All posts by lindquist2199

Tijuana condo living is reaching for the sky

By Diane Lindquist

High-rise condos are altering the skyline of Tijuana, transforming its image from a bustling border city to an urban metropolis that offers residents lofty living with vistas of the city and the Pacific Ocean beyond.

A vertical building boom over the past decade has resulted in the construction of numerous residential high-rises. At least 30 vertical projects with 700 condominiums reportedly were under construction at the end of 2017.

“We are building more condos now than in the last 126 years,” said Hector Bustamante, director of the Bustamante Group, a leading real estate company in the region. “By 2018, there will be more condo buildings in the city than there has been in all its history.”

The skyward push has been driven by a lack of land for single-family housing projects, the arrival of Mexico City developers seeking less saturated markets and the changing demographics of Tijuana with a growing and affluent middle class. Developers say there is pent up demand from years of meager construction during the recession.

As a result, the city has benefitted from permits and additional property tax revenue and the creation of thousands of construction jobs. Tijuana officials have enacted exemptions to allow higher-density concentrations for the projects and are trying to persuade the federal government to make permanent allowances.

While the boom has shown no signs of slowing currently, there are concerns about what the election of Donald Trump as U.S. president means for Tijuana’s high-end condo market.

In the wake of his election, the peso has plummeted, making the luxury units much less affordable. His threats of imposing a “border tax” on the city’s foreign-owned factories might give pause to maquiladora executives contemplating purchasing a condo. And Trump’s border wall could make already frustrating crossings even more onerous, thus discouraging potential U.S. buyers who are seeking lower prices.

Reversals in a booming real-estate market are nothing new to Baja California. The recent recession left multi-story steel girder skeletons and scraped land dotting the coastline south of Tijuana.

Among the abandoned projects was the Trump Ocean Resort, a 526-unit, three-tower resort with 26-story penthouse suites. The project died five years ago with a slew of lawsuits subsequently filed against Trump. The site 10 miles south of Tijuana now has been put up sale at $7.5 mm, with the broker seeking to attract senior housing developers.

While those projects, aimed mainly at U.S. retirees and second-home buyers, clung to the coast, the new wave of high-rise condos are more integrated in the life of the city.

Less than a kilometer from the U.S.-Mexico border crossing in the Rio Tijuana region rises the NewCity Residential complex planned with five towers. Its Diamond Tower, 27 stories at 334 feet, is now the tallest building in Tijuana. Begun in 2006, it was the first of the high-rise, all-amenities projects. The development also will include NewCity Medical Plaza, a 26-story tower with doctor’s offices, a medical lab, a surgery center and a 140-room hotel.

Despite its and other projects’ proximity to the border, developers and brokers say Americans make up few buyers — 2% at one estimate. Prices range from $200,000 to $300,000, but some penthouses have reached $700,000.

Foreigners, says NewCity developer Isaac Abadi, are “not buying here because financing is not attractive. In the United States, the (interest) rate is 3 or 4% per year and here it is 8 to 12%.”

Most of the condo projects are in Tijuana’s exclusive “Golden Zone” and represent an average investment of $100 million.

Some of the projects involve teams from both sides of the border, but for the most part, the developers, designers and financial underwriters are Mexican.

“There’s a lot of capital in Mexico right now,” said Bustamante. “The difference (from before) is we have experienced developers and we are doing our due diligence.”

Considered the crown jewel of the city’s residential high-rise building boom is one of the most recent projects announced, Alta Baja, a 63-acre development in the center of the city with 400 condominiums. The development will have four residential towers, an office tower, a hotel and a mall. The first residential units and retail components are expected to be finished by 2019.

The flashiest new project is Adamant Tijuana, a 32-story tower near Estadio Caliente, a multi-use stadium that is the host of the Xoloitzcuintles professional futbol team. Aimed at millennials, developer Milk Life Investments is using flashy videos and glossy promotional materials with fashionable young people driving sports cars and drinking champagne.

Another closely watched project is Cosmopolitan Residences, which is aiming to become LEED certified. Its 42 units will range from 1,450 to 7,200 square feet and cost from $400,00 to $700,000, making them the most expensive condos in the city.

