IRS US TAX RULES YOU AND YOUR CLIENTS DO NOT KNOW ABOUT FIDEICOMISOS AND MEXICAN CORPORATIONS

IGNORING U.S. INCOME TAX RULES ON OWNERSHIP OF MEXICAN PROPERTY THROUGH FIDEICOMISOS OR MEXICAN CORPORATIONS CAN COST THOUSANDS OF DOLLARS IN PENALTIES!

(Your clients probably do not know about this rule, but should)

There are three serious potential IRS tax problems which may cause you or your American real estate and business investors in Mexico to pay tens of thousands of dollars in penalties. Each of these problems areas is briefly outlined below and be immediately communicated to your clients or and future buyers and sellers..

Foreign Corporations: Though the rules are complex, generally if a US person (Citizen or permanent resident) owns ten percent or more of a Mexican corporation, they are required to filed Form 5471 with their personal U.S.

tax return each year. Though this form usually has no tax effect, failure to file this form on a timely basis results in a $10,000 penalty for failure this return in time or never filing the return. This penalty may only be abated for reasonable cause which is not clearly defined. There is another form which must be filed when assets are transferred to a foreign corporation.

It is also important to chose the proper type of Mexican corporation to own your real estate of Mexican business. The type of Mexican corporation most commonly used can result in double taxation of all income on your US tax return and the inability to pay the lower US capital gains tax and take foreign tax credits for the taxes paid in Mexico when the real property owned by the corporation is sold. If the correct Mexican entity is utilized using the U.S. "check the box" regulations it is possible to take advantage of the corporations losses on your U.S. individual tax return, and take foreign tax credits on Mexican taxes paid by the corporation.

Fideicomisos (Foreign Trust): If you own your Mexican real estate through a fideicomiso (as required by Mexican law) and are a U.S. citizen you are required to file Form 3520 and 3520A each year. If you fail to file form 3520 in a timely manner there is a late filing penalty of 35% of the value of the assets in the trust. If you fail to file 3520A in a timely manner
there is a penalty of 5% of the value of the assets in trust.

Form 3520A is is due on March 15th following the end of each calendar year.
It can be extended, but the extension request must be filed by the original
due date. Form 3520 is attached to your personal tax return.

Foreign Bank and Financial Accounts: Form TDF 90.22.1 must be filed
separately from your tax return with the U.S. Treasury for each year you have more than $10,000 in one or more foreign bank accounts, stock accounts or other financial accounts. On this form you report the name of the financial institution, account number, co-owners, and range of balances held in the account during the calendar year. This return is due June 30th, following the end of the calendar year. It is not filed with your tax return severe civil and criminal penalties can be assessed if you fail to file this form.

Upscale and undiscovered on Mexico's Pacific coast

By MOLLY GLENTZER
Copyright 2007 Houston Chronicle

PUNTA MITA, MEXICO — It's hard to say exactly when Punta Mita charmed me in spite of myself.

Maybe when I took that first sunrise walk on an empty, pristine white beach. I picked up a free souvenir: a speckled blue spiny lobster shell. I climbed to the top of a huge rock and did a few sun salutations. There were rose petals blowing around, the remains of a romantic dinner the Four Seasons Resort had staged for some of its guests the night before.

Or maybe I was hooked that afternoon on another quiet beach, one with harder-packed, also pristine sand that was easier to walk on, when I spied a great blue heron perched on a rock out in the surf.

Or maybe it was the moment Fernando handed me a beer in a tall plastic cup.

I sat with friends on the prow of a sailboat for hire. We felt like models in a Nautica ad — hair blowing, soaking up the spray and the sun and letting our psyches rock with the boat as it crested big waves. And Fernando, a tan, thin, good-looking teenager with bleached blond hair, was chatting me up in broken English. I was thinking that he probably picks up a lot of business out here for later, after the boat docks.

You may like to play golf, or you may love lounging beside a pool in a tropical environment. But, ultimately, it's the lure of its wild water that makes Punta Mita special.

About 45 minutes north of Puerto Vallarta in the state of Nayarit, it occupies the end of a foot-shaped peninsula cradling Banderas Bay, with its sole (and soul) massaged by the Pacific. The 9 miles of shoreline here are naturally "scalloped'' into coves and inlets, giving the beaches an intimate scale.

Scrubbed and designed for U.S. vacationers, the 1,500-acre development is a project of Dine, the real estate subsidiary of the Mexican conglomerate DESC. (It's not to be confused with the more accessible nearby town of Punta de Mita.)

Punta Mita is relatively undiscovered for a good reason: Imposing gates monitor access to each of the dozen or so resort communities within the main entry.

The hum of construction is constant. New villas and condos — which account for most of the lodging choices — are coming on line fast. While this building boom may not please everyone, the developers do not plan to line the beaches with hotels.

The still-growing Four Seasons Resort Punta Mita is the only viable hotel choice for now. Open about six years, it's a jewel in the chain, with four gourmet restaurants, three beautiful pool complexes, a small spa and a Jack Nicklaus-designed golf course.

It's almost a shame you have to retire to an indoor room at night, given the stylish poolside cabanas that surround the adults-only pool area. They're outfitted with plasma-screen TVs, state-of-the-art sound systems, wireless Internet service and plush furniture. Champagne and caviar are served at the bars outside early each evening.

You know a place has arrived when the fashion world moves in. Punta Mita will get an added shot of glamour in June when Michelle Smith, the designer behind the upscale Milly line, unveils her Punta Mita Collection of chic dresses, swimwear, beach bags and sportswear at the Four Seasons.

A St. Regis resort with another Nicklaus-designed course is due to open in December — although when I visited in February, getting a beat on the layout required some imagination. The site consisted of strategically piled mounds of dirt, with a couple of concrete-block-construction offices.

I stayed at Las Palmas de Punta Mita, in one of 28 just-completed luxury villas along the Four Seasons' golf course. I enjoyed the indoor-outdoor bath, the sunny entry atrium and the gourmet kitchen but gravitated to the terrace and its plunge pool. It overlooked the fourth fairway, with a view of the Pacific and the golf course's famous ``Tail of the Whale'' green, which is perched dramatically on a small, rocky island. (During high tide, players access it by amphibious vehicle.)

Punta Mita Residential Concierge services can stock the fridge or send in a personal chef or a masseuse. Cheerful maids seemed to hover — each day, they sculpted the plush towels into animal shapes and laid them out with fresh bougainvillea blossoms.If you'd rather venture out to eat, several Residents Beach Clubs on the peninsula offer excellent waterfront meals, including delectable shrimp quesadillas, huge hamburgers and drinks.

You wouldn't know you were in Mexico if the friendly people didn't speak English with charming accents.

The exception is the small village where, according to our guides, Dine gave land to squatters who were living on the government-owned peninsula when development began. Aside from a few scruffy beachfront bars and restaurants, there's not much else for visitors there.

But natural wonders aren't hard to find, and outdoor activities are plentiful.

Walks along the beach turned up plentiful birds, the tracks of sand crabs and prints left by some kind of large cat — perhaps an ocelot. We also watched as a washed-up spotted boxfish became dinner for a black vulture. One night, a small fox darted across the road.

On the sailboat ride toward the nearby Marietas Islands, a sanctuary for marine life and birds that draws scuba divers and snorkelers, time-warp music blared over the boat's speakers: The Beach Boys' Good Vibrations, Simon and Garfunkel's Sounds of Silence. We were looking for humpback whales, which visit in the winter.

It might have been the music's weird influence, but I became giddy when we spotted humpbacks breaching in the distance — even though from our vantage point, without binoculars, I could see only waterspouts and poorly outlined tails.

Surfers have several good spots to catch the waves around Punta Mita. Sea kayaking, swimming with the dolphins, jeep safaris and canopy tours along zip lines in the Sierra Madre also beckon. There are plenty of things to keep vacationers busy for a week.

Or not. If relaxation is your goal, you can lose track of time here, blissfully, in a weekend.

Behold the Marietas Islands' blue-footed booby

By PEGGY GRODINSKY
Copyright 2007 Houston Chronicle

The Marieta Islands, a craggy, wild, grassswept national park off Punta Mita on Mexico's Pacific coast, are home to another of the area's famous natural residents: the blue-footed booby (Sula neboxuii).

The seabirds' shockingly bright blue feet are thought to attract the opposite sex. "They dive from sometimes rather large heights into the water. It's very cool," said Dave Mehlman, director of the Nature Conservancy's Migratory Bird Program. "They turn into living feather arrows as they plunge into the water."

Many boat tours depart for the islands from Punta Mita; the trip takes 30 minutes or less. Tourists would be hard-pressed to walk through the village without being offered a boat trip.

