ISSUE #382: Nov. 21-26, 2011


Brian Timmons, Newsletter Author
Brian Timmons

Dear friends,

When I started Residencias Los Jardines, I started writing a weekly news letter -determined to tell all the good, bad, and the ugly. I knew some readers would be interested in the construction process. I expected others might be interested in the lifestyle of two people who had decided to live outside the box. For others, the adventures of Lita, the parrot and the cat took on an entertainment saga all its own.

Residencias Los Jardines is finished. We periodically have resales and rental availability. Some readers may be interested in this information.

More and more, the content will be dominated by events of our new project, "El Dorado" for short. While the future is always uncertain, I again aim to tell it like it happens -the good, the bad, and the ugly, and that is what follows.

Brian Timmons
Residencias Los Jardines /
Hacienda El Dorado /


Construction Log
Updates about Hacienda El Dorado

Rio Oro: BCR has found out about the development and wanted to present it to three of their preferred developers -BCR would fund, their builders would take on the commitment, and we would throw in the land for a joint venture. While these discussions are in the early stages and while they want to tie us up, we are also speaking with, a well known architect / developer in the area for whom the project would be a great fit as well. It's way too early to know what is going to happen but I believe something good with happen because it is a great piece of land, great location, and has permits.


Residencias Los Jardines
Property Management, Rentals, Re-Sales

Imagine the "Titanic": this incident wasn't exactly the Titanic but it did involve water. Nine PM Friday night while watching TV I was knocked up by a resident alerting me to a broken pipe. For some reason, a hose bib blew off and water was, of course, spurting 20' across the road. So I found the shut off and had it fixed the next morning. Who knows why? I really think the basic reason is the plastic pipe...

Chris Howard's Tour: visited us Saturday morning along with about 12 people... a bit of a younger crown this time. While it's too early to know if any will follow up with us or with other options Chris presents them with, Chris did say that RE was really very, very slow... which we know to be the case, We're not even seen Europeans much any more -their own economic problems have seen to that.

Market Activity: We've had no calls or showings this week.

Pending Sale of 102: It's moving along and should be in the hands of the lawyers next week for an expected closing mid January.

KIREBE: The construction company building out the development tour east... continues pounding along. They have about 8 more buildings to complete and finish and then, after 3 1/2 years, they'll be out of here, no more dust, no more noise, no more heavy trucks, no more toxic water dumped on us...


Unit 106B: $159,000 for sale / Price Reduced by $10,000 See Unit
Unit 115: $205,000 for sale See unit
Unit 125: $140,000 for sale / Price reduced by $10,000 See unit


Site Plan-


UNIT #106B
FOR SALE $159,000
Price reduced by $10,000

Total Area (Sq Ft): 1270
Total area (Sq M): 115
Bedrooms: 2
Bathrooms: 2
Floor(s): Ground
Type: Apartment
Furnished: Yes

This is a fully furnished 2-bedroom unit situated in a 2-story building, which has two nits on the ground floor and two units on the 2nd. floor. Each unit is the same size 1,250sf) divided into 800 sf of interior space and 450 sf of covered front and back erraces. Floor. The solid masonry demising wall (common wall) as well as the 5" oncrete slab prevent sound transference.


UNIT #115
FOR SALE $205,000

Total Area (Sq Ft): 1345
Total area (Sq M): 124
Bedrooms: 2
Bathrooms: 2
Floor(s): 1 Story
Type: Attached
Furnished: Yes

This 1,345 sf single floor home includes a 200 sf private terrace plus parking for one car. It is attached on two sides by a 6” solid concrete block wall which prevents sound transfer. This is an extremely well decorated home with lots of natural wood built ins.


