Category Archives: Observations

What’s Happening with the Gasoline Situation?

pemexbrandIf you need to fuel up your car in Mexico you look for the green, white and red Pemex  filling station(pronounced peh-mecs).  There are no Exxon or Shell franchises; no mom and pop Gas N’ Gos.  Just Pemex.  Pemex, which stands for “Petroleos Mexicanos,” has been the only game in town forever. But, all of this is about to change.

Last week, Pemex–with its issues around reform, steep hikes in prices at the pump, and protesters creating blockades–became front page Mexican news.  And, it caused many of us to stop and think about what a world with limited fuel might look like.  At the same time, many snowbirds and ex-pats began to ask questions about Pemex–How did Pemex come to be, and why a price hike now?  What follows is a brief summary and analysis of the history of Pemex and the current situation in which those of us in Mexico find ourselves.

Why Only One Company?

During the early years of the 20th century, U.S. and British oil companies were quick to exploit both Mexico’s oil and  gas reserves and the Mexican labor force.  This prompted the Mexican government in 1917, during the Mexican Revolution, to nationalize and essentially make oil and gas reserves the property of the Mexican state through a Constitutional Amendment. mex-rev-women2However, it would take another twenty years before Pemex would come on the scene and Mexico would expropriate all remaining foreign-owned and non-governmental oil companies.  For the next half century, Pemex became a premier company, expanding and changing to keep up with often volatile markets and evolving industrial conditions.  They made money for the Mexican state and became a major employer of Mexican workers, offering stable jobs and good salaries with pensions and other benefits to their 150,000+ workers.  Pemex has held this virtual monopoly on the Mexican petroleum industry for almost eighty years.

What Has Happened with Pemex?

In the last decade or so, Pemex has slipped in profitability.  In 2012, for instance, the Mexican federal government received 852 billion pesos (roughly $40 billion dollars)from oil revenue.  In 2015, this figure had dropped to half that amount, only 408 billion pesos.  This is creating a situation whereby rather than make money for the country, the country faces subsidizing an aging petroleum organization and infrastructure.

While a drop in world oil prices has contributed to the slip in profitability, lack of money for reinvestment, general mounting debt, pension obligations and an over sized work force have all contributed to the continued demise of the oil behemoth.  In addition, the Cartels continue to plague Pemex operations as they create ever more sophisticated means of siphoning off petroleum from the country’s aging pipelines.  Recent major accidents, lower yields on existing wells, and the glut in the global supply have also contributed to Pemex’s inability to re-organize and keep up with the times.  Last year they experienced the worst fiscal year in a quarter of a century.

What’s with the Reforms?

By 2012 it was clear that something had to change.  Between 2012 and 2014 there were major reforms to the Mexican petroleum industry.  In 2013, the 75-year monopoly on Mexican state held oil production was lifted by a Congressional vote.  By 2015, bidding rounds began so that private companies could start to invest in Mexican oil exploration, production, and domestic sales.

How Does this Tie in with the Current Price Hike?

Up until 2016 the Mexican government subsidized the petroleum industry to such a degree that the consumer did not pay the actual cost of gasoline and diesel.  They paid a lower price.  The reforms conceptualized in 2012 and 2014 allowed the government to remove its subsidy of the industry and shift the actual cost for gasoline and diesel back on to the consumer.  The hope was that by “liberalizing” (or, de-regulating/privatizing) the gas and oil industry, and, by allowing outsiders into the Mexican petroleum process, Mexico would be able to afford to modernize and compete with prices on the world market.  And, consumers would reap the benefits down the line.  (Time will tell if this actually happens.  Theoretically, however, it sounded good to the majority of Mexicans back in 2012.)

The current price hike was originally slated to begin in 2018.  The start-up date was moved to January 1, 2017.  We can assume this was done because the government could not afford to subsidize the national petroleum industry for even one more year.

pemex-1Worst Possible Timing

Many are criticizing President Pena Nieto for his terrible timing of this price hike.  After all, January is peak driving season in Mexico; President-Elect Trump is threatening to pull out of trade agreements and introduce tariffs on Mexican goods; the peso has dropped dramatically against the dollar and is now ranked the worst currency in the world; Ford Motors will not be building its $1.6 billion plant in Mexico; and, inflation is spiraling almost out of control. President Pena Nieto has been asked, why now for this 20% fuel hike after promising that gas prices would be lower and not higher?  Why now for an abrupt adoption of the “liberalization process,” instead of the gradual process over the course of this year?