Spend day in Sayulita for a different shopping experience

Spend day in Sayulita for a different shopping experience

By MOLLY GLENTZER
Copyright 2007 Houston Chronicle

SAYULITA, MEXICO — If you have a shopping jones and don't want to leave Punta Mita, prepare to spend big bucks.

There are upscale shops for clothing, gifts, jewelry and art at the Four Seasons Resort. But for something a little earthier, take a day or half-day trip to Sayulita, a small village about 30 minutes to the south.

Here, white linen resort wear gives way to the black cotton and tattoos of a global surf crowd and leathery ex-pats. Many of these folks migrate to other climates in the summer, when it gets hot and humid. One jewelry store clerk told me she spends her summers in Thailand. Tough life.

Among the cool shops to check out: Pancha Mama is a beautifully styled shop for hip clothes, jewelry and nice stoneware. At Galería la Hamaca and Cólores, indigenous arts and crafts are the draw, and a portion of sales benefits community projects. Try Rústica and Joyería Sol for locally designed jewelry.

Colorfully garbed Huichol Indians set up shop around the small zócalo for the tourist trade, proffering pottery pieces adorned with intricate beadwork. Other locals drive through the streets, selling fresh shrimp and seafood from the backs of pickups.

Along the back streets at the far end of the beach, you'll find entrepreneurial artisans who make fine jewelry and other goods.

Surfboards are lined up along the beach, a happening spot for 20-somethings.

There are casual restaurants here, too, with tables in the sand. You won't find a Starbucks in Sayulita — yet — but you can satisfy that frappuccino craving with a serious shake from Choco Banana, beside the zócalo.

Café des Artistes can be a gastronomic adventure

By MOLLY GLENTZER
Copyright 2007 Houston Chronicle


PUERTO VALLARTA, MEXICO — Even from the back seat of a van full of sunburned travel writers, Puerto Vallarta entices at night.

There's a carnivallike atmosphere along the famous Malecon promenade near the center of town. Turn inland a few blocks, and the quieter, narrow streets yield boutiques, art galleries and eateries that beg to be explored.

I felt like I was finally in "real" Mexico when we passed the ornate Our Lady of Guadalupe Cathedral. The doors were wide open, and dim golden light spilled onto the sidewalk along with voices from the small congregation inside, participating in a Mass.

Then came the best surprise of all — well worth an hour's ride from Punta Mita, indeed worth a trip from Houston: a religious experience of the culinary kind at Thierry Blouet's stylish Café des Artistes compound, carved out of a century-old home on the hill above the Malecon.

Comprising several "concepts" that have evolved over 16 years, Café des Artistes is a gastronomic adventure zone. The friendly, French-born Blouet — one of Mexico's top toques — delights in exotic ingredients.

In the main restaurant, Café des Artistes Gourmet Bistro, you're likely to find roasted sea bass consorting with spinach mousse and an eggplant marmalade; giant grilled scallops cavorting with a melt-in-your-mouth huitlacoche and potato Parmentier. Or Kobe beef with a pasilla chile sauce sharing a plate with a potato and bacon terrine, fried goat cheese and black beans. The cocoa and spice-spiked roasted piglet with a "hibiscus confit turnip" is another winner.

I could go on, but I'm getting hungry. Entree prices range from about 160 Mexican pesos ($14.50 U.S.) for a "Grand Vegetable Symphony" to 495 pesos ($45) for a 14-ounce rib-eye steak. A three-course, prix-fixe menu costs about $34, plus about $40 for house wine.

We were served (and served, and served) a tasting menu that would take pages to explain, each with its own wine — and I lost track of it all after the mirrored tray of a dozen or so deserts arrived and Blouet cheerfully brought out his best liqueur.

Although Blouet's meticulously-styled dishes clearly mark him as the "artiste" of the house, contemporary sculpture plays out the theme in several inviting environments. (You'll have to visit more than once to enjoy them all.) We ate under the stars in the lush, multilevel tropical garden. Another room is all candlelight, crystals and white walls. The Constantini Wine Bar, where 350 bottles are available by the glass, has a cool modern vibe.

Then there's Thierry Blouet Cocina de Autor, a stunning upstairs room that feels like the inside of a terrarium. Here, the chef and his army of sous-chefs whip up three-, four- and five-course tasting menus nightly that range in price from about $53 to $68 U.S. To finish off the evening, you can choose your own music in an intimate new Cigar and Cognac lounge.

Newcomers both friends and foes of Mexico's sea turtles

By PEGGY GRODINSKY
Copyright 2007 Houston Chronicle

PUERTO VALLARTA, Mexico — You may not have flippers or a shell, but if you are among the growing number of tourists and expatriates captivated by the beautiful Pacific coastline north of Puerto Vallarta, you do have something in common with sea turtles: a taste for pristine, undeveloped, remote beaches.

Unfortunately, your needs and theirs may collide.

Three species of turtle — the Olive Ridley, Hawksbill and the critically endangered Leatherback — lay their eggs on the contiguous beaches of Litibu, Malinal, Punta Negra and Careyeros, a two-mile stretch of rapidly developing white beach and rock outcrops in the Mexican state of Nayarit.

Two years ago, expatriates living along those beaches began meeting over potlucks to talk about how to protect the natural turtle nursery. They've recently formalized a partnership with the nonprofit Grupo Ecologico Manos Unidas por Litibu A.C (Litibu Ecology Group). With the Mexican government's okay, expertise from biologists and backing from the expatriates, the group operates a turtle corral where the eggs can safely hatch.

"We want to establish the (nonprofit) before the hotels are developed, so that we can have some impact," said Susan Drexler-Price, an organizer of the grassroots homeowners group and former history teacher from Oakland, Calif. (Now, she runs the Pie in the Sky bakeries in nearby Bucerias and Puerto Vallarta.)

Sea turtles face a host of threats around the world. They get tangled up in commercial fishing lines and nets. Pollution makes them sick, literally. Some species are killed for meat, others for their shells.

In Nayarit, poachers steal the eggs for their alleged aphrodisiac effects, gulping them raw with lime and chili. Poached eggs can fetch as much as 10 pesos apiece, says Gilberto Galindo Castro, president of the Litibu Ecology Group and a biologist. At that price, a single nest containing about 100 eggs nets a poacher 1,000 pesos (about $90 U.S.). Compare that, he says, to Mexico's minimum daily wage of 45 pesos.

The Mexican government takes poaching seriously, he continued, assessing steep fines or jail time — "it's a worse offense than drugs" — but it lacks the manpower to prevent the crime in the first place or prosecute offenders in the second.

Rapid development endangers the turtles, too. Tourists, and locals for that matter, ride ATVs up and down the beach, potentially crushing the eggs. (Drexler-Price once stopped some riders to try to educate them. "So who are you?" one asked her. "The turtle bitch?" She jokes that she's considered making up T-shirts with the phrase.) Also, lights from mushrooming hotels and homes along the beaches confuse the new hatchlings, which make their way to the ocean by following moonbeams reflecting off the water. The longer it takes them to reach the ocean, the slimmer their chances of ever getting there.

During egg-laying season (June-December), volunteers from the Litibu Ecology Group, many of them university students, carefully move the eggs to the corral, meticulously recording numbers and nest locations. When the eggs hatch, which happens en masse, the newborns scurry across the beach to the sea. Volunteer Jamie Perkins says only one in 1,000 will survive to adulthood. Amazingly, eight to 10 years later, the female turtles return to their natal beach to lay their own eggs.

Efforts in Mexico to protect sea turtles are a patchwork of official and unofficial endeavors, according to Sea Turtle, Inc., a nonprofit based in South Padre Island. In the 1960s, Galindo Castro remembers "mucho, mucho" turtles on this two-mile stretch. (Careyeros, translates as "turtle hunter beach," indicating the turtles have come here, and men have killed them, for quite some time).

Then the government said it was okay to harvest them, and their numbers plummeted. When the government changed its mind and changed its policy beginning in 1990, Galindo Castro says the numbers went up again. Since that about-face, SEMARNAT (Mexico's equivalent of our Environmental Protection Agency) has operated a corral in Nuevo Vallarta, about 10 miles from Litibu, last year gathering eggs from some 4,000 turtle nests to better the hatchlings' chances for survival. His own group hopes to relocate eggs from 200 sea turtle nests in the coming season.

There are seven sea turtle species in the world. All are endangered, some, including the leatherback, critically. Why bother to save them?

"Biologists could tell you we don't know exactly what could happen ... if they become extinct, probably something dramatic," Jeff George of Sea Turtle Inc., said during a telephone interview. "We can't tell you exactly how (things) would fall apart, but we know enough about their diet to theorize."