UNIT #125
FOR SALE $140,000

Price reduced by $10,000

Total Area (Sq Ft): 662
Total area (Sq M): 61
Bedrooms: 1
Bathrooms: 1
Floor(s): 2nd Floor
Type: Semi-Detached
Furnished: Yes

This 662 sf, + parking for one car and 33sf locker is a one bedroom home on the 2nd floor overlooking the large pool. It is ideal for a single person or couple —or investment property.




Our Lives

WEATHER: It's been a normal transitional week of weather -a little sun, a little rain- beautiful... beautiful from my perspective.

New Tax Plan in CR: The government is having difficulties getting this passed -surprise, surprise and as currently structured is dumber than dumb but I don't think any government including the CR government was ever accused of doing smart things... as written, provisions would cripple the country when the solution is really easy... simply collect / enforce those taxes currently on the books and those require those behind in their taxes to pay... and for the government to focus on some meaningful cuts in expenditures (the latter is not likely to happen)... but CR's culture is not to enforce nor to maintain, simply to pass a law, allocate no resources to enforcement, challenge it to death in the courts, provide no training, and when the issue is out of the lime light, move on to something new...

Interesting Articles culled from the week's news:

Bribes "Seduce" Ticos

According to a study by the Centro de Investigaciones en Matemáticas Puras y Aplicadas (CIMPA) - Centre for Research in Pure and Applied Mathematics of the Universidad de Costa Rica (UCR), Costa Ricans (Ticos) have become more tolerant of bribes.

In one year, it is estimated that Costa Ricans paid more than ¢18 billion colones in bribes, that is, about ¢50 million a day.

The research was conducted with a sample of one thousand people interviewed in 47 cantones (counties) and 95 distritos (districts) around the country, between September 3 and 18, 2011.

Some key findings are that 50% of respondents do not know where to report corruption

On the other hand, the study reveals that people made bribes to obtain a driver's license, with an average payment of ¢23.000 colones each, which would bring the total to an estimated ¢2 billion.

The main conclusion of the study is that Ticos have become more tolerant of corruption, for them the main reason of the inefficiency of government.

In addition to being permissive with corruption, Costa Ricans are not afraid of the consequences to legal action. It has lost credibility in the country's justice system.

Revealing is that 95% of the interviewed admitted to having offered some type of bribe for something or other. The study has a margin of error of plus/minus 3%.


The "Pimps of Poverty" Trophy Is A Tie This Week
By John R. Holtz*

A few short months ago the most dominant worries on our collective minds were national security, rampant crime, corruption among government officials and institutions, illegal shark fining, outrageous traffic fines that could not be justified, the almost greed like counting of money generated to the State from well positioned traffic cameras; but now, resulting from a barrage of local media, international opinions such as that published in The Wall Street Journal, and to a far lesser extent expat media, the list of priorities has changed.

Those former crisis issues remain a distant memory as we move along Disney World with our “D” ticket where reality is far from what we see. And, we need to keep focused.

What has replaced the soap opera are two critical challenges that should be found important by every national and expat alike because they each will impact your life; living in Costa Rica.

The Tax Plan and the plight of the public health system, Caja Costarricense de Seguro Social (CCSS or Caja).

Despite all the smoke and mirrors, the Tax Plan, which no matter what form it eventually becomes will dramatically increase the cost of living for each and every one of us and challenge if not threaten the macro-economy.

For example, the construction industry predicts the costs of a new building will increase 8% to 12%, the tourists industry is looking at a 10% increase in costs and a decrease in tourists from 2010. We have already seen an 8% increase in October on food stuffs going up in anticipation of the holidays as well as quick passage of the Tax Plan.

I have been saying for almost a year that Costa Rica´s gross revenues have increased only 7% while the costs of government have increased a disproportionate 29.4% and The Cato Institute, a conservative think tank, credits this contemporary bureaucratic growth to the Arias administration which counts for 20% of those “cost” numbers.

With a fiscal deficit of 5.3% to GDP predicted for 2011 and 5.5% for 2012, Costa Rica is the highest debt ratio to GDP in Latin America.