What Lies Ahead

President Pena Nieto has publicly said that he is not going to reverse his decision to increase the price of gas.  If he made a sudden policy change as a result of public pressure, it could potentially introduce too much uncertainty over future regulatory decisions into the mix. And, this might scare away potential investors. The Mexican Constitution bars Pena Nieto from running for another term.  Therefore, he has little to lose politically, and, has no incentives to back down from raising prices.

pemex3The wild card in all of this is the protest movement.  The current protests are not part of an organized movement.  Their strength is coming from transportation unions and support from social media.  If security forces double down on demonstrations and take lives or inflict injuries, it could potentially trigger more unrest.  Should an opposition party (Pena Nieto is a member of the PRI), such as the PRD (Democratic Revolution Party) jump on the protest bandwagon, it could legitimize the demonstrations making it possible to garner more support.

It is unclear right now how much longer the protest will last.  A few hours?  A day?  A week?  No one knows.  At the moment of this writing, sources say that it is a “mass display of unconnected protests,” rather than a coordinated effort at undermining energy reform.  It appears that unless these multiple organizations can pull themselves together and get the support of the PRD, labor unions, and social media, the whole thing may just fizzle out pretty quickly.

So, Pena Nieto is in an awkward position.  Does he demonstrate to investors that he “caves” to pressure from street demonstrations?  Or, does he push ahead and inflame further protests, potentially hurting his party’s (PRI) chances in the 2018 race–which is already proving to be very contentious.  The  next few hours, or, days will tell the story.

–by Linda Whedbee and edited by Lisbeth Vincent

 

 

Fuel Protest Updates

Monday, 1/9/2017, noon

Just returned from a run into town.  Forget trying to get fuel at the Saltito Pemex station.  All pumps there are closed.  The Ejido Pemex was running all pumps.  However, the line was six or seven deep on all pumps.  It is hard to tell how long that will last.  The Pemex just beyond Los Arcos and across from OXXO was totally closed.  Kip and Nell were going downtown and said they would report on that situation.  Kip said she had heard airport road Pemex was closed.

The water station around the corner from OXXO (just past Los Arcos) is open.  The Zgas propane main station is also open.  I ran into Cesar (delivery for Zgas) and he said they will continue to run until they run out of diesel for the trucks and propane to fill the trucks. He also said they would remain open to fill small, individual tanks until their station ran out of propane.

Sunrunner Mail said they would also be effected.  Their courier lives in Mexicali. Consequently, all depends on whether they are able to get fuel in Mexicali.

Businesses and restaurant owners I spoke with this morning say they will stay open until they run out of supplies or until employees and customers stop coming.

We can probably expect trash collection services to be suspended if this goes on very long.

As I write this, I hope everyone has made provisions for gas, water, propane and basic essentials. This protest over the gas price hike could last a day, a week, or a month.  Nevertheless, it never hurts to be prepared for the worst.  And, to check in with one another to be sure we are all holding up okay.

If anyone has any new information, you are encouraged to share it here or on our FB page.

Saludos

Linda

Best Bets of San Felipe

Best Bets of SF 2013-2014 Season

Don’t forget to nominate your favorite places from this past season (see earlier post)! It will be fun to compare notes and hope that our favorites will still be in business  and/or operational next snowbird season.

Send your nominations to: bajasisters@gmail.com

New Italian Restaurant

Pizza

Three different pizza sauces. Pictured here, a white sauce.

Dining out on something besides fish tacos and carne asada can–in some years–be a bit of a challenge in San Felipe. Consequently, when we got word that there was a new Italian restaurant in town,  we were naturally curious. Jim, the owner/chef, of El Padrino, hails from New York. An ex-member of “New York’s finest,” Jim has been living in San Felipe for many years. He helps out with the San Felipe rowing club and, we were pleased to discover, can sure cook a mean pizza! We understand he also does a great Stromboli  and fettuccini Alfredo. But, we didn’t get a chance to try those items.

The place is clean and the service is first rate.  The pizza comes in one size–huge.  The pizza dough is made with pizza flour from the States. We understand the calzone and the Stromboli are easily enough for two people to share. We also tried an order of  El Padrino’s signature “garlic balls.” 🙂 if you like garlic, olive oil and crispy bread, you are sure to like it!