He gave a "for instance." Some sea turtle species eat jellyfish like they are going out of style. If the turtles weren't around to eat the jellyfish, the jellyfish population would explode. The hungry jellyfish hordes, in turn, would gorge on zooplankton. That's bad, very bad, as plankton is vital for healthy seas. Or suppose the sea turtle species that George described as the "lawnmower of the ocean" went extinct. Its dietary habits ensure healthy seagrasses, where it just so happens fish lay eggs and shrimp spawn. Should those turtles disappear, it doesn't look so good for fish or shrimp, either. Or for us.

Sitting at a beachside restaurant not far from the nesting grounds she dreams of protecting, nibbling on chips and sipping a cool drink, Drexler-Price, a layperson, sums up. "Basically," she said, "it's our future."

Mexican fishing village retains rugged charm

10:00 PM
PDT on Saturday, April 14, 2007
By JASON BLEVINS
The Denver Post

SAYULITA, MEXICO - Legend holds that those who drink the water in this whimsical fishing-village-turned-surf-hideaway will fall prey to the region's siren song, assuring not only several return trips but a lifetime spent snaring others under Sayulita's salty spell.

Wedged between dense jungle and the Pacific Ocean, this once-humble village has become the sandy metropolis of Nayarit, the coastal state north of bustling Puerto Vallarta.

That's not to say that 3,000-resident Sayulita is anything like its sprawling, resort-rich neighbor to the south. It's just that Sayulita's four square blocks of beachfront fun ranks as the largest village among Nayarit's bounty of not-quite-remote but lonely oceanfront hamlets.

Villa Amor overlooks the bay at Sayulita, Mexico. The village's hotels are cozy and affordable.

Sayulita's fishing economy slowly began to give way to tourism in the mid-1960s.

In the 1970s the government, as part of a nationwide urbanization effort, erected a town square in Sayulita and flanked it with new buildings. Still, the village spent three decades off the beaten path of barefoot tourists, happily hiding in the shadows of the big-box hotels emerging in Puerto Vallarta.

The quiet villages of Nayarit have always been popular with Mexican vacationers from Guadalajara and Mexico City, but among others, word of the region's treasures rarely trickled beyond the secretive sect of vagabond surfers.

But, as with every hidden paradise, word spread. Outside Magazine in the late '90s whispered to its half-million subscribers that Sayulita was top-shelf for anyone seeking a southern tropical getaway sans doorman.

Bulldozers started forging farther up the jungled ridges above the surf, clearing roads for palatial homes for outsiders. Cobblestone avenues in Nayarit's Sayulita, Punta Mita, San Francisco and even Lo de Marcos now host plenty of real estate offices.

Despite its "discovery," Sayulita remains rootsy with delicious food, comfy and affordable hotels, lodges and homes, and a mostly happy-to-see-you local population.

It remains the more rough-hewn, adventuresome alternative to Puerto Vallarta -- a perfect place for the folks more apt to name the scurrying sand crabs living in the bathroom and feed the geckos on the porch.

Golf growth moves beyond America and Britain

From China to Mexico to Ukraine to Dubai, most fairways still are part of residential projects

By: Kevin Brass

Published: April 12, 2007

Now that Britain is saturated with fairways, greens and bunkers, David Hemstock, a golf course architect, travels the world looking for work.

"In the U.K. we're golfed up," said Hemstock, who has run his own design firm, David Hemstock Associates of Derbyshire, England, for 16 years. Once focused on business within the country, he now designs courses in China, India, Romania and even Ukraine, where he is helping to build that country's first courses.

"Odessa could be the new Bulgaria," Hemstock said, referring to the southwest Ukraine's potential as a sunny second-home market.

The continuing growth of luxury residential and resort development around the world is fueling a high-stakes competition in the traditionally staid community of golf course designers.

Architects are increasingly trying to top each other with elaborate layouts and spectacular water elements to woo homebuyers to international projects.

Today, three-quarters of all the golf courses planned or under construction are outside the United States, Britain and other traditional golf centers, according to industry estimates. With 17,000 courses already open in the United States, for example, the number of new 18-hole courses opening there plummeted to 119 in 2006 from a peak of 398 in 2000, according to the National Golf Foundation.

Of the courses being developed around the world, 70 percent are tied to real estate developments, a much larger proportion than ever before, according to Keith Carter, managing editor of Golf Inc., a U.S.-based industry magazine. And a well-known course architect can add more than 20 percent to the value of a development's houses and jump-start a project, industry executives say.

"The name gives credibility to a development," said Alan Mishkin, president of U.S.-based Abigail Properties, which is building Las Palomas, a residential and golf project in Puerto Peñasco, Mexico.

"Golf courses are not money makers," he said. "They're the sizzle on the steak" of residential developments.

The focus on houses - and the resulting demand for boldfaced names - has prompted a flood of pro golfers into the design business, led by stars like Greg Norman, Nick Faldo and Gary Player. In December the sport's biggest name, Tiger Woods, formally entered the competition with the announcement of his first signature course - part of a $7.5 billion residential and entertainment complex in Dubai.

"If the goal is to sell real estate, the smaller guys are probably not even going to have a shot" when it comes to selecting who will design a development's course, Carter said.

But some developers say they do not really want or need to pay top golfers for their projects, particularly because some stars have little involvement in the work other than showing up at an opening ceremony.

"I don't necessarily buy into it as a developer or as a golfer," said Brian Dobbin, chief executive officer of Newfound Property International, a London-based company that is developing projects in Canada and the Caribbean. "I want to go to a course because it is designed well."

In addition, fees for top designers are skyrocketing, prompting many developers to think twice before signing on with a big name.

The legendary golfer Jack Nicklaus, one of the granddaddies of the design business with more than 300 courses to his name, usually charges a minimum of $2.5 million, plus a cut of residential sales, for his signature on a course, according to Paul Stringer, senior vice president of business development for Nicklaus Design, which is based in Florida. (Architects's pay typically is 6 to 12 percent of the overall budget for the course, depending on the design services that are to be provided.)

And, following the market, international courses now represent 75 percent of the business for Nicklaus Design, up from 25 percent four years ago, Stringer said. The firm has 118 courses either under construction or in the planning stages, including 14 courses in Mexico and another 12 in the Caribbean. In addition to the Middle East and South Africa, Asia has also developed into a primary focus for the company, with new courses under construction in Vietnam and Cambodia.

"In the '80s we did a lot of work in Japan, and then that slowed down," Stringer said. "Now Korea is in the role of the new Japan."

The number of courses in Eastern Europe alone has grown to 134 in 2006 from fewer than 10 in 1992, according to a study by KPMG Advisory, a consulting company based in Bucharest. And as in the rest of the world, the majority of them are tied to residential developments.

To encourage growth in Eastern Europe and Russia, golf course designers are routinely stepping outside their traditional roles to join the development team early in the process, and in some cases they are even helping with financing.

"The competition is so fierce, you have to bring extra value," said Quentin Lutz, vice president for global business development of Arthur Hills/Steve Forrest & Associates, a U.S.-based design company.

Even the most basic project now requires a dramatically expanded set of skills, designers say. Beyond tee elevations and pin placements, designers have to be experts on water conservation, agronomics, government regulation and environmental policy.

"The planning process is much more rigorous these days," said Ken Moodie, president of the European Institute of Golf Course Architects, which is based at Chiddingfold Golf Club in Chiddingfold, England.

The good news for designers is that high demand for new courses is expected to continue.

According to a study by Ennemoser Consulting of Innsbruck, Austria, the number of golfers worldwide is expected to grow by 35 percent by 2010.

A bridge to success

Ex-Chicagoan gives Mexican kids leg up with English fluency at his non-profit school

By Marla Dickerson
Tribune Newspapers: Los Angeles Times
Published April 11, 2007

PUERTO VALLARTA, Mexico -- A few years after retiring to this Pacific resort city, American David Bender was bored with golf. His new hobby, he decided, would be tackling Mexico's income inequality. He would do it by teaching English to Mexican children.

Mexico didn't ask for his help. And the former Chicago advertising executive knew nothing about running a school. But Bender saw working families hungry for affordable English-language instruction and upward mobility for their children.

Credit a seasoned adman for knowing his market.

In less than 5 years, Colegio Mexico-Americano has become the largest school in Puerto Vallarta. The non-profit's tuition is 70 percent less than that of the city's priciest bilingual academy. Enrollment has grown to 1,135 pupils and students, with dozens on the waiting list.