The challenges for the continuing boom in Tijuana high-rise condos appears uncertain, even beyond the impact of Trump’s presidency.

Topping the list is the affordability of the new condos, especially with the peso plummeting to record lows.

Another possibility is that, especially as buyers diminish, the market will become oversaturated as competition heats up. With an absence of contact information and websites, it’s difficult to predict how sellers will respond. One resource is the Mexican website Vivanuncios, similar to Redfin or Zillow.

Perhaps the biggest challenge, however, is that Tijuana might not be able to accommodate such large population densities. An urban infrastructure that can support the high-rise boom is lacking.

Quality of life and infrastructure go hand in hand, said Maricarmen Castellanos, a director of Exclusive Real Probien. Those in the industry are calling for the Metropolitan Planning Institute of Tijuana (IMPLAN) to address the issue immediately.

“We need to invest in sidewalks, pedestrian mobility, a functional transport system,” she said. “We are going to a vertical growth without public infrastructure.

Cali-Baja region is poised to become a drone hub

By Diane Lindquist

The San Diego-Baja California region is positioning itself to be a hub in the emerging global drone industry, not only by promoting companies developing and manufacturing the unmanned aerial vehicles and their parts but also by training pilots, some as young as in elementary school.

“San Diego and Tijuana should dominate the drone industry in the near future,” said Darryl Anunciado, founder of ActionDrone. “It’ll happen if we develop the people, not just the industry.”

Although recreational drones have become commonplace — even touted as a children’s toy this Christmas thanks to low-cost manufacturers in China — weak consumer demand and falling prices have driven startups to shift their focus to specialized business applications.

Drones are equipped with a high-speed processor, battery, GPS receiver, compass and sensors like an accelerometer and gyroscope. Unmanned planes currently can fly for up to three hours and helicopters for an hour and a half. Connected to a modem, they can transmit real-time data in a range of up to 60 kilometers (37 miles).

They range in price from about $50 to $350,000 or more.

While drones originated in military applications, activity in the San Diego-Baja California area is focused mostly on commercial, scientific, recreational, agricultural and other applications, such as policing and surveillance, aerial photography and drone racing. A group of operators often hold Friday Fly Days in Chula Vista just a few miles from the border.

Several people are developing proprietary components and code that eventually can establish an ongoing income stream.

One Tijuana venture, the Institute Mexicana de Grafene, is focusing on graphene, a relatively newly discovered form of carbon that’s 200 times stronger and six times lighter than steel. It’s predicted to radically change battery technology by opening up the possibilities of bendable or super-lightweight batteries to replace the ion lithium batteries used currently, allowing drones to be be much larger and fly faster and further.

More than 40 countries around the world either deploy or manufacture drones. Still commercial endeavors are in their infancy wherever they are located. Only about six operators in Tijuana and a handful in San Diego have established formal companies. Numerous others are working on startups in homes and garages much as David Packard and Bill Hewlett did in founding Hewlett-Packard and Steve Jobs did in starting Apple, the firms that gave rise to the computer industry.

Indeed, Marco Lepe, creator of the grafene institute, compares the current state of the drone industry to the computer industry’s early days and the development of the internet.

“Drones are an opening to the future,” he said. “It’s only the top of the iceberg right now. “This is a new opportunity for the Cali-Baja region,” Lepe said. “Both sides have the the vision, the engineers, the marketing expertise and goods being exported worldwide.”

Parallels to the early Silicon Valley computer startups are compelling.

Baja California native Jordi Munoz, who had just arrived in the United States and was waiting for a green card, passed time by building a drone prototype in his garage out of a video gaming console’s remote controls. It became 3D Robotics, which attracted $135m in investment and has been routinely listed among the world’s top drone makers. He has since left that firm to found another in Chula Vista.

Anunciado was selling devices online, putting them together in his bedroom until one caught fire and his wife demanded he relocate to a warehouse. His ActionDrone firm headquarters in Chula Vista’s East Lake neighborhood now employs 9 engineers there and manufactures in Schenzen, China.