They currently have a beer license and are awaiting a wine license. They hope to feature wines from Santo Tomas Vineyard in the Guadalupe Valley.

We recommend you give it a try  if you haven’t had a chance yet!

Avoid A Tragedy, ID Your Pets!

This last week has seen an increase in the number of lost and found dogs in the area.  This can partially be attributed to the increased numbers of visitors last week with the race, as well as to all of the fireworks associated with the race and carnival. This has prompted a reminder of the importance of identification tags and collars on our dogs.

Thanks to Kip and Nell for this great reminder video clip on the importance of micro-chipping your dog(s).

http://blog.petflow.com/so-touching-you-have-to-see-this-dogs-reaction-to-being-rescued-im-almost-in-tears/

Although it is an extremely good idea to micro-chip, please remember that Mexico does NOT recognize micro-chipping, yet. None of their “veterinarians” or “shelters” have access to the devices that read micro-chips. So, while here on the Baja, be sure to attach a pet identification tag to your dog’s collar With CURRENT information.
The following is a list of recommended information to include:
1.Your last name,

2.Your Mexican phone number (take care to ensure it is current),

3.Your U.S. Phone number (if you have a cell number),

4.Your Mexican address or neighborhood (i.e. EDR, Pete’s Camp, etc)

5.(optional) Reward or Recompensa.

If your dog requires medication, be sure to include a separate tag with the medical information. Examples: Necesita medicina para (name of ailment), or, Es sorda (deaf). This information is particularly helpful should your dog be recovered by an ex-pat or visitor to the area.

Finally, because we are living in a more technologically savy era, take a minute to investigate a service called Pet Hub. They offer a QR code identification tag for a nominal fee. The information provided on the QR code can be updated by you whenever your information changes. The QR code can be read by any smartphone or tablet with a QR code reader. Of course, the QR code tag is worthless should your dog be picked up by someone who hasn’t a clue what the code is all about.  So, your best bet is still your straight forward run-of-the-mill ID tag!

If you have other suggestions to add, please feel free to post them here.

Week in Review: Rumor Pot Continues to Simmer

From time to time we will bring readers a slice of some of the major (and minor) rumors floating around EDR and the North Beach communities. We will attempt to elaborate (and, speculate) on some of these stories to get at what might be something close to the truth. But, we don’t guarantee a hundred percent accuracy.  Final judgment is left to the reader. We encourage our readers to jump in and further illuminate, elaborate, or muddy the waters. Chances are you probably know a lot more than we do! When it comes to rumors around SF, you can rest assured that we are always certain, but, often wrong!

If you have rumor-worthy items you would like to include, please feel free to mention them in the comments, or, pass them along to bajasisters@gmail.com, or, contact us so that you, too, can become an author!

Updated and New Rumors

poolclosed#1 Update: The Big Pool is Closed

Short Answer:  Well, it might as well be—closed–forever.

Longer Answer:  Before I retired, I attended faculty meetings once a month.  At every meeting there was this one colleague who made a habit of asking the same question about a particular issue we were dealing with that year.  And, every time, he would get the same answer.  Finally, one day, we asked him, “Why do you persist in asking the same question every time we meet?  After all, you know what the answer is going to be!”  He responded, “Because I hope that circumstances will have changed and that I will eventually get a different answer.”

That is sort of what it feels like living with an avid lap swimmer. Every day for the past month, this group of die-hard swimmers ask the question: “When is the big pool going to be open for lap swimming?”  The pool guy will shrug and say, “When new part comes.”

To everyone’s surprise, last week they got a different answer.

Lap swimmer: When is the big pool going to be open for lap swimming?

Pool guy: (shrugs) There is not enough money to heat pool. 

Lap swimmer: (eyes widening) What? I thought you said the big pool needed a new heater or a new pump or something?

Pool guy: (shrugs) Yes. That, too.

Moral of this story:  Don’t hope for a different answer.  It might be worse than the original answer.

