Building Up Baja: U.S. Suburbanization Comes to the Peninsula

by Dan La Botz

Tijuana, Mexico — The drive down Baja California’s Pacific coast scenic highway from Tijuana on the U.S.-Mexico border to Ensenada 60 miles to the south sometimes affords an opportunity to see seals and whales. Seeing the signs of Re/Max and Century 21, by contrast, is a sure thing. Billboards advertise Donald Trump’s Ocean Club Resort, just 30 minutes south of San Diego, with seaside condominiums starting at $200,000. New real estate development in Baja is everywhere.

U.S.-based multinationals are funding a construction boom in Baja, with condominiums, beach houses, seaside mansions and retirement communities sprouting up from Tijuana to Cabo San Lucas at the tip of Baja. U.S. real estate companies peddle beachfront property to aging U.S. baby boomers at one third the price of similar property in the United States.

But, say critics on both sides of the U.S.-Mexico border, sales prices do not reflect the social and ecological costs being exacted. What is a boon to some from the United States may prove to be a bane to Mexico and a tragedy for the Pacific coast’s environment.

Luxury residential development obviously does not create housing for most Mexicans. Those economic benefits that do redound to Mexico are not shared equally. “The investment money going into Baja rises to the top, and the rich get richer while the poor get poorer,” says Mike McCoy, environmentalist and the moving force behind the creation of the Tijuana River Estuarine Reserve. Meanwhile, the real estate developments are injurious to coastal ecosystems. The environment is ravaged as habitats are damaged or destroyed by the big projects, says McCoy.

Background to the Boom

The spectacular U.S.-made real estate boom in Baja California has been made possible by what is now almost 20 years of the Mexican state’s corporate-oriented policies — lifting economic regulations, selling government assets at firesale prices to locale elites and opening to foreign investment — first under the government of the Institutional Revolutionary Party (PRI) and more recently under the National Action Party (PAN). Perhaps most fundamentally, given the country’s history, Mexico has, over the last two decades, altered Article 27 of its constitution to permit the sale of ejidos, state lands once given in perpetuity to peasant and indigenous communities.

Mexico’s Congress has also passed laws to permit 100 percent foreign ownership of Mexican land and businesses. The situation is somewhat more complicated in Baja California, where nearly all property is either borderland or seashore and subject to more restrictive laws. Still, foreigners can buy and own land through a fideicomiso, a bank trust, and they are doing so at a rapid rate. (Mexican law requires that land within 75 kilometers of the border and within 50 kilometers of the sea coast be held in trust through Mexican banks.)

While Mexican legal and policy reversals made the current real estate boom possible, U.S. banks, corporations and real estate companies are the driving force in today’s investments in Baja. The rising cost of real estate in California — where middle-class homes in Los Angeles and the Bay Area can cost a million dollars or more and condominiums often go for several hundred thousand dollars — has driven retiring baby boomers to look south. So U.S. realtors now offer U.S.-built beach property to retiring accountants, teachers and factory workers — as well as to the well-to-do and the very rich. The beachfront condominium that would cost $600,000 in San Diego will cost only $200,000 in Northern Baja, where the same beautiful Mediterranean climate prevails. The building boom, however, extends all the way down the arid and torrid peninsula to Cabo San Lucas, some 1,060 miles to the south.

Looking from north to south down the peninsula, some of the major developments taking place are:

• Trump Ocean Resort — a 525-suite luxury condo hotel resort with 26-story towers, situated on 17 acres of “pristine land” in the area of Rosarito in Northern Baja California.
• Meridian Development Group — Porto Hussong — a $350 million development on 16-acres of land with prices ranging from $400,000 to $3 million for a penthouse in the Ensenada area.
• El Dorado Ranch — hundreds of condos and homes on lots with mountain and sea views that sell for $40,000.
• Loreto Bay — a $3 billion beachfront project, on 8,000 acres. It will create 6,000 homes, 700 miles south of San Diego in Southern Baja California on the Sea of Cortez (Gulf of California).
• Chileno Bay Club — 650 homes selling for between $1 million and $3 million each, located on 1,265 acres on Cabo San Lucas, 1,060 miles from San Diego.

