read a newspaper? Or want to go to a movie? Or have banking needs above an ATM withdrawal? The list is endless.

wilderone - 8-31-2007 at 09:00 AM

Si, living in a foreign country isn't for everyone. And getting there is an added expense as well.

"If they had friends in LB" - correct. When you move to Mexico you leave your family and friends in the USA behind. A major undertaking for someone to come visit you. And in Palm Springs you can:
drive your own car around
not have to separate your recycleable trash
Not have construction going on around you every day for the next 10 years
Walk to the corner grocery store for a bottle of California wine

Canadians, potential buyers of LB: Check out Palm Springs for your retirement digs, affordable 2nd home getaway: multiple golf courses; aerial tram to famed Mt. San Jacinto for mountain hiking and snowshoeing, nearby hotsprings and canyons offer relaxation; high end shopping, complete with water misted sidewalks for your strolling comfort; only minutes away from the mountain retreat of Idyllwild; Joshua Tree state park in your backyard; swimming pools, hot tubs, massage therapists galore.

LB homes are paid for in cash? Get real. Where do you think the cash comes from? Are you saying nobody can get a loan to buy an LB Village unit? Would definitely limit the number of buyers with $300,000 ready cash. Many of the units in LB were purchased on speculation -- buyers hoping to flip when construction was finished. True? Yes, time will tell.

And I just can't help going back to this one point: If LB was initially relying on the San Juan acquifer for its water supply because FONATUR told them it would be adequate, but then later decided to supplement the water supply, then why did they - from DAY ONE - promise that "by the end of the project we will harvest or produce more potable water than we use." You can't tell me with a straight face that building a few check dams so that some indefinite amount of rainwater might (or might not) filter into the acquifer and be available maybe 50 years from now is their plan to harvest potable water. Would you please tell when "the end of the project" will be?

flyfishinPam - 8-31-2007 at 09:22 AM

Quote:

Originally posted by Pescador
Pam, the report from Tampa Bay indicates some really serious problems with their desal plant. But we should not worry, that was a problem in the United States with the EPA and the Florida State Dept. of Health, Water Quality Control Division breathing down their necks. What Loreto Bay will do is to dump this stuff right back into the sea and when we see serious depletion of sea life and ocean ecosystem, LB will obviously deny any wrongdoing on their part. If LB can somehow come up with the rights to the entire San Juan Londo aquifer, then a little bit of dumping brine should really present no major obstacle.

I´m not finished reading this report yet (3/4 of the way through it) but I am finding some serious concerns that will need to be presented in the planning stages of a desal plant. One thing to consider is the power grid. The Pacific Institute recommends for reasons of cost and infrastructure sharing, that a desal plant be located next to an existing power plant. The existing power plant for our area is in San Carlos on the East side of Magdelena Bay. And the wind power plant will also be located on the other side of the peninsula which will pose a cost and infrastructure problem.

One burning question I have before I leave here and during the read of this report is, how much water will this proposed desal plant be producing? I don´t think I ever saw the answer to this question anywhere. The amount that will be produced has a huge bearing on how much this thing will cost. After reading this report I will post a new thread, but first I gotta leave town for a few days.

oldhippie - 8-31-2007 at 09:28 AM

Pam,

"up to 1.5 million gallons per day of potable water. "

http://www.loretobay.com/loretobay/LBC%20Sustainability%20Ov...

page 5

Loretano - 9-4-2007 at 02:05 PM

Pretty amazing set of statements from Wilderone who apparently doesn't believe in checking facts before stating something is a fact.

Anyone with a brain knows there is a short term nightly rental market as the Inn at Loreto Bay attests to. Loreto Bay Co. has had a group of experienced resort managers and marketers working on a nightly rental program for some time and a very limited nightly home rental program is already operating. The main program has been announced to start next year.

I know for a fact that every home where a homeowner has requested a long term rental has been rented long term, most for one year. In fact, there is a waiting list of people trying to lease homes. I think there are more than 50 leased this way. So much for the lame lesson on economics.