The company turned an important corner when the U.S. Navy hired him to build 20 drones for training. “That’s when everything changed,” he said.

Since then, his custom-built drones have been used by Mexico’s Comisión Federal de Electricidad to inspect electric power lines. They are seeking leaks in oil pipelines for a company in Dubai. The U.S. Department of Agriculture is asking him to build a drone that can measure the temperatures of cattle.

“There’s no one drone that fits all,” he said. “That was a big wakeup.”

Anunciado, 36, an MBA who previously was in banking and property management, is a major mover in the area’s drone industry. He has been working with San Diego State University on an as yet unspecified program. He has convinced Chula Vista and the YMCA to establish a drone racing course that will open in January. When U.S. Commerce Secretary Penny Pritzker paid a visit, he lobbied her to give special support to the local industry.

“My pitch is create a new drone hub in San Diego that will create a new Silicon Valley. You don’t even have to work for it,” he said. Tijuana “is part of the plan. … Tijuana is such a good location. They have the right people. They’re smart. They’re like a hidden gem.”

He believes there will be a blurred line between San Diego and Tijuana and has reached across the border to help with the establishment of Geeks Academy, a venture that will, among other things, train young people as drone pilots.

“There were no teachers qualified to teach drones so we spent three months training teachers and it led to Geeks Academy,” Anuciado said. For one of the first courses, an expected enrollment of 10 attracted 22 students. By the end of the course, students can race, design a drone, be familiar with components and create needed software.

“They’re so good and so fast. They sometimes leave us behind,” he said.

Anunciado’s nurturing of the fledgling Cali-Baja industry but especially

of young drone pilots is close to his heart.

“What we’re concentrating on is the human aspect because I believe the future is not the drones, it’s the people,” he said. “There’s enough drones out there to do the work, but there aren’t enough pilots.”

Action Drones, he said, not only makes the drone but also provides the training for operators. One company wanted 2,000 pilots.

By 2020, $127b worth of labor and business services could be replaced by drones, according to a May report from consulting firm PricewaterhouseCoopers.

Moreover, “In the next decade, the burgeoning commercial drone industry is projected to generate more than $82b for the U.S. economy and, by 2025, could support as many as 100,000 new jobs,” White House representatives recently wrote in a fact sheet.

Individuals in the San Diego-Baja California region believe much of that income will be generated by area entrepreneurs.

“We are going to create a middle class with a good industry that’s going to offer unlimited opportunities,” Anunciado said.

Jordi Munoz career mirrors short history of drones

By Diane Lindquist

Jordi Munoz’s role in the drone industry took off a decade ago when the Baja California native was 20 years old and living in Los Angeles waiting for a green card so he could get work in the United States.

Using microchips heated in the oven to attach to circuit boards and a video game console remote control, he created an unmanned aerial vehicle, or drone, in his garage. The device proved to be a major tech innovation that has helped give rise to a completely new global industry.

The idea of drones dates to the late 1880s. By the 1990s, their use was mainly restricted to the military.  But Munoz’ multi-rotor drone, with its embedded processors, tiny sensors, GPS receivers and lightweight but powerful batteries, hit the market in 2009 and put the devices within easy reach of hobbyists and other consumers.

Munoz remarkable story mirrors the evolution of drones

“I was crazy, and I didn’t know what I was doing,” he said in a recent interview. “I always wanted to be a pilot. I grew up reading books about that and about computers. I put together model airplanes. I was just obsessed with things that fly.”

Living in Los Angeles, he grew bored. “I had so much time I was killing myself. There was nothing around. I learned to program. I just started fooling around,” he said.

His business took off when a blog he had written for the DIY drones community caught the eye of Wired magazine’s editor-in-chief Chris Anderson, who had started the site for aerial vehicle enthusiasts. Anderson sent Munoz a check for $500. They collaborated, without ever meeting in person, and founded 3D Robotics.

Munoz, as chief technology officer, was the engineering brains while Anderson, as chief executive, focused on the business and investment side of things.

The company took off, routinely landing near the top of industry lists of the best global drone makers. In 2012, It employed more than 350 people at four main sites. With prices ranging from $740 to $5,400, sales hit close to $40 million in 2014 before weakening as Chinese copycats undercut prices.