And, so it is with the pool complex.  Apparently $8,000/month was budgeted to heat the pool(s).  According to reliable sources, this would have been an appropriate amount to budget had the ORIGINAL pool design been built.  However, since the ORIGINAL pool building committee got the sack, the replacement pool building committee (#2 )redesigned the pool complex and did not account for the fact that it was going to cost almost double to heat the larger, redesigned pool.  To make matters a tad big more prickly, the dynamics between the second pool committee and the second set of pool builders (oh, did I forget to mention them?) have disintegrated.  The people who actually wound up completing the pool are not happy about honoring guarantees to parts they didn’t install.  So, the long and the short of this is that our brand new, less than a year old “HOA owned” pool complex is experiencing a few “hiccups.”

roadrunnerclosedno#2 Update: Roadrunner: Closing? Again?

Short answer: Still, not true in 2014.

Longer answer:  Stop! Hold the bus!  Well, it just goes to show, NOTHING in life is static.  Last time I checked in with you on this subject, I had it on good authority that The Roadrunner Upstairs would be open for breakfast, lunch, and dinner at least until June, 2014.  This week, because of something having to do with the new tax reform and business incorporation papers, The Roadrunner has had to develop a new strategy.  So, for all of you Roadrunner fans, here is their latest schedule as of Sunday, 26 January:

The Roadrunner Upstairs

Beginning January 29–open from 5 until 9 p.m and serving DINNERS ONLY.  Open Wednesday through Saturday (ONLY)

The Roadrunner Downstairs (Deli)

Beginning January 29–open from 7 am until 2 p.m. and back to serving breakfast and lunch. Open every day but Tuesday.

Old News Becomes New Again: The Fideicomiso is Going Away.

Short answer: Before you run down to the bank….hold your horses. The law has not changed, yet.

Longer version:  Stories about eliminating the fideicomiso have been floating around for years. Last season, when the new President, Enrique Pena Nieto (PRI party), took office, a bunch of bills–that had been sitting dormant– floated to the surface.  One of those bills had to do with eliminating the fideicomiso.

But, let’s back up a minute. I think it’s safe to assume that when many of us first came down to check out property on the Baja, we knew as much about fideicomisos as we did about the desert brittlebush. Under this new President, and with a different Party in office, it behooves us to have a rudimentary working knowledge of the fideicomiso: what it is, and, what, if any, impact it will have on foreigners “owning” property. An informed and educated public is a responsible citizenry, or, something like that.

What follows is just the tip of the iceberg on this subject. I don’t Pretend to know what I’m talking about. So, if you need or want more information, I encourage you to speak with a Mexican attorney or do a lot of reading. Consider this my disclaimer.

Fideicomiso 101 in a very tiny nutshell

A fideicomiso (pronounced: “fee-day-ko-me-so”) is similar to a “Trust.” The word comes from the Latin word “fideicommissum.”  Fides meaning “trust,” and, comissum meaning “to commit.”  One can assume that the most ancient origins of fideicomisos can be found in Roman Law.  This makes sense since at that time there were restrictions on who could and couldn’t inherit property.  No surprise, women, slaves, and foreigners were excluded from inheriting property. Apparently there must have been people back then who wanted to circumvent this restriction, thus they creating this “wiggle room.”

Later, in England, during the Middle Ages, the fideicomiso became an institution known as a “Trust,” whereby the trustees have legal title to the property and the beneficiaries hold the equitable or beneficial ownership. Some historians speculate that this might have been a way for wealthy landowners to get around paying property taxes.

The Mexican fideicomiso was created early in the last century and is based on the Anglo-Saxon institution of Trusts.  It was described initially as an:

“irrevocable mandate by means of which specific assets are delivered to a bank, as fiduciary, for him(sic) to dispose, according to the intention of the person who gave them to him (called fideicomitente), for the benefit of a third party or beneficiary, called fideicomisario or beneficiary.” –Sergio Monserit Ortiz Soltero.

I think the most important thing to remember here is the terminology.  From my understanding, a fidecomitente is the person who initiates the trust.  The fiduciary (in terms of real estate) is the bank.  The fideicomisario is the beneficiary or the person who is currently benefiting from the property thanks to the fidecomitente and the bank.

Why do “real estate fideicomisos” exist in Mexico?  Initially, a fideicomiso was created with Mexican National Security in mind.  The Mexican Constitution prohibits non-Mexican citizens from owning real property located within 100 kilometers of Mexico’s inland borders or within 50 kilometers of its coastlines.  These areas are referred to as the “restricted zone.”  Only Mexican citizens — or, Mexican corporations whose bylaws forbid the ownership of stock by non-Mexican citizens–are allowed to directly own real estate within the restricted zone.  The whole of the Baja is a “restricted zone.”