About 50% of the homeowners are not interested in renting long or short term but want a second home to use for part of the year or for their family to use. They have chosen not to sign up for either rental program. Loreto Bay regular notes this.

Finally, the completely inaccurate quote "as you know, all amenities and common areas ...will need to be paid for by the HOA fees." Wrong. Minimal checking would have easily shown that golf, tennis, beach club and all other recreational amenities are not the responsibility of the HOA but are separately owned. HOA fees cannot be used to support these.

You left out a few other things as well like the majority of the first 500 homes sold were paid for in cash and are without mortgages, the HOA rules and the sales contracts have language that prevents quick flipping for profit and can you say Citigroup? This 50% partner is the worlds largest financial institution.

Next time get your facts straight before you sound off.

wilderone - 9-4-2007 at 04:35 PM

The Inn at Loreto Bay is a hotel. I was talking about nightly rentals of the village units, which was recently reported on the LB website, as minimum 4 month leases. Then if 50% of the homeowners want a second home, then HALF OF THE VILLAGE WILL BE EMTPY most of the time. The HOA will need to pay for plenty. BTW, how much are the dues now, what are the projected increases? Citigroup - HA! Their investment group providing the LOAN ("partner" - give me a break) - Citigroup Property Investors - "invests its clients' capital in private market real estate investment strategies designed ... to produce attractive absolute and risk-adjusted returns ...." So their clients are putting up the money and taking the investment risk. In fact, LB Villages was the FIRST such investment in their effort to invest in "sustainable" properties. AND CPI actually stated that they were relying on LB's sustainable hyperbole in offering the investment. CPI cautions their investors "loss of all or a substantial portion of the investment due to leveraging, short-selling or speculative practices; lac of liquidity; volatility of returns; absence of information regarding valuations and pricing; complex tax structures; less regulation and higher fees; advisor risk; general economic risks; environmental contamination; zoning requirements; development and renovation risks; etc. But their money's been spent so I guess if their investment fails, it's no skin off your nose.
If many of the recreational amenities are separately owned, then they'll be charging a fee for their services? How does that work? Golf fee, tennis fee, beach club (membership we know about), pay for towel, pay for drink, tip for drink, guests have a daily rate? Whole family in membership or per head? So it will cost what to spend a couple hours at the beach? What will happen if they're not making any money and decide to close up shop? Golf in the summer? Can't be too lucrative. Tennis fees? Haven't heard about this before.
Thanks for the information - Tell us more.

capt. mike - 9-4-2007 at 04:46 PM

this is so funny. :lol:

Wilderone - she got you going eh? :?:

HOAs absolutely can be separated from the other amenities structure, its done all the time - they can sell separate club memberships for any activites not wanting to be subsidized thru the owner's fund. - like Golf and tennis. And the hotel's income stream can cover many other things like beaches, cabanas etc. Check out any major time share resort operation, they do it all the time.

the key here is its about those with the where with all to pay CASH for a place they may only use a few months of the year, like about 500 of them??

:lol:

Skeet/Loreto - 9-5-2007 at 06:04 AM

Look Out Loreto!! The Texans are Coming!
There has been a Media Blitz in the Houston Area for the past month selling Loreto Bay.
Conniental Airlines is starting service Sept. 8th.
Loreto will never be the same, relax, maybe some of those Texans will start a Rodeo.

Skeet/Loreto

Bob and Susan - 9-5-2007 at 06:07 AM

Continental is already there....

From the East Coast:
Houston, TX (IAH) to Loreto, Mexico (LTO)
Thursday and Sunday with:
Continental Airlines 800-525-0280
Continental Airlines Reservations Website Booking

oldhippie - 9-5-2007 at 07:29 AM

Just to set the record straight about the Citigroup involvement, they're investing other people's money (OPM) pronounced "opium" using a brand new investment stategy. Loreto Bay is their first investment in "sustainable building projects". Given the size of Citigroup compared to Loreto Bay Company, the amount invested could be considered chump change and was probably taken from the petty cash cigar box in some secretary's desk drawer.