In addition, Munoz was chosen as one of the top innovators under 35 in Mexico by Technology Review, which is published by the Massachusetts Institute of Technology.

“A lot of people will look at him down the line as one of the pioneers,” said Darryl Anunciado, who’s ActionDrone operations are located in a cluster of warehouses in Chula Vista’s East Lake neighborhood near where Munoz established a new business after leaving 3D Robotics.

Being the joint boss of a fast-growing corporation was a cultural shock for Munoz. He had no prior business training nor leadership experience and had not been to university. Instead, he had been used to working on his own and learning from the internet, according to him, earning a Google PhD.

The board of directors, with the recreational drone market slowing, made the decision to concentrate 3D Robotics in Berkeley. They shut down the manufacturing in Tijuana and Munoz’ design operations in San Diego. As the company grew, a board with 14 members had control.

“It was not like Chris and me, each with 50 percent,” he said. “They were closing the branch of the company I was working with. I was very happy in San Diego. I didn’t see any enjoyment in moving.”

Since January, Munoz has been working on starting a new company called mRobotics. With a new staff, the enterprise is focusing on specialized raw materials and specialized hardware. Instead of recreational users, target customers will be engineers, scientists, the military, those considered advanced customers, the bulk of whom are expected to be in Europe.

“It’s a lot different now. I know what I’m doing. There’s not as much stress,” Munoz said. Still, he has been kept extremely busy setting up the new operation. “I’m wearing 20 hats.”

He envisions a company that will be substantially different from 3D Robotics.

“My business will have more organic growth. It’s not money grabbing. It gives more attention to the employees and the customers,” Munoz said. “Honestly, I just want a mid-sized company. I want to relax. I don’t want board meetings.”

Unlike 3D, Munoz doesn’t see mRobotics manufacturing in Tijuana. “Tijuana is good for bigger-scale manufacturing. Tijuana is good because it’s cheaper. There’s really good people there. I’ve brought people from Tijuana to set up my machines,” he said.

Those in the San Diego-Tijuana cross-border drone industry were impressed that he would leave 3D and develop a firm that is more approachable. Munoz said he hopes to spur faster development among smaller companies because he can offer the development tools to help them. It’s more difficult to get started now, he said, because there is so much competition.

“People have said: ‘It’s so good you’re back.’ I enjoy it. It’s very gratifying,” he said.

Munoz, now 30, predicts he will produce even more innovations in the future.

New regulations planned in the United States and elsewhere will impact how drones can be operated, he said. Drone operators might have to reserve air space and notify towers that they are going to take off.

Since earning that pilot’s license he so long desired, Munoz foresees drones and airplanes linking together, much like the connection between computers and the internet.

“I have an eye for more development now that I’ve become a pilot,” Munoz said. “Aeronautics will be part of my world.”

Unique Baja Med cuisine emerges in Baja California-San Diego region

By Diane Lindquist

With a sweeping rehabilitation, the Baja California Railroad has realized such success that it is driving renewed hopes for a cross-border rail transport system to move goods around Baja California and into the United States.

Since taking over the line three years ago, Baja California Railroad (BCRR) has modernized the 42-mile (71.4 km) stretch of line from Tijuana to Tecate. Along with other improvements, the company replaced rails, eliminated a tunnel, tore down a wooden bridge and erected a concrete one and created a holding yard.

The changes have more than doubled the company’s business. And it operates only four hours a day, from 1 a.m. to 5 a.m. when it can run its cars on the rail lines through San Diego.

The transformation is prompting Baja California officials to move forward on building a separate rail line from Ensenada’s port to the BCRR connection at Tecate. If a similar upgrade occurs on the California stretch of rail linking up with a line further east, Baja California manufacturers would have a more secure, less expensive way to transport goods to and from the United States.

“It’s just a matter of putting things together. Both sides need to open the huge market we have between the regions,” said Roberto Romania Tamayo, the Baja California Railroad’s director. “It is a must do.”