During the early 1970’s, the Mexican government decided that it would be to their benefit to allow foreigners to purchase real estate property in the coastal areas of Mexico.  The government explored ways to balance Mexico’s needs of maintaining secure borders and encouraging foreign investment.  Their solution was to allow foreigners to purchase the “beneficial interests” in a fideicomiso, under which legal title to the restricted-zone real estate is held in the name of a Mexican bank. They tweaked their Constitution in 1997 so that foreigners could have unrestricted use of the property (almost as if she/he owned it outright), but the Mexican bank’s legal ownership of the property would technically satisfy the prohibitions against foreign ownership in restricted areas as found in Article 27 of the Mexican Constitution.

For years, foreigners owning homes in Mexico have complained about the recurring administration fees for their fideicomisos. The fiduciary banks don’t appear to do much to earn their $400 to $600 annual fees.  And, for years we have been hearing about the government doing away with the fideicomiso altogether. Last year a bill was presented to the Federal Congress to get rid of the fideicomiso.  And, it passed with an amendment that says they will allow direct ownership of restricted-zone property by foreigners as long as use is for residential purposes only. No commercial activities will be allowed (i.e. rentals and leases).  It goes now to the Senate for discussion. While in the Senate, Senators and others will have to hammer out the “ Calvo Clause” to decide how foreigners will have “escrituras” (title that a Mexican national receives when they purchase land).  The Calvo Clause is used all over the world. In Mexico it would be an agreement you would sign saying that you would behave like a Mexican national and would not try to invoke the laws of your native country when it comes to issues about your property.  In addition, Senators and others need to discuss and agree on something called, the Investment Clause. This clause says that if you have land larger than 2,000 square meters, you must develop it within 24 months and spend at least $250,000 on the improvements. There are other provisions, but, those appear to be the big issues.

Once approved by the Senate, it goes to President Pena Nieto. Some speculate that the President will sign it if:

  • The US doesn’t do something objectionable that affects Mexico between now and then.
  • The banks don’t decide to muddy the waters.
  • The bill doesn’t have too many additions or deletions that the President doesn’t like.

But, wait.  Even if the President does sign it, it still has to go to the States for ratification. (Does all of this sound like a familiar process?)  A simple majority of the State Legislatures need to approve it before it becomes law.  That could take another year. And, then, should it be ratified, there is the process of implementation. I don’t imagine that that is something that will happen– shall we say—“smoothly.”

Even though it’s unlikely that we will see the fideicomiso totally gone anytime soon, I do think it is looming on the horizon. The real estate people are rubbing their hands together with glee already over it.  One of their contentions is that once Americans and Canadians can be assured of outright title to property they will come in droves. Consequently, with so much pressure from realtors and developers, it doesn’t hurt to be prepared and understand the implications should it actually come to pass.

What happens when we eliminate the fideicomiso?  Realtors and developers are quick to point out that closing costs will be reduced.  I’m not one hundred percent sure what they mean when they say, “closing costs.” The only closing costs I’ve seen referenced are filling the fideicomiso.  Those include: the $1,000 bank fee and the $4,000 notario fee.  If there are other fees, I’m not aware of them.  Okay, so let’s assume for the sake of argument that the fideicomiso costs are the closing costs and that they go away. But, wait.  It ain’t that simple.  The fideicomiso cost may go away but it will be replaced with another filing cost. It has to. Indeed, in order to receive title to the property we will have to file a yet-to-be-determined-new-for-foreigners “escritura” and pay all associated fees that go with it—like a notario fee and a bank fee. So, personally, I’m not buying the “this will reduce closing costs” argument, quite yet.

Next argument from the real estate people is that you will be saving $400 to $600 annually in fideicomiso fees. True enough. They are quick to emphasize that $400 to $600 annually will buy a lot of tequila. I think they are trying to be funny.  But,what if you are part of a master trust as we are at EDR?  Are our yearly fees for the master trust deducted from our HOA dues?  If so, how much are they?  If the fideicomiso goes away, and we pay for that out of our HOA dues, will we see a drecrease in our HOA dues?  These are all questions for which I have found no answers.  And, I couldn’t even begin to tell you where to go to get answers to these questions!