Plus, in general, real estate investment instruments are taking a beating. Many people think that real estate in general is overvalued. Not to imply that a quarter of a million dollars or more for house in Loreto Bay is a bad deal, especially if there's running water for a year or two and they get the raw sewage flowing in the streets of the town cleaned up.

"Citi Alternative Investments
Various businesses at Citi Alternative Investments (CAI) have been active in making environmentally friendly investments. For example, as part of the Sustainable Development Investment Program, CVC International has invested $150 million to date, including such notable transactions as Suzlon Wind Energy, a wind turbine manufacturer based in India, and Sindicatum Carbon Capital, a developer of projects that reduce GHG emissions globally. Citi Property Investors (CPI) invests in sustainable building projects. Its first such investment was in the Loreto Bay Company, a 5,000-home community in Baja California, Mexico that is one of the largest sustainable resort communities in North America."

http://www.citigroup.com/citigroup/press/2007/data/070508a.h...

https://citigrouppropertyinvestors.com/reinst/

[Edited on 9-5-2007 by oldhippie]

elizabeth - 9-5-2007 at 07:43 AM

Quote:

Originally posted by 805gregg
I drove through Loreto Bay 2 weeks ago, ugly is the only word to describe the attached housing. All the units I saw had common walls with their neighbors, a very small front entry or kind of court yard maybe 5'x15' or none at all just a front door right on the street. My wife said it reminded her of France, maybe thats why we say so many French and Itialian tourists. Selling this mess in Europe.

It reminded me of a NY tenement with pretty colors...and no grafitti...yet.

oldhippie - 9-5-2007 at 08:05 AM

Quote:

Originally posted by elizabeth

Quote:

It reminded me of a NY tenement with pretty colors...and no grafitti...yet.

Wait until the slave quarters, oops, I mean public housing developments, for those poor Mexican workers to live in are built. But like one poster said, some of the happiest people live in tar paper shacks. I bet they're really happy today given the hurricane in the area.

wilderone - 9-5-2007 at 09:42 AM

Mike - au contraire - only shows how much more risky the purchase is. Not only are they buying an attached unit, LEASED for 99 (or however many) years in a foreign country, but the purchasers do not even own the amenties nor have any control over them whatsoever. And I agree, there are all types of financial structures for purchase of property: time share resorts (a couple weeks with exchange privileges for a hotel room); fractional ownership of hotel rooms (1/16th or whatever), the purchase of vacation property exchangeable all over the world. With LB it appears you get far less for your money than I even thought previously - and not all of the LB development units are the same - some are "small hotel apartments". All the promises of shops, cafes, studios, galleries, etc., I'd still like to know: these commercial spaces will all be individually leased and managed by independent contractors? And if they're not profitiable, they have the option to quit their business? So LB Co. is making promises regarding the ecologically responsible and sustainable golf course without having any of the responsibility of its future caretaking because it will be in the hands of ___ (who)? Will the golf course managers have specific criteria to ensure that it does not become salt and pesticide laden and have adverse effects on the health of the estuary and the Marine Preserve? So many promises. So many who have so much to squander on promises.

oldhippie - 9-5-2007 at 09:55 AM

wilderone, I think LB homes are sold using fideicomisos. They're not leased, or are they?

The big risk in my mind is the "deal" they've worked out with the Government for water from the measly aquifer. What happens if the gov renegs?

Sorry Mr. Butterfield, we've changed our mind and decided that the water is better used by our citizens and we've also decided to deny the permit for the desal plant. Of course we'll reconsider if you can get Washington to lighten up on our fine citizens living in the States whose paperwork isn't quite correct.

Let's see, a Canadian/American company sues a Mexican government agency in a Mexican court. Yup, that will work.

Don Alley - 9-5-2007 at 10:01 AM

Quote:

Originally posted by Loretano
Next time get your facts straight before you sound off.