Just numbers, meaningless numbers that interest only a few yet the end result will pretty much set the economic standard for a weak economy and possibly a degenerative culture made up of more crime and corruption just to pay household bills. As Marx said, “society is a reflection of the economy.”

Where is the austerity plan that goes along with the raising of revenue?

Lady Laura admits her 2012 budget will increase another 9%. Both Greece and Italy have evolved into public chaos because social entitlements as well as government employment are to be whittled away. In Costa Rica we play the fiddle as Rome burns. A land of conformists!

At home, each of us will pay a price. How much is hard to say. But remember, that in 2012 47% of the entire budget is again being borrowed to pay current expenses. It is like consolidating credit cards to open up access to more loans, only we are playing for survival and not Christmas toys.

As “Ithink”, a regular “Inside Costa Rica” commentator and a very bright one at that, always says to me, “The sky is falling.” Maybe it is?

Tied for the “Pimp” trophy is the national health care system, the Caja.

By law, nationals and each expat must pay into the Caja. The only exception are tourists, including the perpetual tourist who in a pinch can receive services free of charge. As would be expected this cherished institution is the pride of Costa Rica and essential to most that live here.

Blindsided, Laura Chinchilla is being hit with a year end deficit only of the Caja of upwards of $250 million and getting worse. (Why she acts surprised, like a deer on a dark road looking into the headlights of an oncoming car is beyond me. She was Vice President during the last administration and should have at least suspected if not known of the bankrupt condition.)

From 2007 to 2010, Caja officials made a very bad decision. Without having conducted any technical studies, the Caja hired roughly 10,000 new employees. Yet Caja services have not improved. Today, more than 65,000 patients await surgery; 150,000 are waiting for ultrasonic scans and in a more recent case, a man from Palmar Norte received a gastronomy appointment in the year 2018.

Meanwhile, Caja doctors can earn up to $20,000 per month, when overtime, benefits, bonuses and “on the side” private practices are factored.

Some physicians and technicians also are equity or stakeholders in private services billed to the Caja at double, triple the going rate.

Four physicians have been asked to make a choice: Either work for the Caja or work for Radiotherapy Irazu because they have a clear conflict of interest. The Caja owns two cancer treating linear radial therapy units of which one does not work. Instead of purchasing or repairing them, these fearless docs sent patients to a private company named Radiotherapy Irazu (700 patients) at $3,200 per treatment while the cost at the Caja is between $1,250 to $1,600 per patient.

Radiotherapy Irazu apparently is owned in large part by these four physicians or close relatives who spent $10.4 million of tax payer´s money on private gain plus collected salaries and benefits from the Caja.

In a period of nine months between September 2010 and June 2011, the Caja purchased more than $919,000 in emergency prescription drugs from a medical supply company known as Seven Pharma Limited. According to La Naciόn newspaper, an employee of the Caja´s mother is a major stakeholder in that company.

Our so called tax plan will decide how well we will live, while for most people the Caja will decide if we will live. It all about “me” instead of being part of the solution.

For better than a week, Caja anesthesiologist have been on a strike for more prophylactic vacations time and a 5% wage increase resulting in better than 1,000 surgeries to be delayed.
The State and the Caja both get my “Pimps of Poverty” trophy for this week and it is not returnable.

*John Holtz can be reached at


Tax 'Experts' Target Costa Rica

French political thinker Alexis de Tocqueville rightly warned in the earliest days of the American republic that democracy can endure up to the point when "politicians realize they can bribe people with their own money."

It's a good thing the Frenchman didn't have to also factor in the poisonous influence of multilateral institutions, such as today's Inter-American Development Bank (IBD). He might have abandoned all hope.

Tocqueville's perceived threat to democracy has not yet crippled the U.S. But he was prescient about the inherent risks. Think Greece and Argentina—and now the seemingly stable Costa Rica.