Friends who thought Bender had gone off the deep end were correct in one respect; the private institution boasts Puerto Vallarta's only Olympic-size swimming pool.

Not bad for a project that began in August 2002 with a few preschoolers learning their ABCs. It is vindication for Bender, 71, a preacher's son who never lost faith when the current campus was a weed-choked vacant lot with no funding and plenty of doubters.

"We saw a tremendous need," Bender said. "We are trying to build a middle class in Mexico."

Some might chafe at the notion of an American who speaks little Spanish presuming to remake Mexican society. But the school's enthusiastic reception here speaks of parents' desire for their children to learn English in a town where most of the good jobs require it.

There are few developing nations with more to gain by teaching its citizens English. About 85 percent of Mexico's exports go to the United States. Americans and Canadians constitute the majority of its international visitors. More than 400,000 Mexicans migrate illegally to the U.S. each year in search of work. The money these expatriates send home -- $23 billion last year -- is a pillar of Mexico's economy.

But while Hispanic nations such as Costa Rica and Chile have seized on English fluency as a key to global competitiveness, Mexico has done little to prepare its youngsters. The state requires just three hours a week of English instruction for three years during Mexico's equivalent of junior high school, often by teachers who don't speak the language well.

"Pencil. Window. Door. It was useless," said Jose de Jesus Alcantar Delgado, a Puerto Vallarta workman recalling his rudimentary lessons. Lack of fluency has kept him from higher-paying employment in the city's air-conditioned resorts.

Experts blame scarce resources, an inflexible teachers union and widespread resentment of U.S. hegemony. But Puerto Vallarta mother Kenia Salazar Torres isn't buying it. English is standard in elite academies where the children of Mexico's wealthy matriculate. Salazar wants the same chance for her three boys.

Her oldest son, Jose Rodolfo, 9, has a partial scholarship to Colegio Mexico-Americano. Salazar earns the rest by rising before dawn to prepare refried beans for local markets. Her husband, Arturo, is a ticket seller at the bus station.

Such stories keep Bender focused on his second career.

Raised in Pittsburgh, the grandson of a German immigrant farmer and son of an evangelical minister, Bender parlayed a magazine writing contest into a college scholarship. He got into advertising, eventually starting his own agency, Chicago-based Bender Browning Dolby & Sanderson. Bender prospered. He and his wife, Gloria, moved into an oceanfront home near Puerto Vallarta in 2000. It was time to slow down, enjoy the good life.

Conversations with the mostly Mexican congregation of his local church, the New Dawn Christian Center, led to the idea of launching a secular, non-profit, bilingual school that working-class families could afford.

Bender spearheaded a fundraising effort, hitting up friends in the U.S. for money to clear a junkyard and build three classrooms on rented land. Colegio Mexico-Americano opened its doors with 35 preschoolers and the goal of adding a grade every year through high school.

Valley company investing in Mexico

The real estate market in Mexico is booming — and it’s about to explode. That’s the message three Valley entrepreneurs are sending to potential investors in Arizona, across the nation and around the world.

“Buying property in Mexico is a wonderful opportunity,” said Tim Kelley, chief operating officer of the IMI Group, a Phoenix-based investment and mortgage company at 2398 E. Camelback Road with offices in Austin, Texas, New York and business links in Germany and throughout Mexico.

“And it’s going to get even better,” Kelley added.

He cited the growing number of baby boomers in the United States who have a combined estimated spending power of more than $2 trillion dollars as the future group of investors.

Recent changes in Mexico’s property-ownership laws make it easier — and more secure — for U.S. investors.

Last year, three major money lenders, or financial groups, were offering loans for properties in Mexico. Today, the number has increased to nine, according to IMI Group.

The firm estimates U.S. citizens own $30 billion in residential real estate in Mexico, and another $5 billion is expected to be developed during the next two years.

Roy Nelson, associate professor of international studies at Thunderbird School of Global Management in Glendale, said Mexico’s economy is growing, helping fuel rapid development of real estate.

However, he believes the overall growth is not as rapid as most international — and Mexican investors — would like it.

“There are a lot of people, including Mexico’s President Felipe Calderón, who would like to see the country’s economy growing a lot faster, but there are political forces that are holding it back somewhat,” said Nelson, who also teaches at several Mexican universities.

Nelson echoes IMI Group’s opinion about real estate expansion, particularly in areas like Monterrey, Mexico, a magnet for foreign companies and growing real estate.

“Monterrey’s real estate prices are skyrocketing,” Nelson said. “A lot of people from the United States and Canada are buying property in Monterrey as well as other areas that attract tourists.”

The IMI Group — International Mortgage & Investment Company — was created two years ago by Kelley, a finance, real estate and construction expert who lived in Mexico for 10 years; Kevin Hardin, chief executive officer and veteran mortgage lender; and Tracy Smith, chief marketing officer and real estate entrepreneur who has been tracing Mexico’s economic expansion since he was a child.

“My family owned a home in Rocky Point, and we regularly vacationed there,” Smith said. Smith, a Valley native, said when IMI Group first started he tried to contact as many potential investors as possible. He and Hardin teamed up, then asked Kelley, who had sold real estate not only in Mexico but also in Chile, Portugal, Spain, Venezuela, Brazil, Colombia and Israel, to join them as well. The IMI Group was born.

The principals of IMI Group so far have sold more than $10 billion in mortgage loans and coordinated more than $200 million in construction projects, mostly commercial and residential, including condos. The company deals primarily with U.S. and Canadian investors buying second homes in Mexico and developers in Mexico.

The solid security of putting dollars in Mexican property was not always the case, however, Kelley said, but times are changing.

“In most of Mexico, Americans — or any other foreigner — can now own land outright with what’s called fee simple title, the same kind we have in the United States,” Kelley explained. He said there is a restricted zone — 31 miles from the ocean and 62 miles from the borders — where foreigners can’t hold fee simple titles.

Titles must be held in a trust that is perpetually renewable in 50-year terms. Kelley said this is virtually identical to a Deed of Trust, similar to what is available in Arizona.

There are also areas in Mexico that are set aside by the Mexican government for homesteaders in communal properties (Ejidos) which, in the past, have created legal disputes between Mexicans and foreign investors. “The fact remains that Mexico and the United States have fundamentally distinct legal systems, different politics, different languages and different customs,” Kelley said.

Mexico Facts

Standards

Road Traffic:right side
Voltage:127V
Frequency:60 Hz
Plug types:A & B,
TV Systems:
System: NTSC M DVD-Region: 4

Geography

Bordering countries:
Belize 250 km
Guatemala 962 kmUS 3,141 km
Location: Middle America, bordering the Caribbean Sea and the Gulf of Mexico, between Belize and the US and bordering the North Pacific Ocean, between Guatemala and the US

Area: total: 1,972,550 sq km
land: 1,923,040 sq km
water: 49,510 sq km
Climate: varies from tropical to desert
Terrain: high, rugged mountains; low coastal plains; high plateaus; desert

Economy

GDP: $1.134 trillion (2006 est.)
GDP growth rate: 4.5% (2006 est.)
GDP per capita: $10,600 (2006 est.)
Inflation rate: 3.4% (2006 est.)
Currency: Mexican peso (MXN)
Exchange rates: Mexican pesos per US dollar - 11.024 (2006), 10.898 (2005), 11.286 (2004), 10.789 (2003), 9.656 (2002)

People

Population: 107,449,525 (July 2006 est.)
Growth rate: 1.16% (2006 est.)
Religions: nominally Roman Catholic 89%, Protestant 6%, other 5%
Languages: Spanish, various Mayan, Nahuatl, and other regional indigenous languages

Government

Capital: name: Mexico (Distrito Federal)
time difference: UTC-6 (1 hour behind Washington, DC during Standard Time)
daylight saving time: +1hr, begins first Sunday in April; ends last Sunday in October note: Mexico is divided into four time zones
Independence: 16 September 1810 (from Spain)

A Mystery: Chacala, Mexico, is a combination of locals and foreign residents acting in concert to benefit town

By Christopher Reynolds
LOS ANGELES TIMES

CHACALA, Mexico - Sure, there’s a great beach here, fresh fish, tall palms and only about 400 locals to share them with. But let’s start with the treachery and deception.

“You wouldn’t believe the snakes. Snakes as big as your head,” said Ben Laird, a Wisconsonite who bought a vacation home here last year.

“People are poisoned in Chacala every day,” deadpans Richard Laskin of Hornby Island, British Columbia, who has been coming here for 10 years.

“Are you sure that was a whale?” asked Laskin’s friend Stu Reid, gazing offshore. “Could have been drums of toxic material.”