Starting Next Week: All Banking in Mexicali Only

Short answer: Not totally true

Longer answer:  While it is true that Bancomer got rid of its branch on the Chetumal, its main office for San Felipe is still on Mar Caribe across from the orange indoor mall.  Banamex on the Chetumal, will, according to the note on the door will be closing its doors next week.  If you have an account with Banamex, you will have to go to Mexicali or figure out how to bank on-line with them.

In terms of ATMs, three still remain in town.

  • La Palapa at LVDM
  • OXXO on Chetumal next to Agua Express
  • Bancomer downtown

If anyone knows of any others, or has any info on these bank office changes, please pass it along under the comments for this post.  Thanks.

Week in Review: Or, What Rumors are Flying Now?

From time to time we will bring readers a slice of some of the major (and minor) rumors floating around EDR and the North Beach communities. We will attempt to elaborate (and, speculate) on some of these stories to get at what might be something close to the truth. But, we don’t guarantee a hundred percent accuracy.  Final judgment is left to the reader. We encourage our readers to jump in and further illuminate or elaborate on a story. Chances are, you know a lot more than we do!

If you have rumor-worthy items you would like to include, please feel free to mention them in the comments, or, pass them along to bajasisters@gmail.com, or, contact us so that you, too, can become an author!

EDR HOA Manager Cliff Ulman Given the Boot

Short answer: I know, I know, some of you out there would like to hear that this rumor is true.  But, it is Untrue.

Longer answer:  Official word is that Cliff Ulman has resigned.  What precipitated the resignation is still under investigation. Some speculate  it is because many of the EDR staff have been asked to take a ten percent salary reduction, including Mr. Ulman.  But, reliable sources say that in Mr. Ulman’s case, he was offered a better job working on the Mainland for a tequila company. (Yes,  you read that correctly.)

The following is a copy of the official letter from the EDR head shed:

January 17, 2014

In response to Pat Butler’s notice of Cliff Ulman’s resignation notice, we would like to take this opportunity to sincerely thank Cliff for all his very significant contributions and accomplishments during the past nine years at El Dorado Ranch.  Cliff’s decision is his as he wanted to continue to explore other avenues of opportunity.  The Supervisory Committee’s are already working in concert with Roberto Islas, the new Administrator, to ensure both a smooth transition and that the projects in the “pipeline” will proceed without interruption.

 We wish Cliff all the very best in his future, and welcome Roberto Islas to the El Dorado Ranch HOAs.

 El Dorado Ranch Supervisors 

El Dorado Ranch La Ventana Del Mar Las Villas 

Steve Kimmey, Denise Laven, Michael Schwartz, Ed Jones, Hans Wildschutte, Gary V. Lambert, Bob Miller

Roberto Islas was managing the Red Lobster, another of Pat Butler’s holdings.

North Beach Community Week in Review, or…What’s been in the Rumor Mill this Time?

saltito.westbnd  From time to time we will bring readers a slice of some of the major (and minor) rumors floating around EDR and the North Beach communities. We will attempt to elaborate (and, speculate) on some of these stories in order to get at what might be something close to the truth. But, we don’t guarantee a hundred percent accuracy. Final judgment is left to the reader. We encourage our readers to jump in and further illuminate or elaborate on a story. Chances are, you know more than we do!

If you have rumor-worthy items you would like to include, please feel free to mention them in the comments, or, pass them along to bajasisters@gmail.com, or, contact us so that you, too, can become an author!

Roadrunner Grill and Bar Closingroadrunner-outside

Short Answer: Not true for 2014.

Long Answer: No doubt about it, the border area VAT increase (Value Added Tax) from eleven to sixteen percent, with its accompanying paperwork nightmare, will hit smaller establishments, like the Roadrunner, hard.  However, reliable sources say the Roadrunner Grill and Bar, as well as the Roadrunner Downstairs Deli will remain open until at least June 1, 2014. The RR Grill and Bar will continue to offer breakfast, lunch, and dinner through June 1. However, beginning June 1 the RR Grill and Bar (upstairs) may be permanently closed.  Starting in the 2014 fall season, The Roadrunner will reopen in its “original” form, i.e. as a cafe/grill/deli, in the old downstairs location. Same great service, same great comfort food, but only serving breakfast and lunch, as it used to do.