Long an ambition on both sides of the border, cross-border rail service would allow exporters in Baja California to avoid northbound truck delays at the congested Otay Mesa commercial crossing, as well as the need to switch drivers at the international border.

Hopes of developing the rail system have been thwarted by the age and condition of the rail line and its circuitous path east from San Diego, dipping south into Baja California and then back north across the border to Plaster City in California’s Imperial County.

If coordinating among local, state and federal governments in the United States and Mexico hasn’t been difficult enough, a series of revolving and inexperienced owners has made realizing the dream even more elusive.

The entire line of the San Diego and Arizona Railway was completed in 1919 by San Diego sugar, hotel and transportation magnate John Spreckels. In its early days, it was credited with helping San Diego develop into a major commercial center.

Because of its 148-mile (238 km) route zigzagging across mountains, crossing bridges and trestles, dropping into Mexico and threading through scores of tunnels, the line was dubbed “The Impossible Railroad.”  Damage over the years from heavy rainstorms, landslides and fires only made that title more fitting and the challenge of revitalizing the railroad more daunting.

Now, with the Baja California portion of the line being upgraded, the key to developing a modern, functional cross-border rail transport system lies in California.

North of the border, the railroad’s owner is the Metropolitan Transit System (MTS), San Diego County’s public transit service. Although focused more on local transportation, the MTS is committed to the cross-border system.

“We do see this as a viable way to move goods across the border,” said Rob Schupp, MTS director of marketing and communication.

In 2013, MTS signed a 50-year lease — with an option to renew for 49 more years —with Pacific Imperial Railway. The contract sets specific milestones for upgrading the line, including investing at least $1 million a year. The firm has lived up to or surpassed the requirements, Schupp said.

It has been estimated that it will cost at least $120 million to transform the line so it could carry the double-stack rail cars in use today.

Attempts by phone to reach Donald Stoecklein, president of the Pacific Imperial Railway, were unsuccessful.

Talks among the various stakeholders on both sides of the border reportedly have been ongoing.

“We are optimistic that by the end of the year, the problems will be resolved,” said Baja California economic development secretary Humberto Carlo Bonfante Olache.

Previously under federal control, the railroad now operates under a Baja California government entity, Admicarga. BCRR, formed by a number of prominent Tijuana businessmen, including Fernando Beltran and Dilma Campos, took over from an underperforming company and now holds a concession with 28 more years to run.

In an interview at the BCRR’s new three-story office building just south of the border overlooking the point where the rail line crosses the border at San Ysidro, director Romania discussed the changes underway.

“We’ve been doing a lot of rehabilitation,” he said. “We’re trying to upgrade the entire

line.”

Last year, BCRR invested 250 million pesos ($14.5 million), and it plans to spend another 200 million pesos ($11.7 million) this year. Seventy percent of the money came from the state and federal governments and 30 percent from BCRR.

One of the biggest improvements was creating a five-spur holding yard adjacent to the border where empty rail cars can sit until the border opens. “Previously we had the capacity to store only eight cars. Now with this new capacity, we have space for 68 cars,” Romania said. “For such a short line it is really good. We think it’s enough, but you never know.”

Iron rails were ripped up and steel laid down, replacing the 90 gauge track with 112. The change allows an increase from 4,800 cars to 12,000 cars per year to move on the tracks. “We can put more load on it, and we can move faster,” Romania said.

In addition, one of four tunnels on the line was blasted open. The wooden Matanuco bridge was replaced with a concrete structure. And, the Tecate bridge, three-quarters mile long, will get the same treatment this year, he said.

Operating costs have been cut by $70,000 a year, Romania said. The company is making a profit, but it is being plowed back into improvements. The complete renovation is expected to take four to five years.

BCRR’s biggest clients are Z Gas , North StarGas, Empacadora Rosarito, Cerveceria Cuahutemoc-Moctezuma, which makes Tecate beer and requires large imports of grains and corn syrup. Other clients receive shipments of borax, pig lard, lumber, steel, paper and cattle feed.

Liquid petroleum gas (LP) accounts for 60 to 78 percent of the business, especially since state-owned Pemex allowed the the gas company to to be privatized. In March, shipments of the fuel increased 300 percent in 30 days.