Then - having done their best to deter the reading public from invading their winter haven - these good-natured liars go back to their tropical idylls. Laskin and Reid tuck into their breakfast at the Mauna Kea Cafe, one of about 10 restaurants in Chacala, as they gaze down upon a canopy of green, a deep blue sea, and a few dozen pelicans swoop-commuting. .

The truth about Chacala is indeed intriguing, especially for a traveler who wants to meet Mexicans while vacationing in Mexico, who likes his coconuts straight from the tree, who doesn’t need the bright lights of Los Cabos or Cancun.

Chacala, a village 60 miles north of Puerto Vallarta on Mexico’s Pacific Coast, is built around the beach, a handsome half-mile crescent of jungle-adjacent sand. At the southern end of the beach, gentle surf murmurs over black volcanic rocks. In the middle of the crescent, a half-dozen palm-shaded restaurants serve fresh fish and shrimp (and keep a machete on hand for those new-fallen coconuts). To the north, two dozen battered fishing boats are tied to a modest dock.

In town, several lodgings have popped up in the past few years, most offering ocean views, modest amenities and nightly rates from $50 to $90. A little farther north, more than 25 luxury vacation homes, some of which rent by the night, have gone up in a gated compound called Marina Chacala.

What sets Chacala apart from so many other modest but growing Mexican beach destinations is this: Thanks to the arrival of three hippie siblings at the end of the 1970s, the town is awash in social experiments, many of them built around the idea that locals and tourists need to meet and learn from one another.

Under one 11-year-old program, called Techos de Mexico (Roofs of Mexico), six villagers have added upstairs rooms and terraces, most with ocean views, none more than a five-minute stroll from the beach. When not snapped up for the season by wintering Canadians, most of these rooms rent for $22.50 to $60 a night.

Other tourists can volunteer on community projects, attend yoga or meditation seminars or learn Spanish as guests at a 24-year-old beachfront retreat called Mar de Jade (pronounced Hah-day), which in winter is usually priced at $120 to $135 per person per night, double occupancy, meals included.

Still other visitors and expatriates have bankrolled a community library, paid for improvements at the elementary school, and developed a scholarship program that underwrites the transportation, books, uniforms and other education costs of more than 25 local youths.
(The public schools in Chacala stop at secondary school.)

But you don’t have to volunteer. Instead, you can spend $50 a night on a hotel room with an ocean view and lie around. Or spend $625 a night on a mansion that sleeps 10 and lie around in splendor.

You can take a $10-a-person boat trip to snorkel by the rocks off Chacalilla beach. You can fish for dorado or sierra or surf at La Caleta Point. You can kayak between rock formations and secluded beaches, go birding in a mangrove swamp to the north or drive half an hour east to the petroglyphs at Alta Vista. You can ride a horse through the jungle to a secluded beach or drive about two hours into the hills and see Lake Santa Maria, its waters collected in the caldera of an ancient volcano. Or you can stroll back and forth on that grand crescent of sand.

“Some nights, the sunsets just tear your heart out,” said Andee Carlsson, who moved here permanently three years ago from Washington state. Carlsson, who rents a room in one of the Techos houses, said she came because it was affordable and the gardening was year-round. She stays because “the people here make me feel good,” she said. “People just help you out, and you get to help people out.”

Until the first paved road connected the village to Highway 200 seven years ago, the only way into Chacala was by dirt road or boat. Now business is picking up and the occasional RV, rental car and taxi has joined the local traffic, including the cab that delivered me to my lodgings at dusk one day.

It had been a three-hour flight from Los Angeles to Puerto Vallarta, then a 90-minute ride, and my first thought, rolling into town, was, “Uh oh.” Two blocks of dirt roads, sleeping dogs and ramshackle storefronts. That was the commercial district.

Ahhh, but then I stepped out to the beach. It was nearly empty, a slight breeze blowing. The tall palms, the quiet, the loop of the beach between the rocky points at either end - this was a landscape to banish worry. In the restaurants along the sand, a small band of Canadian snowbirds lingered over seafood and cervezas. A little way up the beach, 20 RVs were parked in the palm grove next to the beach, their owners paying $5 a night for the privilege.

I know, I know. In your daydreams of tropical paradise, there are no RVs, except perhaps your own. But Chacala is fetching and comfortable, not fancy and immaculate.

“It’s still real Mexico down there,” said Laird, he of the imaginary snakes, gazing out at the town one afternoon from his home in Marina Chacala. “Chickens at your feet. And everybody knows everybody.”

Yet it’s growing by the day, and there’s all this experimentation. By many measures, Chacala’s modern history began 27 years ago, when Laura, Om and Jose Enrique del Valle arrived from Mexico City in pursuit of an implausible dream: On a patch of land at the southern end of the beach, they would build a retreat for foreigners that would increase cultural understanding and support a medical clinic.

Operating out of an old school bus, they put up eight rooms with shared bathrooms, light provided by candles and lamps, refrigeration by ice blocks. They called it Mar de Jade.

The partnership didn’t last. But the business has. These days, Mar de Jade could pass for a rich man’s vacation compound. Surrounded by gardens, it has 30 rooms, a spa, a couple of big meeting rooms, a shaded patio that seats 50 or so, a palm-shaded pool, a prime spot on the beach - and a medical clinic in nearby Las Varas that often draws volunteers from the numbers of medical professionals and students staying at Mar de Jade. Laura del Valle, a 56-year-old physician raised in Chicago and Mexico City, owns Mar de Jade and runs it with her 21-year-old daughter, Angelica.

These days, they house mostly med students and other volunteers in summer and mostly vacationing couples, families and groups in winter.

Laura’s half brother, Jose Enrique, has carved out his own niche on 21/2 acres next to Mar de Jade.

Drawing on his background as a builder, civil engineer and former tour guide, he and his wife, Carmen, built and opened Majahua, a four-room boutique hotel, spa and restaurant on a jungle slope, in 1996. Pronounced “Mah-hawa” and named for a jungle tree, it’s the only lodging in town where you’re likely to hear American jazz on the stereo, order a Mediterranean salad or wash your hands in one of those stone-bowl sinks you see in design magazines.

But it remains a jungle enterprise: Indoors or out, you may spy a spider or two. You spend a fair amount of time navigating the paths that connect the guest rooms to the dining area, the dining area to the beach, and the parking lot to everything else.

To many in town, Jose Enrique del Valle is best known as the coordinator of Techos de Mexico. Started in 1996, inspired by the work of Habitat for Humanity and largely bankrolled by donations from the north, it’s a construction-loan program to connect villagers with tourists and their dollars.

So far, the program has built four houses and expanded three others, spending $4,000 to $9,800 on each project, splitting revenues between landlords and the loan fund. Three landlords have already paid off their loans, including Concha Velazquez, who told me in Spanish that her family had been dependent on her husband’s uncertain income as a fish merchant. They opened Casa Concha in 2001, paid off their loan three years later, and now have three rental rooms.
The only real downside, said Jose Enrique del Valle, now 50, is that “it’s a lot of work. I’m exhausted.”

As the renovated schools and the library near the middle of town demonstrate, more activists have arrived in the Del Valles’ wake. One is Susana Escobido, who runs the Mauna Kea Cafe with her husband, Poncie, rents out a few rooms by the month, sells homes in the Marina Chacala development, and is co-founder of Cambiando Vidas (Changing Lives; www.chacala.org), which spends about $40,000 yearly (much of it raised among U.S. Rotarians) to help local schools, underwrite a learning center and fund scholarships. Twenty-seven local youths are studying on scholarships right now, from eighth-graders to college students.

“The Nayarit coast is just exploding, whether we’re ready for it or not,” Escobido said. “We want to make Chacala a community of entrepreneurs.”

So, plenty of eyes are watching the state-owned RV park at the edge of the beach - where a would-be buyer has proposed condos - and Marina Chacala, where unbuilt lots are priced at $200,000 and up. Developers there already have made enemies by blocking locals’ access to a beach that had been public.

Still, Escobido contends that some of those home buyers could be the village’s next philanthropists. “They don’t know it yet,” she said, “but they’re all going to be participating.”

Why Buy In Mexico

Property values in México, like in the US, tend to increase year-over-year. As the demand for ocean front property in the US has outstripped supply, it has become an unobtainable commodity for the average person to afford. However, in México, there are numerous locations where one can still afford the ocean front home, condo or lot as prices started at a much lower point.

The increases over the last couple of years have, for the most part, eliminated what we would call cheap, but on a relative basis, you can still find a 4 to 10 times differential in prices when compared to the United States.