The 2015 winter season may be an enchilada of a different color, however. The new tax structure will have an impact on legitimate, licensed small businesses— especially restaurants– and, ultimately on the end user of the services. Foreigners operating small businesses in Mexico will have to be particularly careful to mind their “p’s and q’s” or risk possible closure and/or jail sentences.

The reason restaurants will be particularly hard hit is because until this year they did not pay an eleven percent tax on every order. Instead, they paid a flat rate depending on the size of their business and the number of employees. Therefore, this tax won’t be a simple increase of five percent for them. Instead it is a full sixteen percent increase on each order and each transaction. While the Roadrunner could just add this cost on to each of their menu items (indeed, some restaurants downtown already are doing this), there is some concern among some small business owners that passing off the additional costs to the consumer will only serve to drive down business.  For example, a $6.00 omelet might now cost around $7.00 or $8.00; a $20 haircut might now be in the neighborhood of $23 or $24. Expat retirees on fixed budgets might just think twice about spending their limited income on a breakfast out.  Or, they might just start shopping around for someone who cuts hair for almost free out of their home, rather than frequent the established hair salons.

In addition to consumers feeling the added pinch to their pockets, restaurant owners and small business establishments will have to demonstrate that the sixteen percent is actually being collected on each and every item. They will be held accountable for creating a documented paper trail for every transaction. This will require the added time of a bookkeeper–an added expense that many small businesses may not be prepared for.

This is not the first time the Mexican government has attempted to implement tax reform.  We have heard from locals that many of the previous tax reforms went by the wayside after trial periods when it became apparent that the tax created an undue hardship on businesses and proved far too difficult to implement. The small business owners we spoke to were clearly hoping this might come to pass with regard to this particular tax reform measure.

A study by Colegio de la Frontera Norte, a federally funded think tank based in Tijuana that studies issues on Mexico’s northern border, concludes that the sales-tax hike will harm Baja California’s economy. The revamp will lead to price increases “and reduce the quantities that residents of Baja California consume,” the report said.

This is a very big change in the way business has been conducted here on the Baja. It also applies a tax to food (albeit prepared and cooked for you) that has not been applied in the past.

As can be expected, some businesses—licensed, as well as the unlicensed–will attempt to circumvent the tax with under-the-table and black market style transactions. This would be sheer suicide, however, for any foreign business owner.

The next few months will decide the ultimate outcome and impact of this new tax on our area. I guess it’s up to each of us to decide whether we feel this tax is a good or a bad thing. But, at least we can count on one thing–barring no unforeseen dilemmas–the Roadrunner will continue to be a landmark and a gathering place for all of us in San Felipe at least through 2014!

Note: If you wish more detailed information regarding this new EVA tax reform, please visit our Mexican News page.

dif.cardDIF & INAPAM Card=50% Discount on Property Taxes

Short Answer:  Well, yes…but, it kinda depends.

Long Answer:  For those of you not conversant in DIF and INAPAM Card speak, it goes something like this:

If you are over 60 years of age and are a Mexican citizen or have a Mexican permanent or temporary status card (FM2 or FM3), you may be eligible for the DIF and INAPAM programs in Mexico. DIF stands for El Sistema Nacional para el Desarrollo Integral de la Familia  (National System for the Development of the Whole Family.) INAPAM stands for Instituto Nacional de Las Personas Adultas Mayores (National Institute for Elderly Adults). The DIF and INAPAM programs were set up to assist poor families and vulnerable people of Mexico–with an emphasis on the elderly, the poor, single moms, children, and persons with disabilities. For Americans, just think of it as a giant, government run, almost all inclusive food stamp, WIC, senior center program with voluntary private business buy in. Possession of these cards entitles the bearer to discounts on hundreds of National, State, and private business services and goods:  from transportation to food to medical services to entertainment and much more. Discounts range from five to fifty percent off of goods and services.  Both cards require essentially the same paperwork. Both require that you are able to provide:

1. The original and two photocopies of your FM3 or FM2 or permanent or temporary card.

2. Your passport and two copies of the photo and signature page of it.

3.  Four small photos of yourself, either in black and white or color.  You must be facing forward.

4.  Your blood type.

5. Proof of residence. It must be a utility bill with your address on it.

With tax season upon us, there has been some speculation as to whether or not the DIF and INAPAM cards entitle one to a 50% discount on property taxes and water bills. It is the conclusion of this researcher that some municipalities in Mexico do, indeed, offer this benefit. However, it appears that to qualify for this benefit you must hold the fidecomiso on your property.  Most of EDR residents hold it in conjunction with the Bank.  Thus, we are ineligible.

