INS Suit and "La Trinidad" foreclosure... Updates

ISSUE #770: July 21-27, 2019


Brian Timmons, Newsletter Author
Brian Timmons

Dear friends,

When I started Residencias Los Jardines, I started writing a weekly newsletter -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 re-sales and rental availability. Some readers may be interested in this information.

Brian Timmons
Developer / Property manager
Residencias Los Jardines


rentals & sales

Paradisus Condos / Rohrmoser
Visit our website

Paradisus Condos - click to visit

Each of the units consists of two bedrooms / two bathrooms, and a large living/dining/kitchen area. The floor plan of each of these units has eliminated the optional "den / office" divider. The result is a larger area offering more flexible furniture arrangements while still maintaining the option of including an office area. At 105m2 plus two parking spots each and storage locker, they offer a great opportunity for someone seeking views, security, central location, and first class, all round living...

Semi furnished unit: For sale: $235,000
Fully furnished unit: For sale: $245,000
Floor 12 -west view

Market activity
sales & rentals

Sales: Los Jardines: Units #114, #116 and #124


Paradisus: Nothing available

Los Jardines: Units #106C, #106D and #113

Residencias Los Jardines
property management, rentals & re-sales

Unit #114: $ 199,000 / See Unit
Unit #116: $ 195,000 $ 189,995 / See Unit
Unit #124: $ 125,000 / See Unit

Unit #106C: $ 950 mo. / Available immediately / See Unit
Unit #106D: $ 1050 mo. / Available immediately / See Unit
Unit #113: $ 1,200 mo. $ 1,150 / Available immediately / See Unit

For sale

UNIT #114
$ 199,000

Total Area (Sq Ft): 1290
Total area (Sq M): 120
Bedrooms: 2
Bathrooms: 2
Floor(s): 1
Type: Semi-Attached
Furnished: Yes

This 2 bedroom/2bathroom,1,290 sf single floor end unit home includes a 150 sf front terrace plus parking for one car. This house is fully air conditioned and has recently been professionally decorated by international decorator Alcides Graffe and has undergone a complete renovation—new modern furniture, finishings, window coverings, and art work by Carlos Gambino. It is arguably the nicest furnished unit at Residencias Los Jardines and only steps from the pool

UNIT #116
$ 195,000 $ 189,995

Total Area (Sq Ft): 1290
Total area (Sq M): 120
Bedrooms: 2
Bathrooms: 2
Floor(s): 1
Type: Semi-Attached
Furnished: Yes

This 1,290 sf single floor home includes a 300 sf front terrace plus parking for one car and a separate, secure storage locker. It is and end unit and therefore attached on only one side by a 6 inch cement demising (common) wall, which prevents sound transfer.

UNIT #124
$135,000 $ 125,000

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, + covered parking for one car, is a one bedroom home on the 2nd floor overlooking the large pool. It is ideal for a single person or couple.

For rent

UNIT #106C
$ 950 mo.
Available immediately

Total Area (Sq Ft): 1250
Total area (Sq M): 120
Bedrooms: 2
Bathrooms: 2
Floor(s): 1
Type: 4-plex
Furnished: Yes

This is a fully furnished 2-bedroom unit situated in a 2-story building, which has two units 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 terraces. Units 106A and B are on the ground floor; Units 106 C and D are on the 2nd. Floor. The solid masonry demising wall (common wall) as well as the 5” concrete slab prevent sound transference.

UNIT #106D
$ 1050 mo.
Available immediately

Total Area (Sq Ft): 1227 + parking
Total area (Sq M): 113 + parking
Bedrooms: 1 + den (bedroom possible)
Bathrooms: 2
Floor(s): 2nd. floor
Type: 4-plex
Furnished: Yes

This 2nd story, 1,227 sf (113 m2 + one parking space) is a georgous home with one of the best views at Los Jardines. The very large front covered terrace faces east and is suitable for entertaining; the off-bedroom covered terrace faces west for sun sets. This very tastefully furnished and fully equipped home offers a lifestyle envied by many.