What? Did someone change the rules? :lol:

If LB can make up "facts" from under the shade of their palapa trees, so can we.

Now, did OJ Simpson buy a unit? :lol:

wilderone - 9-5-2007 at 12:31 PM

Right - a trust not a lease for the restricted zone - whatever - it's not fee simple with your name on it with the land rights too.

"In 1993, then, the Foreign Investment Law was passed whereby foreigners may purchase land in restricted zones provided the deed is held in trust by a trustee. Thus, banks such as Banamex and Bancomer operate as trustees and can hold your deed in trust for you. The banks, which must hold a permit issued by the Mexican Secretary of Foreign Relations, charge an annual fee for this service, generally around $500 USD. The trust agreement is valid for 50 years and must be renewed thereafter for another 50 years within 90 days of the expiration of the first term.

It is through the use of this trust arrangement that compliance with the Mexican Constitution can be maintained: technically you, as a foreigner, do not hold your deed. Instead, it is held in trust for you by a trustee."

Bob and Susan - 9-5-2007 at 12:37 PM

oldhippie...

Loreto Bay is a MEXICAN Corp and EVEN if wholely owned by foreigners has the SAME rights as a mexican citizen

oldhippie - 9-5-2007 at 03:54 PM

Oh, OK, let me re-phrase it.

Let's see, a foreign owned Mexican company sues a Mexican government agency in a Mexican court. Yup, that will work.

Besides, that will never happen, I was kidding. All's it will take is ANOTHER suitcase full of 100 dollar bills. No problemo.

oldhippie - 9-5-2007 at 04:02 PM

Quote:

Originally posted by wilderone
Right - a trust not a lease for the restricted zone - whatever - it's not fee simple with your name on it with the land rights too.

"In 1993, then, the Foreign Investment Law was passed whereby foreigners may purchase land in restricted zones provided the deed is held in trust by a trustee. Thus, banks such as Banamex and Bancomer operate as trustees and can hold your deed in trust for you. The banks, which must hold a permit issued by the Mexican Secretary of Foreign Relations, charge an annual fee for this service, generally around $500 USD. The trust agreement is valid for 50 years and must be renewed thereafter for another 50 years within 90 days of the expiration of the first term.

It is through the use of this trust arrangement that compliance with the Mexican Constitution can be maintained: technically you, as a foreigner, do not hold your deed. Instead, it is held in trust for you by a trustee."

yeah, that's true, I have one. Big difference between property held in a trust where you are the sole beneficiary of the trust and have full use of the property including the right to sell it and a lease.

ok, i'll buy that, but

capt. mike - 9-6-2007 at 05:13 AM

Quote:

Originally posted by wilderone
Mike - au contraire - only shows how much more risky the purchase is. Not only are they buying an attached unit, LEASED for 99 (or however many) years in a foreign country, but the purchasers do not even own the amenties nor have any control over them whatsoever. And I agree, there are all types of financial structures for purchase of property: time share resorts (a couple weeks with exchange privileges for a hotel room); fractional ownership of hotel rooms (1/16th or whatever), the purchase of vacation property exchangeable all over the world. With LB it appears you get far less for your money than I even thought previously - and not all of the LB development units are the same - some are "small hotel apartments". All the promises of shops, cafes, studios, galleries, etc., I'd still like to know: these commercial spaces will all be individually leased and managed by independent contractors? And if they're not profitiable, they have the option to quit their business? So LB Co. is making promises regarding the ecologically responsible and sustainable golf course without having any of the responsibility of its future caretaking because it will be in the hands of ___ (who)? Will the golf course managers have specific criteria to ensure that it does not become salt and pesticide laden and have adverse effects on the health of the estuary and the Marine Preserve? So many promises. So many who have so much to squander on promises.

what i find amusing here is: where are all the people who are dissatisfied with their purchases? none posting here - just people who are against it or do not want, never would buy one.

so - are people who bought vocal one way or the other? and if so, where are they ragging or cheering?
answer is likely nowhere because, they bought them and like them, they go there when its nice or when they want, they paid cash, they can afford such niceties, they could care less about any controversy - and if/when they tire of it or want to go elsewhere they'll sell at a profit or loss - big whoop.........