U.S.-style luxury developments are surrounded by U.S.-style malls and big box stores. The Macroplaza del Mar shopping center based in Ensenada, for example, is anchored by Home Depot and a Wal-Mart Supercenter. The new Wal-Mart in Ensenada is just one of the nearly 900 Wal-Mart outlets in 140 Mexican cities employing 150,000 workers. Wal-Mart is the largest employer in the country.

U.S. insurance companies have also gone to Mexico. Hundreds of thousands of people already travel from the United States to Baja California for medical or dental procedures, or for prescription drugs, crossing the border on a weekly or monthly basis. With medical insurance, prescription drugs, surgery and dental work available for about a third of the cost in the United States, medical care is one of the major attractions of living in Baja California for some. But until 2000, no HMO plans covered such services in Mexico. Today, several such plans, such as Blue Shield’s Access Baja, are available. Several U.S. medical corporations — firms that operate hospitals, nursing homes and private clinics — are rumored to be planning to open facilities in Baja.

Baja: Sold

Such massive U.S. investment — in real estate, retail and healthcare — means U.S. corporations will secure their position as the dominant economic power in Baja California. U.S. and other foreign investors already own 550 maquiladoras — manufacturing plants worth billions of dollars that process goods such as electronics, autoparts and hospital supplies for the U.S. market. For all intents and purposes, U.S. businesses, and now people from the United States, own Baja.

The U.S. development corporations building the new homes and malls provide jobs for construction workers, maids, gardeners and retail workers, but at wages that are roughly one tenth of those paid to workers in the United States. Some Mexicans welcome the investment and the employment it brings, but others see it as a poor trade-off, a deal that perpetuates and reinforces the country’s social inequalities.

Many Mexicans feel ambivalent about the development taking place. Gilberto Ortega, the manager of a small family-owned maquiladora, says, “I can’t have hard feelings against retired workers. Most of the people who come here do not have enough income to survive in the United States because it’s expensive. I know because I have relatives who have retired from U.S. jobs. Every month they receive $800 or $1,000, and that is not even enough for me here in Mexico.”

But, he says, “there is another side of the equation. The United States always had the idea of trying to seize Mexico and particularly Baja California. We know this from the history of the United States in the nineteenth century and the U.S. war with Mexico in 1847. This time I think they are trying to do it economically. Most of the investors along the shoreline are from the United States, for example, this famous American investor Trump. This is a problem of sovereignty.”

There are also cultural implications. Some of those looking for property in Baja want to live in Mexico, but would prefer to avoid living with Mexicans. Nathan Stuart, a former Christian missionary in Ensenada and now a real estate salesperson there, says, “Half of my clients call me and they say, ‘We really don’t want to live in an area where there are a lot of Mexicans.’ But they want to be in Mexico. This is basically the baby boomers realizing that ocean front property south of the border is one third of the cost in San Diego. So it’s not so much their love for Mexico as their love for saving a buck.”

Environmental and Social Problems

While each of the development corporations claims that it will provide U.S. buyers with a beautiful, almost utopian community, the growing megapolis that extends from Tijuana to Tecate on the east, and south to Ensenada faces enormous problems of infrastructure development, difficult social problems and serious security problems.

California and Baja California are both extremely arid. In both countries, water resources are already overcommitted and poorly managed. Mexico’s border cities have enormous problems with sewage and water treatment, and there is no potable water anywhere in the country. The projected seaside developments will further strain and stress the water resources and systems on both sides of the border.