Latin America is littered with once-promising nations brought low by self-indulgence. But Costa Rica, the so-called Switzerland of Central America, was supposed to be above it all. While the rest of the isthmus was immersed in guerrilla wars in the 1980s, Costa Rica enjoyed peace. That stability and the country's better-educated population put it well ahead of its neighbors in the post rebel-war period.

Now the education and health gap that once existed between Costa Rica and the rest of the region is disappearing and the Tocqueville effect seems to be at the heart of the problem. Since January, the government of President Laura Chinchilla of the National Liberation Party (PLN) has been pushing a package of sharp tax increases to fund a spike in government spending.

The IDB seems to approve. A statement released from its country representative on Friday said that the bank "does not advocate a specific tax burden or tax policy." But IDB tax expert Alberto Barreix has twice visited the country this year to endorse the Chinchilla plan, calling it "a heck of a tax reform." He has also said that Costa Rica needs a tax burden similar to Argentina's.

Some Costa Ricans know better: A coalition of antitax activists has launched a public information counteroffensive to inform citizens of the cost of the tax hike. A video called "Costa Risa," literally "Laugh Coast," that mocks the political class has gone viral on the Internet.

Whether the tropical tea party can prevail is far from clear, but its struggle ought not to be ignored, because it is a microcosm of a threat to the entire region. Geniuses from Washington's multilateral community have decided that poor countries cannot become rich countries unless their governments impose heavy tax burdens on the locals, and these "bankers" are using rich-country resources to make it happen.

Costa Rica's official tax stats are deceptive. In 2008 the central government's revenues equaled only 15.9% of gross domestic product. But as Cato Institute scholar Juan Carlos Hidalgo pointed out in a January op-ed in the Costa Rican daily La Nación, that number doesn't include local taxes or taxes paid to government entities like the Institute for Tourism and the Institute for Agrarian Development. Nor does it include social security taxes, which rich countries include when they discuss their tax-to-GDP ratios.

Tally up the total take and, according to Mr. Hidalgo, the burden for Costa Ricans in 2008 was 23.1% of GDP. In recessionary 2009 it fell to 21.7%. Compare that to the U.S. overall tax burden of 26.1% in 2008 and 24% in 2009 (the latest year for which Organization for Economic Co-operation and Development figures are available), and it is clear that Costa Ricans are not undertaxed.

Nevertheless, the country's fiscal deficit as a percentage of GDP rose to 3.5% of GDP in 2009 from only 0.2% in 2008. In 2010, according to the United Nation's Economic Commission on Latin America, Costa Rica's fiscal deficit was 5.2%, the highest in Latin America. The government forecasts a deficit of 5.5% in 2012.

The problem is government spending. While revenues as a percentage of GDP are forecast to be 7.5% lower this year than they were in 2008, expenditures as a percentage of GDP are expected to come in 29.4% higher. Most of that money is going into an expanded bureaucracy, which grew by 20% during the previous PLN government of Oscar Arias. Mr. Arias was also generous with salary increases. Tocqueville predicted it.

Now Ms. Chinchilla's "reform" proposes, among other things, a 14% value-added tax on all goods and services to replace a 13% sales tax on goods only and tax hikes on small and medium-sized businesses. Far from simply raising taxes on the rich, as the politicians want people to believe, this proposal will hit ordinary Costa Ricans hard.

Ms. Chinchilla's party is salivating over the possibility of new revenue and the IDB is feeding the frenzy. In September it approved $609,000 for a project that its website says will "support" the "implementation of the tax reform proposal." The IDB says how the money will be spent is not yet public information.

Tocqueville would have seen the danger: "The history of liberty is a history of the limitation of governmental power, not the increase of it." But even he could not have anticipated today's governmental excess encouraged by the IDB.

By MARY ANASTASIA O'GRADY, Wall Street Journal


Brian, Lita, Hugo, irreverent Vicka, the pigeon toed parrot, Chico II and Chica II

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