Romania, an industrial engineer and lawyer in international relations, worked in Baja California maquiladora manufacturing plants, including Mattel. “I didn’t have any experience in the railroads,” he said, but he knows what is needed.

“With all the maquilas that are here, there are a lot of raw materials that can be brought here,” he said. “To attract customers, you need first to give them security for their merchandize and then efficiency.”

Baja California Railroad renovation drives hopes for new trade route

By Diane Lindquist

With a sweeping rehabilitation, the Baja California Railroad has realized such success that it is driving renewed hopes for a cross-border rail transport system to move goods around Baja California and into the United States.

Since taking over the line three years ago, Baja California Railroad (BCRR) has modernized the 42-mile (71.4 km) stretch of line from Tijuana to Tecate. Along with other improvements, the company replaced rails, eliminated a tunnel, tore down a wooden bridge and erected a concrete one and created a holding yard.

The changes have more than doubled the company’s business. And it operates only four hours a day, from 1 a.m. to 5 a.m. when it can run its cars on the rail lines through San Diego.

The transformation is prompting Baja California officials to move forward on building a separate rail line from Ensenada’s port to the BCRR connection at Tecate. If a similar upgrade occurs on the California stretch of rail linking up with a line further east, Baja California manufacturers would have a more secure, less expensive way to transport goods to and from the United States.

“It’s just a matter of putting things together. Both sides need to open the huge market we have between the regions,” said Roberto Romania Tamayo, the Baja California Railroad’s director. “It is a must do.”

Long an ambition on both sides of the border, cross-border rail service would allow exporters in Baja California to avoid northbound truck delays at the congested Otay Mesa commercial crossing, as well as the need to switch drivers at the international border.

Hopes of developing the rail system have been thwarted by the age and condition of the rail line and its circuitous path east from San Diego, dipping south into Baja California and then back north across the border to Plaster City in California’s Imperial County.

If coordinating among local, state and federal governments in the United States and Mexico hasn’t been difficult enough, a series of revolving and inexperienced owners has made realizing the dream even more elusive.

The entire line of the San Diego and Arizona Railway was completed in 1919 by San Diego sugar, hotel and transportation magnate John Spreckels. In its early days, it was credited with helping San Diego develop into a major commercial center.

Because of its 148-mile (238 km) route zigzagging across mountains, crossing bridges and trestles, dropping into Mexico and threading through scores of tunnels, the line was dubbed “The Impossible Railroad.”  Damage over the years from heavy rainstorms, landslides and fires only made that title more fitting and the challenge of revitalizing the railroad more daunting.

Now, with the Baja California portion of the line being upgraded, the key to developing a modern, functional cross-border rail transport system lies in California.

North of the border, the railroad’s owner is the Metropolitan Transit System (MTS), San Diego County’s public transit service. Although focused more on local transportation, the MTS is committed to the cross-border system.

“We do see this as a viable way to move goods across the border,” said Rob Schupp, MTS director of marketing and communication.

In 2013, MTS signed a 50-year lease — with an option to renew for 49 more years —with Pacific Imperial Railway. The contract sets specific milestones for upgrading the line, including investing at least $1 million a year. The firm has lived up to or surpassed the requirements, Schupp said.

It has been estimated that it will cost at least $120 million to transform the line so it could carry the double-stack rail cars in use today.

Attempts by phone to reach Donald Stoecklein, president of the Pacific Imperial Railway, were unsuccessful.

Talks among the various stakeholders on both sides of the border reportedly have been ongoing.

“We are optimistic that by the end of the year, the problems will be resolved,” said Baja California economic development secretary Humberto Carlo Bonfante Olache.

Previously under federal control, the railroad now operates under a Baja California government entity, Admicarga. BCRR, formed by a number of prominent Tijuana businessmen, including Fernando Beltran and Dilma Campos, took over from an underperforming company and now holds a concession with 28 more years to run.

In an interview at the BCRR’s new three-story office building just south of the border overlooking the point where the rail line crosses the border at San Ysidro, director Romania discussed the changes underway.