Additionally, Bancomex, the Mexican import export bank, asked me for a comparison of a 10 acre parcel in La Jolla, CA. My response was that there was none, but the type of property still exists in México. As with all property, the relative value and appeal of property in México comes down to the three key factors: location, amenities, and accessibility to the United States.

In addition to México's lower land costs, construction costs are lower, maintenance is cheaper, and ownership costs (taxes, utilities) are very low. A person can live like royalty on the saving from property taxes alone. For example, in most areas of México, property taxes are about 0.1%, so for a $1,000,000 home, a person would pay about $1,000 per year.

In Florida, property taxes are about 2.5% or $25,000 for the same million dollar home. So with the $24,000 or $2,000 per month differential, one could have a live in maid, pay the utilities, have the maid buy groceries, and have some mad money left over.

Purchasing property in any location requires an extensive amount of research, planning and preparation - México is no exception. A person should understand the laws, do significant diligence and work with true professionals who can guide you to a successful, safe property ownership in México.

Banyan Tree Invests in Chamela, 2 Hours South of Puerto Vallarta

Banyan Tree to Joint Venture to Build a World Class Resort in Chamela with Golf

Banyan Tree Holdings is investing with a Mexican partner to develop approximately 500 acres in Chamela, approximately 2 hours south of Puerto Vallarta. The integrated resort will offer guests spectacular views of the protected islands around Chamela and will feature a world-class golf course and a high-end mix of Banyan Tree branded residences for sale.

I've been to the exact location and looked at it from a development perspective. It is a truly special location. The only draw back is it accessibility to the world; however, I guess after a few spa treatments, you will not care about the journey, only the destination. Banyan Tree has partnered with the Mexico Owner and has taken minority interest of 19.9% in the development and has an option to increase its investment to 30% of the development within a year and a half.
Banyan Tree is investing $200 million USD in Mexico to develop 4 projects. Besides the Chamela project, Banyan Tree also is developing Banyan Tree Los Cabos, Banyan Tree Punta Diamante in Acapulco and Banyan Tree Mayakoba in Rivera Maya. It is a leading developer, designer and operator of luxury resorts, hotels and spas worldwide.

Capital Gains

We have heard different interpretations of the Mexican capital gains
tax and what we must do to avoid it, what is yours?

We have FM3s (working, not just retiring) and have had them and lived here for 11
years not owning any other house. Our rental business is a sole
proprietorship that pays all pertinent local, state and federal payroll
taxes, income taxes, etc. I have a permit from the city and a tax ID number.

Would the closing (the $ transfer) be in the US?

Here is something a local colleague, Wayne Franklin, wrote up to illustrate the UDI formula:

I'm going to show you two different sales.

Both have the same sales price for today, but different purchase prices:
one at $5,000,000 pesos (or approximately $455,000 USD)
and another at $7,000,000 pesos (or approximately $635,000 USD).

The calculations are for foreigners, as for Mexicans, they can be different
based on the Mexican's tax base rate.

The calculations assume an 8% brokerage fee.

Note that the Adjusted Purchase Price does NOT include any fiscal adjustment
that would also be applied since the purchase of the property, which would
effectively reduce the taxes to be paid. As to the real estate commission,
IVA is not factored in for this calculation.

$5,000,000 Peso Original Purchase Price:

Current Sales Price $9,000,000 March 2007

UDI Deduction ($5,737,809) (1.5M UDIs x 3.825206)

Amount Exceeding Deduction $3,262,191 (36.25% of sales price)

Adjusted Purchase Price ($1,812,500) ( 36.25% x $5,000,000)

Adjusted Real Estate Commission ($ 261,000) (36.25% x $720,000)

Total Gain $1,188,691

Capital Gains Tax Due $ 332,833 (28% x $1,188,691)

---------------------------------------------------------------------------
$7,000,000 Peso Original Purchase Price:

Current Sales Price $9,000,000 March 2007

UDI Deduction ($5,737,809) (1.5M UDIs x 3.825206)

Amount Exceeding Deduction $3,262,191 (36.25% of sales price)

Adjusted Purchase Price ($2,537,500) ( 36.25% x $7,000,000)

Adjusted Real Estate Commission ($ 261,000) (36.25% x $720,000)

Total Gain $ 463,691

Capital Gains Tax Due $ 129,833 (28% x $463,691)


In the first scenario, your REAL profit is approximately $3.3 million pesos
($9M, minus $5M, minus brokerage fees). That means that your REAL tax rate
is just over 10%! ($332,833 divided by $3,280,000) – remember, that's all
pesos.

If EVERYBODY had a 10% flat tax, I think we'd all be pretty happy about it.
In the second scenario, it's the same – just over 10%. While there are still
criteria to meet for this, you don't have to meet the most difficult
criteria item, which is to reside in the home for 5 years; only 6 or more
months.

All things considered, this is not such a bad deal.

As you can see, despite the fact that some think that the 1.5M UDIs is an
«exemption» to that amount and then you pay taxes on all the value that
exceeds that, this is not the case. So despite the fact that you may have
purchased a property exceeding the UDI exemption, the current law does have
benefits for you too.

These figures are based on the law as of today and can change at any time.
In addition, you MUST confirm all calculations in your particular situation
with the Notario Publico in your transaction as each case is different and
there may be idiosyncrasies of your deal that may affect your particular
situation. As you can see from these examples, owning property in Mexico is
still a very good investment.


Based on what I know, you have had title for 11 years and are very much in the clear.
As for a straight answer to the issue, I'm no lawyer, but as I understand it, like anywhere, capital gains tax codes are continually modified to fit the times and the big change this year is in the "no exemptions" code.

Last year you had to own the property as your primary residence for 6 months to avoid the tax. This year, they changed it to 5 years residency.

It is cooling speculation and the notarios have less latitude and are getting more organized/standardized.

------------------------------------------------------------------------

Starting January 2007 there are three levels of exemption:
Total exemption, Partial exemption and No exemption.


Total exemption
------------------------------------------------------
Proof of five year residency: FM2-3, business accounting/hacienda documentation, utility bills


No Exemption:
------------------------------------------------------
25% of the gross sales price or 28% of the net gain
Deductions:
brokerage fees
capital improvements



Partial Exemption
------------------------------------------------------
Proof of six month residency: FM2-3, business accounting/hacienda documentation, utility bills
The partial exemption is calculated using the Unidad De Inversion (UDI)
http://coinmill.com/MXV_calculator.html

Unidad de Inversion (UDI). Loans denominated in UDIs maintain their purchasing power and provide a real rate of return in pesos.

In 1995, during the devaluation, Mexico introduced a price-level-adjusting unit of account called the Unidad de Inversion (UDI), an index unit of funds.

It can be traded in many currency markets because its value changes with respect to currencies. Unlike currencies, it is designed to retain its purchasing power and not be subject to inflation.

The Mexican credit system (especially mortgages) uses the UDI rather than the peso because of its stability.

The UDI fluctuates daily and is currently at +/- 3 UDIs to the peso.

The new tax law describes a partial exemption of up to 1.5 million UDIs and can be calculated using a rather complicated formula that has variable worth gong over personally with a lawyer.

You will need a lawyer to get the most accurate assessment.

That it is difficult to get a straight answer is bad for everyone.

I think we both know you are perfectly exempt, but would like it in stone before making the big decisions.

The lawyers and Notarios we use can help with that.

but you should keep asking the questions Here is a link with good info

http://www.virtualvallarta.com/puertovallarta/realestate/re-articles/useful-information-for-th.shtml

and here are well reputed lawyers you can talk to


David Connell
CONNELL & ASSOCIATES
Hermenegildo Galeana #18
Col. Centro, Zihuatanejo, Gro.
C.P.: 40880 M e x i c o
Phone: 011 52 (755) 555 0400 or 554 1370
Fax: 011 52 (755) 554 2035
http://www2.blogger.com/www.mexicolaw.com.mx
dconnell@mexicolaw.com.mx


María Elizabeth O'Connor
Robles, Lazo y Gallardo, S.C.
Carretera a Mismaloya No. 479, Int.107
Edificio Scala
Puerto Vallarta, Jalisco 48380
Tel. 011-52-322-223-3218
Fax 011-52-322-223-2790
moc@rlg.com.mx
http://www2.blogger.com/www.rlg.com.mx


Javier de La Pena
Marina Las Palmas 2 Local 25
Acceso por Calle de Ancla.
Marina Vallarta, C.P. 48334.
Puerto Vallarta, Jalisco, Mexico.
Tel: 322 2091549
Fax: 322 2090544
Cel: 322 2275815
javierdelapena@yahoo.com

Other interesting reading:
http://www.pwc.com/extweb/service.nsf/docid/6A6886056BC7C8A6802570B3005D6FCF

Gringolandia — The U.S. Migrant Boom Hits Mexico

April 2, 2007

By Kent Paterson

Elizabeth Rogers and Alex Kelly embarked on the trip of their lives. Selling their Chicago condominium, the couple flew to Puerto Vallarta, Mexico, this past winter for a needed break from the old work routine. Based in beautiful but expensive Banderas Bay, the young travelers visited beaches, endured roving street vendors and explored the wonders of the tropical Pacific coast, a place where the waters hop with migratory humpback whales, dolphins and sea turtles. Rogers was struck by the gay-friendly atmosphere. "A lot of rainbow-colored flags and that kind of thing, which is nice," said the young woman. "That's accepted down here, I think."