Pescador - 9-6-2007 at 07:18 AM

Quote:

Originally posted by capt. mike

what i find amusing here is: where are all the people who are dissatisfied with their purchases? none posting here - just people who are against it or do not want, never would buy one.

so - are people who bought vocal one way or the other? and if so, where are they ragging or cheering?
answer is likely nowhere because, they bought them and like them, they go there when its nice or when they want, they paid cash, they can afford such niceties, they could care less about any controversy - and if/when they tire of it or want to go elsewhere they'll sell at a profit or loss - big whoop.........

You go Mike. Does this not sound a little bit like the voice of reason describing the Free Enterprise System, which, when I last checked, worked very well.

Crusoe - 9-6-2007 at 07:54 AM

Hmm......But the true reality is.....Should an entire natural and virgin landscape allowed to be totally desicrated for the sake of the "Free Enterprise System". The true reality is... the "Free Enterprise System " is nothing but a "Farse". Just ask any Loreto Bay Worker. ++C++

backninedan - 9-6-2007 at 07:59 AM

I don't care if they buy a hundred of them and are thrilled with the purchase. However if this thing affects the quality of life of those already here, I do have a problem with it. Not a thing I can do either way, so I may as well buy a bigger tenako, install solar and have another beer.

oldhippie - 9-6-2007 at 08:13 AM

Quote:

Originally posted by Pescador

Quote:

You go Mike. Does this not sound a little bit like the voice of reason describing the Free Enterprise System, which, when I last checked, worked very well.

The fact that it is the free enterprise system at work does not mean that the product is a good thing. The Mexican drug cartels are also a fine example of free enterprise. Lots of demand and lots of profit.

wilderone - 9-6-2007 at 08:32 AM

THE POINT HAS NEVER BEEN WHETHER PEOPLE LIKE THEM OR NOT. omg - has the past three years of discussions been fruitless? deaf, dumb and blind.

Cypress - 9-6-2007 at 12:39 PM

capt. mike.

Your take on the Loreto Bay situation is good.

gnukid - 9-6-2007 at 08:27 PM

My opinion: (I'm not an expert about the future of RE or Loreto)

I went to Loreto Bay to meet some of the developers with some potential investors a few years ago. The potential investors complained about exactly the things noted here; no club points or ownership or control of anything. Basically you are buying stripped down rights to use the vacation home in a development without a say or benefits in the development.

Its like a lot of vacation resort deals but its missing the meat.

The visitors I went to Loreto with were savvy RE and golf club investors with hotels and investments worldwide and said this was a keep it all development giving up very little for the money and little that could be highly valued later. High risk with low potential return. Very smart for developers = very bad for investors. It seemed like an impressive deal for the developers.

As we rode home after the meetings that day, it was suggested that under the circumstances the company could take all the money and walk away prior to early or even second or third stage completion if they chose with little recourse for investors therefore we had to walk away.

Most Real Estate buyers are not so savvy and are unaware of the history of such developments or of Loreto's drawbacks as a fast growth, highly impacted vacation destination, specifically the obvious lack of resources to support such a development for the long term.

Loreto Bay is doomed to be highly impacted, costly and has low likely-hood of being a potentially very good real estate investment when compared to alternatives which have much greater potential for appreciation than Loreto Bay's overpriced, low value, hollow plan.

Worse, even if it is sold out, an near empty town almost year round makes it a home robbery target and when crowded for the 2-3 week x-mas rush when people finally visit it's possible there will be a shortage of resources, food, restaurants, water, sewage capacity, taxis, shuttles, rental cars, tours. etc... as you would expect. So, when you arrive for your two weeks of bliss you might very well miss the enjoyable vacation you imagined.