“We’ve been doing a lot of rehabilitation,” he said. “We’re trying to upgrade the entire

line.”

Last year, BCRR invested 250 million pesos ($14.5 million), and it plans to spend another 200 million pesos ($11.7 million) this year. Seventy percent of the money came from the state and federal governments and 30 percent from BCRR.

One of the biggest improvements was creating a five-spur holding yard adjacent to the border where empty rail cars can sit until the border opens. “Previously we had the capacity to store only eight cars. Now with this new capacity, we have space for 68 cars,” Romania said. “For such a short line it is really good. We think it’s enough, but you never know.”

Iron rails were ripped up and steel laid down, replacing the 90 gauge track with 112. The change allows an increase from 4,800 cars to 12,000 cars per year to move on the tracks. “We can put more load on it, and we can move faster,” Romania said.

In addition, one of four tunnels on the line was blasted open. The wooden Matanuco bridge was replaced with a concrete structure. And, the Tecate bridge, three-quarters mile long, will get the same treatment this year, he said.

Operating costs have been cut by $70,000 a year, Romania said. The company is making a profit, but it is being plowed back into improvements. The complete renovation is expected to take four to five years.

BCRR’s biggest clients are Z Gas , North StarGas, Empacadora Rosarito, Cerveceria Cuahutemoc-Moctezuma, which makes Tecate beer and requires large imports of grains and corn syrup. Other clients receive shipments of borax, pig lard, lumber, steel, paper and cattle feed.

Liquid petroleum gas (LP) accounts for 60 to 78 percent of the business, especially since state-owned Pemex allowed the the gas company to to be privatized. In March, shipments of the fuel increased 300 percent in 30 days.

Romania, an industrial engineer and lawyer in international relations, worked in Baja California maquiladora manufacturing plants, including Mattel. “I didn’t have any experience in the railroads,” he said, but he knows what is needed.

“With all the maquilas that are here, there are a lot of raw materials that can be brought here,” he said. “To attract customers, you need first to give them security for their merchandize and then efficiency.”

Parched Baja to get water supplies from Pacific Ocean

By Diane Lindquist

Growing but parched municipalities on the Baja California Peninsula are expected to receive major new supplies of water over the next few years from desalination plants that will tap the adjacent Pacific Ocean.

The projects are part of Mexico’s blueprint to establish seawater reverse-osmosis desalination plants along coasts where, according to national water authority Conagua, water availability is low while there is a high potential for development.

While desalination plants on the peninsula are planned to begin construction this year off Los Cabos and La Paz in Baja California Sur, the greatest concentration will be in Baja California. Three facilities are slated to be operating in the next few years. Yet another plant is planned off Sonora at San Carlos.

Baja California’s first such plant already is under construction near Ensenada, where residents have long been subjected to water rationing. The $48 million facility is expected to supply 5.7 million gallons daily to the port city.

A second plant — similar in scale and size to the Ensenada plant — is foreseen down the coast in the farming community of San Quintin. Growers in that region have been operating private desalination plants, more than 50 at the state administration’s count, to treat the area’s brackish well water.

The third and largest desalination plant is at Rosarito Beach. It is expected to produce up to 100 million gallons a day — twice the size of a desalination plant being built north of the border off the Carlsbad coast in San Diego County. The plant would supplement the water from the current source from the Colorado River and possibly be shipped across the border to users in San Diego.

“It looks like a very viable project,” said Roberto Vega Trevino, an attorney representing a businessman seeking to become involved in the project. “The project itself is supposed to create the largest desalination plant on the Pacific coast.”

In March, The state government, which is overseeing the public-private project, extended the bidding deadline from March 23 to April 21 to allow time for competing groups to complete the mandatory Q&A process and finalize some revisions to the regulations associated with newly instituted Asociaciones Publico Privadas (APP) public-private partnership laws.

That date, by some accounts,  remained uncertain because of a legal dispute among partners in one of the potential bidding groups.

According to the Water Desalination Report, six teams have been pre-qualified to bid on the project. They include NSC Agua/CWCO; Hydrochem (Hyflux)/CGM Services; Valorize Agua; Acciona Agua; Proactiva (Veolia); IDE Technologies; FCC Aquaria; Constructora los Potros; and Grupo Financiero Interacciones.

