FONATUR to take over Loreto Bay?
Southern Baja resort project falls victim to financial woes
Government agency asks to take over struggling development
By Sandra Dibble, Union-Tribune Staff Writer
2:00 a.m. June 18, 2009
Like other tourist-oriented real estate projects on the Baja California peninsula, the planned 6,000-unit Loreto Bay development has struggled under
daunting market conditions.
With fewer than 800 units sold, the Mexican development company TSD Loreto Partners this month announced the suspension of construction and
operations. Last week, the golf course and 155-room hotel were shuttered. But yesterday, Mexico's tourism development agency, Fonatur, said it was
asking for custody of both facilities so they could reopen while a buyer is sought for the project.
“The golf course is an important attraction in Loreto, and its loss would be a great blow, from which this tourist destination would not easily
recover,” Narciso Agúndez, governor of Baja California Sur, said in a statement Sunday after meeting in Mexico City with Fonatur Director Miguel Gómez
Montt.
Heavily marketed to U.S. and Canadian baby boomers, the Villages of Loreto Bay was launched in 2002 by an Arizona company as a series of
environmentally friendly seaside communities. For Fonatur, Loreto Bay was to be the cornerstone of a major tourist destination planned since the 1970s
in this picturesque desert community about 750 miles from San Diego.
Supporters of the Fonatur plan said it would bring much-needed development to Loreto, a town of 15,000 founded in 1697 as a Jesuit mission. For all
its beauty and rich history, the town offered few economic opportunities to local residents, they said.
But critics said the region lacks the water resources for a proposal that they said would bring in up to 220,000 residents. What no one foresaw was
the drastic drop in demand for vacation homes as the U.S. and Canadian economies suffered and credit grew tighter.
A 2005 study commissioned by the San Diego-based International Community Foundation stated that desalination is the only apparent option if Loreto
were to grow beyond 30,000 people. But desalination, it warned, could potentially damage ecosystems in the Loreto Bay National Marine Park.
In a four-sentence announcement sent to Loreto Bay homeowners June 6, TSD Loreto Partners, whose major lender is Citigroup Property Investors, stated
that “due to the challenging situation in the international real estate and financial markets, all operating and construction activities for Loreto
Bay will be suspended.”
Though several potential buyers have visited the project in recent months, the project “has been unable to secure a buyer or new investor,” the
statement said.
In the statement released Sunday, Agúndez pledged support for Loreto Bay, saying “Loretanos are not alone in their effort to make Loreto develop
through tourism.”
Agúndez announced that the Mexican airline Aeromexico next month will resume a San Diego-Loreto-Mexico City flight suspended in 2006, though
Aeromexico did not confirm the flights yesterday.
Agúndez said the suspension of operations at the project has led to the layoff of 400 workers. Because many are from mainland Mexico, that poses a
potential “social problem” for the local community, said Ramón Romero Amador, the municipality's secretary general.
In a telephone interview, he said the government has secured funds to send workers back to their home communities.
Still, he added, “there is much optimism and hope, and we believe that this project will continue.”
Pascal Pellegrino, president of Loreto's Hotel Association, said he supported the government's actions. The development, he said “needs to be sold
soon, so that it doesn't remain as an unfinished project.”
Pellegrino said Loreto needs growth, “but we must keep it on a human dimension. We want projects developed with the standards of conservation that are
applied around the world.”
Brian Durnian, a Napa Valley real estate agent, purchased a three-bedroom, two-bath adobe at Loreto Bay with his brother. With construction on the
$400,000 property finished three years ago, Durnian said he was not worried.
Durnian said that like many buyers, he was drawn to the region because it offered a slower pace than Cabo San Lucas, at the peninsula's southern tip.
“This is more planned growth. I love it down there.”
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