Lodged in a Puerto Vallarta condo, the Rogers-Kelly team quickly stumbled across the pricey real estate market that defines Puerto Vallarta and surrounding areas. Timeshare vendors hustled the couple, and ads for expensive properties leaped into their eyes from the pages of slick magazines and newspapers. "There is undeveloped land, developed land, high rise condos, gated communities," Kelly observed.

Finding Puerto Vallarta a pleasant stay, the midwestern couple nevertheless departed for the next leg of their world journey. Other US visitors, however, are purchasing homes and remaining in Puerto Vallarta for the long haul.

Mark Anthony Venegas should know. A native of Carlsbad, New Mexico, Venegas lived in San Francisco before moving to Mexico in 2003. Now heading a "full-service" real estate company in Puerto Vallarta, Venegas brokers properties, helps potential customers get financing and arranges for new homes to be built on empty lots. One division of Venegas' business caters to gay homebuyers.

Seated in the air-conditioned comfort of his office in Puerto Vallarta's Olas Alas neighborhood, Venegas pointed to the push of the "rat race" and the pull of community, typified by a traditional family-centered culture, as attractions that convince gringos to move south. And as in his case, the prevailing state of politics north of the Rio Grande is a growing part of the picture, Venegas said.

"I love the US. It's the greatest country in the world. However, it's going through some difficult times right now with the Bush administration and the war and everything else,” he said. “And so yes, I do believe there are a lot of expatriates that are down here dissatisfied with what's happening in the US."

Ken Grover, a longtime US-born resident of Puerto Vallarta who works in the marketing business, observed that an earlier gringo migrant wave tended to be polarized between affluent migrants and poor ones. "There were two extremes," Grover said. Nowadays, a lot of the newer migrants are better-off baby boomers who are still forced to stretch their dollars, according to Grover. Still, a respectable number of the new Mexican residents must work for a living — just like their darker-skinned neighbors. For some, trying to survive on pesos is a bitter jolt of reality.

Almost entirely ignored by a press more interested in undocumented Mexicans in the United States is the phenomenon of US-born workers who labor away in the service and professional sectors without the proper papers. A company that runs a Puerto Vallarta call center promises Canadians and Americans "help in attaining the proper work documentation necessary."

The New Migrant Wave

A recent, path-breaking article published in Dissent magazine described a group that doesn't learn the new language, displays its native flag, maintains its traditional customs, and even celebrates its old holidays in the new country. "Some live and work without proper documentation and have even been involved in the illegal transport of drugs across borders," stated the piece. Sound familiar?

Written by Sheila Croucher, a professor of political science at Ohio's Miami University who is studying US migration to Mexico, the article delved into the complex aspects of the new Gringolandia south of the border. Professor Croucher found that many of the same issues that surround the Mexican immigrant community in the US ring true with the US immigrant community in Mexico as well. As Croucher summarized it in an interview with Frontera Norte Sur, "The precise things that politicians and pundits are railing against in the US."

Nobody knows for sure how many people of US origin reside in Puerto Vallarta and other regions of Mexico, but Croucher said that one US State Department estimate made several years ago pegged the number at about 600,000 souls. Since 9-11, the US government has become reticent about disclosing information concerning US citizens living abroad, Croucher added.

In addition to the older haunts of San Miguel de Allende and Lake Chapala in central Mexico, newer gringo "clusters" are emerging along the Baja California peninsula, at Rocky Point (Puerto Peñasco) in Sonora, around Banderas Bay in Jalisco and Nayarit, in Zihuatanejo-Ixtapa and Troncones in Guerrero, and along the Mayan Riviera on the Caribbean Coast.

Mirroring Mexican immigrant communities north of the border, US migrant communities in Mexico boast their own social and civic organizations, participate in the political life of the old country and enjoy access to native-language newspapers, radio programs and cablevision.

The 2004 US presidential campaign signaled the new importance of the US migrant population in Mexico. Speaking by telephone from Mexico City, Croucher recounted how the Democratic Party dispatched former Clinton Administration official Ana Maria Salazar to round up the expatriate vote, while the Republican Party sent President Bush's nephew, George P. Bush, to rally his party’s faithful. In the town of San Miguel de Allende alone, the Democrats raised US$10,000 for Kerry's bid, Croucher added.

"After 2000 it became clear to people how close the elections could be and the importance of the vote abroad," Croucher affirmed.

A good percentage of the US migrants complain about the drift of politics as well as the propensity for over regulation back in the states. A young woman from the United States, who preferred to identify herself only as Denise, has tasted the world from Pakistan to Puerto Vallarta. The world traveler contended that the strict security measures on US borders symbolize the end of liberty as we once knew it, and represent a closing window on the rest of the global community.

"It's a freedom thing, nobody likes to be controlled," she said. "In the states, it's black and white. Here there is a gray area. If you get stopped in the states, you always get a ticket."

For Croucher, economics, specifically health care costs, are far more influential in driving US citizens to Mexico than either George W. Bush or the local street cop. Many Mexican dental clinics and doctor's offices in the border region and points south thrive on a growing US clientele. Fees are reasonable, prescription medicines are affordable, appointments are given in minutes or hours instead of weeks or months, and the quality of service is good, “Americans I talk to have nothing but positive things to say about health care in Mexico." Croucher said.

Considering that the looming mass retirement of the baby boomers coincides with the growing meltdown of the US health care system, Croucher noted a certain irony in the snappy remarks of commentators who accuse Mexico of exporting its problems to the US. "We're exporting our problems abroad," Croucher contended.

Canadians are also moving to Mexico, but many are more apt to complain about Washington than Ottawa.

Mexico For Sale

"The entire country of Mexico is booming with Americans investing," realtor Venegas concluded. He was quick to add that foreigners interested in buying property in Mexico have it easier than anytime in the past. Even though the nation's Constitution prohibits foreign land ownership near coasts or borders, foreign buyers can now obtain renewable, 50-year trust deeds that grant all the rights of buying and selling. Mexican banks, most of which are now owned by foreigners, administer the properties for annual fees that average about US$500 for individual homes.

Low property taxes coupled with the availability of Mexican home mortgages in the United States are two incentives for foreign buyers. In contrast to the United States, however, prospective homeowners must plop down a bigger cash down payment — something in the neighborhood of 20 percent. With prices for condos and homes quoted in five or six figures, buying a property in Puerto Vallarta and many other markets is not for the budget-minded.

A local trade publication, the Vallarta Real Estate Guide, recently estimated that real estate sales in the Puerto Vallarta-Banderas Bay region jumped from US$400 million in 2004 to US$550 million in 2005. "Gold Rush Days are Here Again," ballyhooed the publication. Familiar US real estate companies including Century 21, Prudential and Coldwell Banker have representatives throughout the country, and friendly, English-speaking salesmen and women regularly emerge from their strategically placed offices in front of the tourist pedestrian traffic.

Locals report that some Mexican landowners and homeowners are cashing in on the real estate market, selling off their properties in trendy places like Puerto Vallarta's old downtown, or "Gringo Gulch," as it is called. Locally home prices are beyond reach for the average Mexican citizen, according to Marina Perez, a Puerto Vallarta environmentalist and longtime resident. Consequently, many Mexicans fall into the old Third World practice of purchasing cheap land or squatting on empty lots located on urban outskirts.

"Puerto Vallarta has always been expensive, but with all this going on home prices are going through the roof. The average citizen can't obtain a decent house, unless it is through low-income government programs," Perez said. "So what happens to the people who come without money and don't have access to the government housing programs? They go up on the mountain and get a lot. It doesn't matter to them whether or not they have electricity, water or sewage."

The lure of the shantytown is not surprising. After all, wages in the service-oriented tourist industry are low. A young Wal-Mart worker, who holds what is regarded as one of the "better" jobs in Puerto Vallarta, reluctantly disclosed earning a few hundred dollars a month — a pitiful income in a city whose prices mimic those in the United States. Wal-Mart workers are instructed by the company not to reveal their salaries to strangers or reporters, she added. In San Miguel de Allende, Croucher found a similar economic dynamic. "Mexicans will say yes, there are more jobs in the service industry, but we shop in the same stores and pay the same prices."