Several of the groups, including Valoriza, Acciona Agua, IDE Technologies and FCC Aqulia, are among the world’s top desalination plant developers.

Considered an up-and-comer, among such global developers, is Consolidated Water Co., a Cayman Islands based firm that has built and operated desalination plants and water distribution systems throughout the Caribbean. But, the company is embroiled in a legal dispute involving membership in the consortium that threatened to delay the bidding process.

San Diego resident Gough Thompson claims the partners illegally sidelined him starting in February 2012. He claims they slashed his shares in the venture from 25 percent to 0.1 percent without his knowledge or permission. At 86 years of age and just months out of double by-pass heart surgery, he wants his original shares restored. Thompson had formed consortium projects in the Middle East, where he advised U.S companies working in Saudi Arabia on desalination efforts.

“He was basically pushed aside,” his attorney, Vega Trevino, said.

Consolidated Water now controls 99.9 percent of the shares in NSC Agua, the Mexican company it formed in 2010 with Thompson and Baja businessman Alejandro de la Vega to develop the plant,

A Consolidated Water spokesperson said the company did not violate any laws, and it accuses Thompson of breaching an April 2012 agreement that included a settlement that released the NSC Agua group from future claims.

“Thompson is clearly after money and has brought these claims at a critical time expecting us to capitulate,” Consolidated Water chief executive Rick McTaggart told The San Diego Union-Tribune.

In June 2015, Thompson filed suit in Baja California courts against Consolidated Water, de la Vega and others seeking to nullify the actions that increased Consolidated’s ownership interest and demanding the suspension of transactions made at a February 2012 shareholder’s meeting that led to the diminishing of his shares.

Last fall in response, Consolidated filed suit against Thompson in New York, asking the judge to issue an injunction preventing continuation of Thompson’s Baja California lawsuit.

A initial ruling imposed a standstill to the Mexico auction until the matter is resolved. Vega, however, is seeking a reversal of that ruling. He said the stakes are high because NSC Agua is considered one of the most likely winners of the concession.

“It’s very complicated,” he said. “New York is not a proper forum to prevent Mr. Thompson from taking part.”

He said Thompson, who has spent close to $500,000 of his own money, had no interest in stopping or delaying the project.

“There is no reason for the licitation to be stopped or suspended because of litigation in the United States or Mexico,” Vega Trevino said.

As the bidding deadline approached, industry and state officials said they were uncertain whether the project would again be delayed.

The Rosarito Beach plant would be a project of unprecedented scale. It is to be located near the Comisión Federal de Electricidad power plant complex at the north end of the municipality, utilizing a relatively new concept in which the power plant can produce energy for the desalination plant while wastewater can be used to cool the power plant.

The traditional criticism of reverse-osmosis technology is that it costs too much. The process uses a great deal of energy to force salt water against polymer membranes that have pores small enough to let fresh water through while holding salt ions back. Sharing resources of the power plant complex not only addresses that issue, but also cuts power consumption and lowers the rate at which the water will be sold.

Under the licitation, the winner will build and operate the desalination plant. The estimated cost of the project is more than $500 million. The first phase is scheduled to start operating by 2019 and be fully completed by 2024. Future water rates for residential and commercial users are uncertain.

Municipalities in Baja California have come under increasing distress as water supplies have shrunk with the expansion of maquiladora and other manufacturing ventures in Tijuana, Rosarito Beach and Ensenada and of agriculture ventures in the San Quintin area.

Ensenada does not receive the Colorado River water that supplies much of northern Baja California, and its supply from acquifers has come under greater pressure from the needs of the nearby Valle de Guadalupe, Mexico’s fast-expanding wine region.

With the desalination projects getting underway, Mexico joins some 150 countries where desalination is practiced.

According to the International Desalination Association, as of June 2015, more than 300 million people in the world rely on desalinated water for some or all their daily needs. The organization put the number of plants at 18,426, which deliver 22.9 billion gallons of water a day to users across the globe.