The creation of these developments will also damage or destroy the habitats of native flora and fauna all along the Pacific Coast. Most of the wetlands of California have already been ruined by similar development schemes. “Investment leads to cut and run development,” says McCoy, who has dedicated the last 30 years of his life to protecting the Tijuana River estuary. “The developers want big profits and make them at the expense of the Mexican people and their environment. These projects will continue to destroy critical habitat and put more species at risk.”

The growing value of land in Baja has led to conflicts between U.S. and Mexican investors and the Kumeyaay Indians, a binational people who live on reservations in the United States and on ejidos in Mexico. The dispute between Europeans and the Kumeyaay over the land is more than 500 years old and continues today in Baja, though now driven not by the conquistadors search for gold, but rather by the real estate developers’ search for land. The Kumeyaay at the San José de la Zorra ejido near Ensenada report an increase in conflicts — legal disputes, physical confrontations, harassment by the authorities — in their community and in other Kumeyaay communities.

The baby boomers who buy in Baja will also find themselves in the midst of other serious social problems. The Mexican drug cartels have been carrying out a war that has led to 1,300 deaths in Mexico so far, many of them in Baja California. The drug lords routinely murder their competitors as well as politicians, police officers and reporters.

The drug lords give politicians and police million dollar bribes to do business in Baja, and poor neighborhoods are rife with crime related to the drug trade. The U.S. repatriation of tens of thousands of Latino gang members, many of whom stay in Tijuana, makes matters worse. Crime along the border now runs from petty theft and robbery to spectacular Hollywood-inspired drug cartel murders that involve high-powered arms and end in real massacres. U.S. émigrés may be able to find safety in their gated communities, but for how long?

Many San Diegans say they no longer visit Tijuana because of the police corruption and impunity. Chuck Anderson, a Navy civil service construction electrician, moved to Tijuana because of cheaper housing costs. “But I stopped driving in Tijuana because the police stop you every 10 minutes,” he says. Mexican police in general and in Tijuana in particular are notorious for shaking down tourists as well as Mexican citizens, mistreating the indigenous people and Central American immigrants, and sometimes sexually abusing women and torturing some of those they arrest. Those with blue eyes and blue U.S. passports are usually immune to physical mistreatment, but not to the mordida, the police “bite” or bribe.

Tremendous social inequalities between rich and poor drive the security and crime problems. Mexico’s core economic plan is creating those inequalities, so no easy solutions are available. NAFTA was supposed to improve life for Mexicans, but it has not, says José Maria Ramos, a researcher at the College of the Northern Border in Rosarito, about 15 miles south of Tijuana, who studies issues of security in the context of social development.

“Living conditions for most have not improved,” says Ramos. “There are great social inequalities.” Regional migration patterns worsen inequality. The maquiladora economy draws poor people desperate for any job. Immigrants arrive in Tijuana from the interior of Mexico, from Central America, South America and countries all over the world at the rate of 80,000 per year. Most become part of Tijuana’s burgeoning working class which labors in the maquiladoras or in other businesses without the right to form or join genuine labor unions.

The gated community residents hoping to escape with regular visits to San Diego may find things harder than expected. The Trump Ocean Resort may be only 30 minutes from San Diego, but on weekends, one can spend between one and two hours waiting to cross the border in either the automobile or pedestrian lines. Even those 70,000 commuters who buy $130-a-year Sentri cards to let them cross rapidly sometimes find they have to wait. Those without cards who commute back and forth across the border to work often find they have to add an hour or two to their work day. These delays are just one more expression of increasing population density which is overwhelming the authorities on both sides of the border.

Another Sort of Development

While the U.S. investors and their Mexican partners are not responsible for all of Mexico’s problems, they are making matters worse. What appears to be underway is the construction of U.S. suburbs surrounded by worsening Mexican poverty and ecological disaster.    

“I wish they would develop keeping the culture in mind,” says the young realtor Nathan Stuart. “It’s funny, because we’re destroying the culture that we loved. Most Americans come down to Mexico and fall in love with the culture. Then we get here and we try to make it look like home. It’s just ridiculous.”