UNIT #113
$ 1,150 mo. price reduction
Available immediately

Total Area (Sq Ft): 1290
Total area (Sq M): 120
Bedrooms: 2
Bathrooms: 2
Floor(s): 1
Type: Semi-attached
Furnished: Yes

This 1,290 sf single floor home includes a 300 sf front terrace plus parking for one car. It is attached on one side by a 6 inch cement demising (common) wall, which prevents sound transfer. The three other sides allow light, ventilation and garden views.

Our Lives

Rainy Season... Rainy season kicked back in... nice for everyone and everything...

What Happened This Week

Vacancies: Another week and not one inquiry...

Property Management: I am sick of it... I have done it for 38 years... like a chef, you are only as good as your last meal or "fix-it". Sometimes you have to deal with crazy people... like this last two weeks... a 41 yr old first time pregnant former Orange County (Calif) yoga instructor living in a "spiritual" community in Nicoya came here to be close to medical facilities... She was scared, lost, and uncomfortable but took out her issues on her husband (I am sure... his problem) and me... my problem. I tried for a while to address every perceived issue and finally offered another unit or an ultimatum. She ended up flying home to mama and he returned to Nicoya... I am left to clean up the mess and recover... meanwhile, no clients looking..

INS suit: Met with the lawyers. INS has until Aug. 8 to appeal the award; they will based on cases ahead of me. It makes no difference if their arguments have a legal or procedural basis -the appeal will take another year to be resolved. Shortly after reviewing their expected appeal, we will file a civil suit... this will be, in effect, a request for a court order to pay the award. The court cannot overturn the award... they could decide not to enforce the award... but according to the lawyers, this almost never occurs... again, this process will take a year... but will be in parallel with the arbitration award appeal... and if they loose these two, they are expected to appeal to the SALA 1 for annulment... so again another year Bottom line, probably another two years of BS...

"La Trinidad" Foreclosure: We are working on drafting an agreement of purchase and sale and a mortgage take back. The buyer selected a lawyer who is clueless. Fortunately, I have a very knowledgeable lawyer and he is looking after my back side. The issues are really agreed to... it is merely the drafting of the document itself ...but as we all know, it isn't done until the $$ is in the bank... so, we'll see what happens next week.

A Journey in Learning: Six + months ago, I saw an ad in CraigsListCR looking for high interest financing of government contracts... a company needing capital to execute a government contract. I followed it up, met an interesting guy and interviewed the company wanting the funds... I was not comfortable at the time so did not pursue it... but kept in touch with the broker, used him for document translation and conventional mortgages opportunities. I shared this experience with a friend and co-lender. Recently my friend has been looking for lending opportunities. Through other brokers, he agreed to four loans but none of them happened. I was again approached by the initial broker re. a short term working capital loan... I passed because I am having to deal with the La Trinidad issue... I presented the opportunity to my friend. We started a conversation... and during that 10 day conversation the original offer morphed into a larger opportunity with security... this closed yesterday... as of now, everyone is happy. There are more of these opportunities coming up and a very attractive conventional opportunity was also presented to us.

Nitty-Gritty Shi...ty - Shi..ty: In the background has been the untangling of months of screwed up accounting -for myself and for Doneste. I am sure no money is missing but money is unaccounted for because of bad accounting and record organization... This is really, really time consuming and should never have happened... and the rectification and assurance that it will no longer happen is yet to be figured out.

New Housing Development: The contiguous lot to the south of Los Jardines has been for sale for at least the past 20 years. It is now being developed. The old and ugly street wall has been removed and a fancy new facade is being built. A roadway and services will be built and a pool and rancho. The development will be sold as lots. We'll see...

News Items of the Week


1. Colon Exchange Rate: it continues to drop -the opposite of what was expected by the people I hang around with... It now costs us about 8% more (rate has dropped from around 620 to 572). And the articles below suggest it is likely to remain there for the interim.

2. Fuel Tax: CR has the highest fuel tax in Central Am. You wouldn't know it from the number of cars on the roads.

3. Central Bank Vision: this is a good summary of where we have come from over the past year and where we are likely to go. While the government has succeeded in changing the perception of imminent financial collapse to one of fiscal health, the result has been the strengthening colon. That creates problems in and of itself... more expensive exports, more expensive tourism and the subsequent decrease in tourists (not yet admitted), higher unemployment and social disruption, chaotic tax levies and filing requirements have caused a reduction in investment and higher unemployment, etc. Officially inflation is non-existent (except if you hold US $). The government has gone towards implementing easy money policies... easier credit. reduction in bank reserves, reduction of government interest rates, debt forgiveness, etc.