In the broader picture, a combination of high real estate prices but low property taxes could be depriving municipalities like Puerto Vallarta and San Miguel de Allende of much-needed sources of extra revenue. Many foreign owners reside in their properties only part of the year and attempt to rent them out to other foreigners at other times, frequently demanding dollars that are then deposited in US banks. In a reversal of J. Ross Perot's NAFTA-induced "giant-sucking sound," it's a cash flow that trickles out of the local Mexican economy in ever-greater amounts.

In the Long Term

Of course, it's way early to assess all the cultural, economic, social and even political impacts of the gringo population boom in Mexico. In places like Puerto Vallarta, the trappings of culture, music, language, cuisine, social behavior, and even spatial ambience are undergoing visible and audible transformations. In nightclubs, the music of Shakira easily mixes with the blues of Eric Clapton. On the streets, English words increasingly infiltrate signs and scream from billboards. Franchises of Hooter's, Wal-Mart, Burger King, McDonald's, and Dominos continue to sprout up everywhere.

Like Mexican immigrants who find familiar product brands and culturally-popular businesses like hairstyling salons in the barrios of El Norte, US immigrants in Nueva Gringolandia have ready access to services from home, whether through the Internet or on the ground. The ageless, rowdy boomers who tear down the roof every night at the tequila-soaked Andale! bar in Puerto Vallarta, can then soothe their hangover seared aching muscles with a California-style massage the next day.

Stirring deeper, morsels of low culture and high culture swirl in the expanding stew. Reminiscent of upscale Southern California or Bay Area eateries, Alaskan crab legs, fusion cuisine and Asian flavors are now regular menu items. A hip new restaurant in Puerto Vallarta offers spicy duck quesadillas concocted with Oaxaca cheese, mushrooms and chile-Hoisin sauce.

A tense, uncertain cosmopolitanism is emerging on Mexico's West Coast. English, Spanish and Canadian French are frequently heard in the same social venue, while Mexican indigenous languages spoken by street vendors trying to hawk handicrafts or gum to the better-off foreigners are heard off to the side. Before too long, expect Chinese to be part of the regular linguistic fare. Unlike the hot button issue of Mexican flags in the US, displays of US, Canadian and Mexican flags wave together without raising major hackles in places like Zihuatanejo or Puerto Vallarta.

On the artistic and literary fronts, the newcomers are making their mark too. Puerto Vallarta's spacious public library, which offers free Internet access, was built with the financial assistance of foreigners. English-language books are available for borrowers to take home. While it might be said that Mexico is suffering a "technical brain drain" because of the migration of many professional Mexicans to the United States, it might be stated too that the US is now beginning to suffer an "artistic brain drain" due to the flight of creative individuals. "I think there are a lot of wonderful writers, artists, intellectuals that are coming down," Puerto Vallarta long-timer Ken Grover celebrated.

Some lament what they regard as the contamination of Mexican culture by rampant consumerism imported from the United States. Credit cards are back in fashion in Mexico, and status symbols prevail. According to world "citizen" Denise, a money game goes on between Mexican nationals and migrants. "You get a lot of Americans here who think they can overrun Mexicans with money," she added, "but Mexicans aren't stupid. They'll charge them double for everything."

In comparison to the immigration debate-polarized US, Miami University's Sheila Croucher hasn't detected a nationalistic resentment in Mexico boiling up against the gringo migrants — at least until now. According to Croucher, natives of San Miguel de Allende maintain that the gringo presence allows the town to economically survive. Intriguingly, Croucher has heard more put-downs against the newer arrivals voiced by longer-established gringos. "The idea," she mused, "that these newcomers are messing up 'our' authentic Mexican towns."

Amended laws let foreigners buy on beach

By Tom Carter
THE WASHINGTON TIMES
April 1, 2007

The Mexican Constitution forbids foreign nationals from owning land within 31 miles of the coast.

However, in 1994, the government amended the constitution and created legal mechanisms allowing foreigners to safely invest in beach property.

"There are big incentives for foreigners to invest in residential property," said Alvaro Palma, general manager of Stewart Title Guaranty of Mexico. "You need patience. You need to understand you are dealing with a different legal system, but it is safe and simple and workable."

In short, land close to the border or near the coast is in the "restricted zone" and can be "owned" only by foreigners through a 50-year renewable bank trust called a "fideicomiso," or by purchasing communally owned "ejido" land with the help of a Mexican national known as a "presta nombre."

When buying property through a Mexican bank trust, the bank holds the title to the land for the buyer, who in effect has full ownership. The buyer has full use of the property, can sell or improve it, give it away or convey the property. The trust is renewable every 50 years.

"You have the same rights that you would have under fee-simple land. You can mortgage it, give it to family members, everything you can do with fee simple. It is a renewable 50-year trust, and it is absolutely safe," said Tom Kelly, a former real estate editor for the Seattle Times and author of "Cashing in on a Second Home in Mexico." Most real estate in the United States is fee simple, meaning the owner is the absolute owner.

Putting his money where his advice is, Mr. Kelly recently bought an ocean-view plot in the Cascadas de Manzanillo development. First American Title of Sunrise, Fla., provided the master title.

Depending on who you ask, buying "ejido" land is considerably riskier, but more Americans are taking that risk.

Ejido land is land that is communally owned in poorer Mexican agricultural and fishing communities. The ejido committee can give title to individual Mexicans, who may or may not by permitted to sell it. With proper documentation, ejido land can be sold to foreigners. This is done through a "presta nombre," which means "borrowed name." It uses a Mexican national, who acts as the name on the title, but retains no rights.

In 2000, some 250 U.S. "land owners" were evicted from property with a questionable title in Punta Banda, Baja. They lost the homes they had built and their investment. The development was not on ejido land, but illustrates that navigating Mexico's property and legal system can be treacherous.

Internet Web sites on "what can go wrong" when purchasing Mexican real estate are full of warnings that when using a presta nombre, U.S. buyers are purchasing with no guarantees that their investments are protected.

That said, hundreds of foreigners do buy ejido land. Given time, money and the proper documentation, ejido can be "regularized," or turned into fee-simple land with a clear title. When that happens, it must be held in a bank trust.

"I bought ejido land. I suppose it is possible that there could be trouble in the future," said Gordon Preston in Chacala. "I am very comfortable with my presta nombre. I expect it will be regularized soon."

Garcia Realty in Sayulita said that over the years it had sold more than 200 prime ejido plots and houses to foreigners using the Garcia family members as presta nombre. The presta nombre has no legal rights to the land, but Garcia Realty receives a real estate agent's commission on each property sold.

"Our business is not just a job. Our home is here, and future generations of the Garcia family will inherit our reputation," according the Garcia Web site, noting the family has been in Sayulita for more than 80 years. "Customer relationships, based on mutual trust and confidence, will remain our top priority."

"When I bought, I was totally ignorant, and I could have really been ripped off," Harvey Craig said of Garcia Realty. "I was lucky. It is important to go through a reputable and trustworthy Realtor."

Lectures shed light on exotic trips

Nancy Lanthier, Vancouver Sun
Published: Saturday, March 31, 2007

Two local lectures in April will shed light on travel opportunities -- one to explore the little-known Southeast Asian country Myanmar (formerly Burma), the other to experience a spiritual ceremony in Mexico.

CanWest contributor Andrew Renton describes Myanmar in a press release as "a magical yet contentious country." The well-known writer -- who takes impressive photographs and shares a good yarn -- offers tips on experiencing the best of this exotic place (bordered by China, Laos, Thailand and India). The talk will take place April 4 at 7 p.m., at Vancouver Public Library (350 West Georgia); tickets are $12; for more information, call 604-732-0054.

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A talk on participating in the Mexican "Ceremony of Fire" -- said to be a life-changing experience -- is presented by Wirrarika Conexion, April 18 at 6 p.m. and April 21 at 4:30 and 6:30 p.m. at the Vancouver Public Library (350 Georgia St.).

Operated by Juan Carlos Quintero and his partner, Wirrarika says in a press release that it guides travellers deep into an indigenous culture to experience a spiritual journey guided by a shaman.

"This is somewhat exclusive," writes Quintero in a recent e-mail, "since these ceremonies are not easily accessible."

For those interested in "expanding their spiritual knowledge," the journey takes place May 24 to 26, in Chacala, Nayarit, a small fishing/tourist village set on a beach near Puerto Vallarta.

nlanthier@png.canwest.com