San José, Costa Rica, since 1956

Coastal Development Rampant

Up and down Costa Rica’s Pacific coast, environmentalists, researchers, municipal leaders and other government officials are reeling under the staggering gold rush of real estate development that is rapidly changing once-pristine landscapes.

A recent study by the Federated Association of Engineers and Architects has confirmed what some have long suspected: roughly one in every four developments in the booming northwestern province of Guanacaste is illegal.

The survey, released early this month, looked at a random sample of 217 hotels, condominiums and private residential developments under construction, and found that 45 lacked even the most basic government permits.

The figures have only solidified the feeling that Costa Rica’s Pacific coast development is spiraling out of control.

“There is so much money behind this, that some companies prefer to risk getting a fine and paying it, and they’ve already got lawyers ready to resolve the legal process. Like the saying goes, it’s better to ask forgiveness than permission,” said Mayor Jorge Alberto Cole, who oversees the southern Pacific canton of Osa.

A surge of construction in that region – much of it illegal – has the understaffed Municipality of Osa and state environmental agencies struggling to control development there (see separate story).

In Guanacaste and more recently on the central Pacific coast, a dispute over beachfront concessions has spotlighted loopholes that allow foreign developers access to land never slated for development (see separate story).

The problem of poorly planned development and haphazard growth is one that Olman Vargas, executive director of the Association of Engineers and Architects, believes is serious enough to warrant immediate action.

Exactly what should be done, though, remains in question.

“It’s a very, very complicated issue,” Vargas told The Tico Times, the day after returning from a meeting with Guanacaste mayors to discuss the issue. “Many of them don’t even know what’s happening in their own towns.”

While less-developed municipalities such as Osa complain of a lack of resources, he said, in Guanacaste that’s rarely the issue – there’s plenty of money arriving in municipal coffers thanks to property taxes and construction permit fees that are booming alongside development. According to another recent study, the 10 fastest growing cantons in the country, including Guanacaste’s own Carrillo, Liberia and Santa Cruz, made a combined $6 million off the country’s 1% construction tax.

“They have the money to hire new inspectors, or engineers, but they don’t have the processes in place to do so,” Vargas said.

“They are lacking even the most basic government infrastructure.”

He said that the chronic lack of structure, and formal municipal processes in towns that not long ago were blank spots on a map, has led to growing anxiety among developers –many of whom refuse to wait months, or years, for a project to be approved.

Their impatience, in turn, has led to a widespread increase in illegal construction, and to the rampant reports of alleged corruption and irregular activities among developers that have made headlines almost daily in Costa Rica’s Spanish-language press during the past month.

Developers at Odds

One such developer, Carlos Arroyo, general manager of the Mapache Group, was fingered recently in the daily La Nación for his involvement in illegal developments around the booming beach community of Playas del Coco.

Some of Mapache’s projects have proceeded without appropriate permits from the municipality – which has the final say on all development projects – and the National Technical Secretariat of the Environment Ministry (SETENA), which must approve environmental-impact studies for all proposed development projects greater than 300 square meters.

In an interview with The Tico Times, Arroyo acknowledged he’d begun construction on some of his condo projects despite not having the necessary permits, but insists it isn’t for lack of trying.

“We have submitted environmentalimpact reports for every one of these projects with SETENA. It’s a process that should take three months, and instead, it’s taken a year and a half,” he said.

He said the government and municipalities are overwhelmed and corrupt, and because of this, those who try to follow the laws are held at a severe and unfair disadvantage.

“A bribe can get you a permit right away. But if you submit your environmentalimpact study, you can wait for a year or more,” he alleged.

It’s a bottleneck, he said, that puts him square in the middle between his clients —investors who might pay him millions to develop a property quickly — and the government, which, understaffed and bound by archaic laws, can’t handle the pressure.

Decisions, Decisions

Tatiana Cruz, Secretary General of SETENA, readily admits there’s a problem – but says it’s still critical that everyone follow the law. She said the secretariat has only six inspectors – and last year, more than 1,200 projects were submitted for review – slowing down the process considerably, but not stopping it.

“Construction is growing by huge percentages each year, but SETENA has not grown with it,” she said.

She offered to send more information by e-mail, but SETENA’s computer servers were broken that day – yet another example of the continual lack of resources the agency experiences.

“SETENA is being re-born. For years, we have had a reputation of being overly permissive. Now we are trying to change that image, to ensure that the laws are adhered to. But that doesn’t mean we want to paralyze all development,” she said.