There is a good chance this is really a big idea that will burst like a hot air balloon soon. It's too far off the mark for high value / high benefit investment.

Money would be better spent in areas where money provides more value and higher chance for appreciation, one which has better potential at this time due to its' infrastructure and proximity to transportation.

Much slower growth for Loreto with adequate infrastructure resources up front would improve its' chances.

That said, I will not turn away support for those who make the choice to buy there and I will assist all my friends and associates who do as much as possible because the buyers are going to need lots and lots of help outside of the "Company" e.g. services like private security, lawyers, immigraccion agents, cleaning, maintenance, transportation, entertainment not to mention basic resources like food, water and energy.

Again, these comments are only my silly unqualified opinion and do not reflect any specific absolute knowledge about the potential future for Loreto. So, Mike and Cypress, whatever your intentions are go ahead and laugh off the criticism and continue the game. No one expects YOU to change your tune.

gnukid - 9-7-2007 at 10:19 AM

I just got an idea I know Mike and Cypress, you will all find it brilliant. If LB can market heavily or exclusively to inner city Parisian clients, then many visiting french tourists will gather in LB and their french friends will join them. It could become a mini-paris on the sea of cortez, similarly impacted, wall to wall living with no room for cars, overpriced coffee and baguettes. Tres bien! Perhaps French could become the official language. How perfect. LB has better weather than Paris-so it all makes sense, Mike? LB city will be French and the rest of Baja free of French tourists. Mais Oui. Win Win. C'est incroyable! Formidable! Genius!

LB Outlook

cajhawk - 9-7-2007 at 10:48 AM

Most Real Estate buyers are not so savvy and are unaware of the history of such developments or of Loreto's drawbacks as a fast growth, highly impacted vacation destination, specifically the obvious lack of resources to support such a development for the long term.

The history of most of these projects is that one developer starts it and another one eventually finishes it. As far as your real estate savvy investors, I would say that you were correct in saying that there was too much risk and not enough return for them. However I would disagree that LB management would "take the money and run". The majority of their profit is in finishing the development and with the huge capital expenditures and payroll I don't see this as being profitable for them either until later. I would say the biggest problems from an investment standpoint are 1) LBs unwillingness to share the pie with (much needed) capital partners and use their expertise; 2) poor management regarding construction; 3) high overhead with too much wasted money. Once again, time will tell.

An earlier poster made the comment that they were destroying a virgin piece of land? (paraphrased). The Mexican Government chose to develop this land years ago and put street, water, and sewer to this area. LB is building homes (at least in the first 3 phases) on completely finished lots and an existing golf course. Complain about it all that you want, but building on lots that are already completed???

Roberto - 9-7-2007 at 11:18 AM

Quote:

Originally posted by wilderone
omg - has the past three years of discussions been fruitless?

Pretty much sums it up.

Don Alley - 9-7-2007 at 11:35 AM

Quote:

Originally posted by cajhawk
An earlier poster made the comment that they were destroying a virgin piece of land? (paraphrased). The Mexican Government chose to develop this land years ago and put street, water, and sewer to this area. LB is building homes (at least in the first 3 phases) on completely finished lots and an existing golf course. Complain about it all that you want, but building on lots that are already completed???

There's more to it than that. Fonatur did not provide LB with "completely finished lots." I've seen the process from the start. First, vegetation was removed. Then scraped. Water, sewer, and electric conduits installed amidst raised pads from streams of dump trucks.

There is a locked, gated road between Loreto and Nopolo that leads to a large excavation area that was the source of the fill for the pads the first phases of LB are being built. Can't say if this are has, can or will be reclaimed. But this land was certainlly disturbed, to put it mildly.