However, given that taxes are so reasonable here, compared with what some of us have to pay on our property in the United States, perhaps we should consider ourselves fortunate. And, if you pay your taxes now –between January 1 and January 30 — you are entitled to receive an additional twenty percent off! You’ll be hard pressed to find such a deal anywhere.  So, the long and the short of it is, if you possess the DIF and INAPAM cards, you may not qualify for a discount on your property taxes, but you will have the good fortune of saving on hundreds of other discounted items.  To find out more about the discounts (because they vary from State to State) check out the INAPAM web site:

http://www.inapam.gob.mx/es/INAPAM/

In short, Mexico offers us many different “silver linings” that we might not be blessed to find anywhere else.

PS Don’t forget to pay your property taxes this month.

 

EDR New Pool. Closed.DSC00039

Short Answer: Well,kinda, sorta. Who knows?

Long Answer:  If you drive by or go to the new pool facility, one of the things that might strike you as a little odd—since it is a brand new facility— is that while the Jacuzzi and the water volley ball pools are available for use all day long, the large, “lap-swimming” pool seems to  be mostly covered and closed.  This has prompted some people to wonder if it has been closed permanently, or, what exactly is going on.  A discussion with various sources seemingly in “in-the-know” about pool stuff, revealed that the large pool appears to be just too expensive to heat. So, EDR management decided to limit its use.  It is now open from 9 a.m. until 11 a.m. for lap swimmers.

A survey taken by the Ranch in 2010 indicated that one of the top community services that the HOA should offer residents was lap swimming (It was rated top 7 item to be included in a community center.).  So, this reporter decided to find out what do the lap swimmers have to say about this new mandate on the large, lap-swimming pool?  Opinion was overwhelmingly not so good.  For starters many of them have years built around swimming laps earlier in the morning (generally at 7:30 a.m.).  This regime allows them to get their exercise program in early and frees them up to do other chores and activities during the rest of the day.  Then, there is the issue of heat and sun.  As our days get longer, more and more people will be coming down to the pool earlier and earlier.  This creates a conflict with the lap swimmers.  Many visitors (and, some residents) do not “get,” or, understand lap swimming.  Out of ignorance, they can be quite discourteous in their use of the pool, making it impossible for the lap swimmers to enjoy, or, even make it through their workout programs. And, the later in the day a swimmer goes to the pool, the warmer the pool can be.  Warm temperatures are nice, but, there is a point when lap swimming in hot water is sheer hell.

But, the real question on most lap swimmer’s minds is, if the HOA knew they wouldn’t be able to heat the large, lap- swimming pool, why on earth did they spend money to build it in the first place?  And, if, on the other hand,  they weren’t aware of the cost of heating, why weren’t they aware?  So, in the end, the large pool begins to take on the image just another “luxury façade.”   Something to open up for photo-ops and major holidays when there is an influx of potential property buyers.

Sorry, lap swimmers, but, without any true representation on the EDR HOA anymore, you can’t even bitch to your neighborhood rep!

Note:  Since writing this piece, we have found out that the new reason for the large pool limiting its hours is that the heater is broken.   Apparently parts have been ordered and the pool may be reopened this coming Wednesday.  As usual, fantasy and reality share a thin line. It’s anyone’s guess as to how things turn out in the end for the large pool and its loyal band of lap-swimmers.

Summary of Desert Observation: Fall 2013

Haven’t had a chance to come down yet this year? Get a summary of what the desert around EDR is looking like:

http://www.croneschronicle.com/2014/01/desert-observations-fall-2013/

Baja Flash Mob Group Growing

grp-btc-obr_stance_500x

Every time we get together there are more and more women joining us at Studio 31-13.  Our little Baja group truly is beginning to be part of the ONE BILLION RISING!  Susan shared some photos from our practice yesterday.  Thought you all would enjoy taking a look.  Thanks, Susan, for being on hand to help chronicle this on going event and for sharing them with us!lizlindamasanee grp2_btc_break-std3113_500x grp_btc_st3113_500x brkchain2-studio3113-lyndadannasusan

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