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Coastal Law Worries Developers

MANAGUA – Developers are gearing up for another fight against the National Assembly’s attempt to pass the notorious Coastal Law, claiming that “grey areas” in the new bill could ruin the value of million dollar properties.

The most recently proposed version of the bill calls for restricting oceanfront development 50 meters back from the high-tide line, and puts the other 150 meters under greater government control. Local municipalities would have the final say on what projects could be put near public beaches.

Small business owners largely support the new bill since it offers potential concessions to land that has largely been bought up by bigger outside developers. The new regulations could also provide better access to popular stretches of coastline that are increasingly hard to reach because of gated communities.

But some warn that the law may scare off foreign investment, with fewer jobs and less money coming to Nicaragua if investors have little control over their property.

“A small fritanga (roadside grill) could sit right in front of a $20 million resort,” said Raul Calvet, president of the consulting firm Calvet & Associates. “It would kill a project.”

The Coastal Law was first introduced in 2005 by politicians from the Liberal Constitutional Party and the Sandinista National Liberation Front. One of the original proponents was Sandinista lawmaker Gerardo Miranda, who is at the center of a bribery scandal involving ArenasBay property owners along the Pacific coast (NT, June 8).

Calvet said that original bill was shelved because of “political sensitivities” (NT, Dec. 23, 2005).

Now, however, investors fear that lawmakers are about to reintroduce the Coastal Law before their concerns are taken into account.

“This law needs to be killed,”Calvet said at a recent meeting of the Nicaraguan Association of Investors and Developers (ANID). “It could damage for good the image of Nicaragua.”

The current cut-off point for establishing exclusive claims to a beach is 30 meters back from the high-tide line. The proposed Coastal Law pushes that limit back by 170 meters for any new development along the ocean, as well as lakes and rivers.

Although private land that is already owned and developed cannot be affected retroactively under the new law, unowned coastal lands, including some of Granada’s isletas and other islands in the Caribbean, would be subject to the new restrictions.

Sergio Corrales, a lawyer with García & Bodan, said the new limits mean small islands could not be developed in the future.

Corrales noted that such regulations will already be partly in place under the Water Law, which was approved earlier this year but has not yet entered into force (NT, March 16). That law calls for greater government  control of the first 170 meters of oceanfront property. It also establishes greater taxes for use of water and criminal penalties for those who violate the rules.

Corrales said that they can still lobby to repeal parts of the Water Law once it’s made official by being published in the government daily La Gaceta. Still, he added, developers who haven’t paid taxes for water before are likely to pay more in the future.

Turalu Brady Murdock, ANID founder and president of First American Title Insurance, said it’s understandable that the Sandinista government would want more revenue from developers, especially when water supplies are stretched thin by large resorts.

Plus, she noted, granting concessions to small business owners to operate near a beach does not mean that those who own the surrounding area give up all their property rights.

She pointed out that developers can still buy whatever concessions are available and keep the land relatively private.

“The [Coastal Law] does not deviate from what’s common in other Latin American countries,” Murdock said. “The issue will be how the law is implemented.”

Despite the new laws,many remain bullish on Nicaragua.

“It’s changed my life to be here,” says U.S. expatriat Jordan Clark, who sells real estate in the northwestern department of León, a colonial city that is experiencing a recent surge in tourism development.

In addition to fighting the Coastal Law, Murdock said that ANID is trying to spread the word about all the good reasons to invest in Nicaragua. She points to the recent government agreement with the International Monetary Fund (IMF) and anti-poverty programs as examples of many of the positive things achieved by the Ortega administration.

As ANID lobbies Sandinista officials in the coming weeks,Murdock said that developers should continue their charitable giving.

“This government is emphatic about investors helping with social development,” Murdock said. “The more we can demonstrate that we are putting something back into Nicaragua, the more support we will get.”


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