SETENA, according to the 1995 Environmental Law, is responsible for ensuring that all construction or development projects in Costa Rica are “harmonized”with the environment (TT, Sept. 9, 2006) Cruz told The Tico Times that the administration has prioritized the modernization of the agency, and that plans are in place to add more staff, and more resources, to allow the agency to comply with the required three-month review period, not the more common six- to 12-month waiting period developers are experiencing.

Until then, she said,“It’s vital that all developers adhere to the laws of the country.”

A New Start?

Carrillo Mayor Carlos Cantillo, who like the rest of the country’s mayors took office last month and whose municipality enjoys the dubious distinction of harboring the most illegal development in Guanacaste, said he understands the importance of development, and the benefits it brings his community. But without the order of law and a preconceived plan, he said, the benefits are squandered.

He is also concerned about the changing face of development in Guanacaste.

Of the 217 development projects surveyed by the Association of Engineers and Architects for its recent report, only 10 fell under the categories of “hotels” and “cabinas,” whereas private villas, residences and condominiums represented almost 80% of the total.

Cantillo said this is a major change from the old pattern, which was heavily slanted toward small hotels catering to travelers, not big condo projects targeting foreign retirees.

“Hotels bring employment, tourists. But this new form of development – buy, build, sell, then leave us with all the problems, must stop. We need to take a breath, get organized, then continue,” he said.

Should Developers Help Create Zoning Plans?

A high-profile coastal concession scandal in the northwestern province of Guanacaste has raised an interesting question: Should private interests help underfunded and understaffed municipalities finance and design much-needed coastal zoning plans? As in many areas of Costa Rican development issues, the answer is not entirely clear.

The Government Attorney’s Office took a stance on this issue last year, when it stated that only the government can process, contract and finance zoning plans for the nation’s coasts.

“The Costa Rican Tourism Institute (ICT), the National Institute for Housing and Urban Development (INVU) and the municipalities shouldn’t approve or adopt coastal zoning plans that were processed, contracted and financed by private interests,” the

Attorney’s Office said in a June 6, 2006, legal opinion sent to the Municipality of Nicoya, in Guanacaste.

The opinion has taken on new relevance after a land concession scandal farther north along the coast opened a Pandora’s box of developmental questions for Costa Rica. The scandal exploded on the front pages of the daily La Nación, which last month reported a heated dispute over beachfront property that the Municipality of La Cruz had awarded to a company represented by a 25-year-old Italian real estate developer named Alessandro Malaguti. The concession includes land supposedly belonging to the central government, upon which the NationalPoliceAcademy has operated for decades. The municipality has since said it intends to annul the concession (TT, March 2).

The municipal zoning plan, or plan regulador, which served as the basis for approving the disputed concession, was financed by a company of which the same Italian developer is treasurer.

The state gives legal opinions on these sorts of developmental issues when its opinion is requested by another state agency. An inquiry from the Municipality of Nicoya prompted the 2006 opinion from the Government Attorney’s Office, and the municipality is obligated to carry out the opinion.

However, Government Attorney’s Office spokeswoman Gloria Solano told The Tico Times, the opinion isn’t binding for all such cases, only the specific case for which the opinion was solicited. The state won’t give a specific recommendation on the case in La Cruz unless a government agency requests its legal opinion.

Municipalities can’t concession out coastal land until they have established zoning plans, which many areas lack.

Water Issues Come to a Boil

In the summer-scorched and development pressed northwestern province of Guanacaste, water is as much of an issue as beachfront development.

A recent scandal, uncovered by the daily La Nación last week, revealed that Carlos Arroyo, general manager of the Mapache Group, a major development company in Guanacaste, last year struck a deal with the National Water and Sewer Institute (AyA) granting him control over the water supply in the booming beach towns of Ocotal and Playas del Coco.

The institute’s assistant manager, Olman Chacón, granted one of Arroyo’s companies, Cocowater S.A., 5,000 future water connections in exchange for expanding the region’s aqueduct.

News of the water deal simmered when it was discovered that the aqueduct had yet to be built, but that Cocowater, S.A. was already accepting advance reservations from prospective clients – and that those who didn’t pay a full $800 would not receive their water-availability document required to obtain construction permits.

According to La Nación, AyA has prohibited, since 2001, issuing water-availability documents before the necessary infrastructure is built.

Cocowater has collected $1.7 million thus far, Arroyo told La Nación – though AyA claims the amount is more like $5 million.

Water and Sewer Institute president Ricardo Sancho has asked for the resignation of assistant manager Chacón while the matter is investigated.


Tico Times reporter Leland Baxter-Neal contributed to this report.


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