Re: "The Mexican Government chose to develop this land years ago..."
No, they chose to attempt to get someone else to develop it. And failed for, what, decades? Until Loreto Bay chose to develop it. And, uh, well, if THE MEXICAN GOVERNMENT wants to do something, it must be the right thing, we hold them in such high esteem. :lol:

toneart - 9-7-2007 at 12:19 PM

I liked the "green" aspect of the L.B. project as described in their beautiful brochures. I sent for the brocures (and also received the DVD)after The San Diego Union did a story on them, which was very positive.

Three years ago I drove there. I did not fly there on Alaska Airlines which put Loreto on their service route because of Loreto Bay. I did not participate in the "sweat box", used car agency mentality sales pitch. I was shown around by a Loreto Bay Sales Representative. At that time the build out estimate for the whole project was 15 years away. In the real world that means the project would have to survive; cost overrides, infrastructure plans implemented successfully, governmental oversight protecting the buyers as well as the developers, completion dates met according to contract....... :lol:

And one could argue that this is "the real world". This is Mexico! Do I sound cynical? Even in a "perfect world" most buyers wouldn't have the 15 years++++++++++ to wait for the promised amenities to benefit them. And then there is the water issue.

Well I took a look at the beautiful bay and felt immediately saddened by what the projected vision would look like and how it's beauty would be impacted, in fact ruined, by the development.I saw the brown golf course and the pathetic strings and stakes in the sand and thought, OMG! For me, there were so many red flags, I literally sped out of there. I should have gotten a speeding ticket.

Hey, I am not tha-a-a-t smart. I bought into a development in a riverbed in Mulege. Of course, I didn't know it was a riverbed until Hurricane John. But I wouldn't trade places with anyone who has bought in Loreto Bay.

Regarding people who have bought, it is human nature to be in denial about such a huge financial and lifestyle committment, after they have made the plunge. They have to stay positive, and I wish them the best. I really do.

Agreed

cajhawk - 9-7-2007 at 12:50 PM

Regarding people who have bought, it is human nature to be in denial about such a huge financial and lifestyle committment, after they have made the plunge. They have to stay positive, and I wish them the best. I really do.

I actually agree with your statement to some degree. The question becomes whether or not they are "in denial" or whether that is actually the future in which they are investing money and time.

The flip side is that it is also human nature to dislike change. People don't want Loreto to change and therefore must be negative about Loreto Bay and things that they do. I've worked for developers in the States before. It always amazed me how people would be 1) shown and walked through complete plans for a 4 phase development; 2) sign numerous disclosures about those phases from both the Devloper and Department of Real Estate; 3) move in phase 1; 4) complain about the fact that phase 2,3 and 4 were being built and how it was "ruining everything".

As I said before, I'm not an apologist for LB. They have their strengths and weaknesses as a development and as a company. I also believe IMHO that even if they did everything that they attempted and it was a wonderful development that most on this board would not like it. Human nature as well.

oldhippie - 9-7-2007 at 05:00 PM

As you know, I'm a tiny bit opposed to Loreto Bay; however, it's not my nature to dislike change. I live in, and am both participating in and watching, rapid change of the community, and I'm all for it. The population at large is benefitting as is the environment.

If Butterfield et al. are really interested in building/bettering communities by increasing sustainablility, they would be working here, not building a destination resort.

[Edited on 9-8-2007 by oldhippie]

ok by me, i'd rather have the frogs at Lb

capt. mike - 9-8-2007 at 05:42 PM

Quote:

Originally posted by gnukid
I just got an idea I know Mike and Cypress, you will all find it brilliant. If LB can market heavily or exclusively to inner city Parisian clients, then many visiting french tourists will gather in LB and their french friends will join them. It could become a mini-paris on the sea of cortez, similarly impacted, wall to wall living with no room for cars, overpriced coffee and baguettes. Tres bien! Perhaps French could become the official language. How perfect. LB has better weather than Paris-so it all makes sense, Mike? LB city will be French and the rest of Baja free of French tourists. Mais Oui. Win Win. C'est incroyable! Formidable! Genius!

than moving in close to my digs at La Sereindad!!

zee plane.......zee plane..... :rolleyes:

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