4. Exchange Rate: This outlines the balancing act the government is on...

1. New minimum for dollar price!

The dollar price started the week with the lowest price of the year in the wholesale Monex market: it closed the transfer at ¢ 574.7 per dollar.

This price was last seen at the end of August last year, prior to the national strike against the fiscal plan.

In banks, the price averages ¢581 in both public and private entities.

The approval of Eurobonds for $ 1.5 billion, lower economic uncertainty and therefore less demand for dollars, are causing this decrease in the value of the US currency. This fall was accentuated from last April.

In addition to these factors, at the end of July, the US Federal Reserve will lower interest rates, which would have an impact on the exchange rate.

2. PUSC proposes to reduce fuel tax

On Tuesday, the legislative bench of the Christian Social Unity Party (PUSC) proposed a reduction in the single fuel tax, as part of three bills for the country’s economic recovery.

According to the Rojiazules, Costa Rica is the Central American country with the highest hydrocarbon costs, a situation that places the country at a competitive disadvantage and affects the pocket of all Costa Ricans. In addition, more than 34.7% of the price of fuels corresponds to the tax.

The project would reduce the amount of the tax to levels similar to those in the rest of Central America and establish a maximum tax value of 40% of the international fuel price.

Currently, the single fuel tax is adjusted based on the Consumer Price Index (CPI) and does not consider the international price.

This tax is disproportionate and takes away from Costa Rican families resources that would be devoted to consumption and economic recovery, so necessary in our country,” said the Social Christians.

They explained that the reduction in tax revenue would be balanced with a tax recovery via VAT, income and others. Also, with a reduction in public sector expenditures, a decrease in cross-subsidies and with external resources.

3) Forum: Vision from the Central Bank

The entity will act in the event that inflationary or deflationary pressures threaten to divert inflation from its target range in the medium term.

The economy faces a difficult external and internal context. After the approval of the Law on Strengthening Public Finances, calm and confidence in domestic financial markets was gradually restored, and there was a reduction in the risk premium in foreign markets. This improvement was manifested, among other ways, in the government's access to domestic financing under more favorable conditions and in the stabilization of the exchange market.

However, production slowed in the first half of the year, unemployment remains at very high levels and informal employment increased compared to the first quarter of 2018.

In this context of global and domestic economic slowdown, persistently high unemployment and moderate growth expectations, the Central Bank oriented its policy actions.

Much of the deterioration is due to an adverse international environment. The world economy is slowing, especially due to trade disputes between the United States and China, uncertainty about the United Kingdom's exit from the European Union and the slowdown in world trade. In fact, international organizations and many central banks have begun to lower projections of global growth and their own countries, and have relaxed their monetary policy stance by reducing interest rates directly or by announcing a lower trajectory for future rates. The expectation of lower interest rates and more favorable international financial conditions has operated as a mitigator of the global slowdown.

The prices of some key export products have fallen in international markets, notably those of pineapple and coffee, while oil prices have increased in relation to their level at the end of 2018 (although the recent fall is a relief). The lower level of the terms of trade (that is, the ratio of export prices to import prices) compared to the forecast affects purchasing power.

The deep recession in Nicaragua has also hit Costa Rican exports strongly to that country and others in Central America. In addition, economic activity has been affected by adverse climatic conditions for agriculture.

Problems at home Economic activity also suffers from domestic factors. Despite the confidence and tranquility perceived in the national financial markets after the approval of the tax reform, it has not yet translated into improvements in consumption or investment. In fact, surveys continue to show high levels of distrust, uncertainty and pessimism among consumers and investors.

Although the medium and long-term fiscal perspectives are now better than before the reform, taxation continues to generate concern, which seems to derive, mainly, from the uncertainty expressed by many economic agents in relation to the impact it would have on their situation individual entry into force of the new tax provisions and the fact that, even if the reform provisions are fully complied with, it will take several years for public finances to be balanced and the Central Government-GDP debt ratio stabilized.

Meanwhile, the execution of public investment projects has been below the levels expected in January, which had even been adjusted to reflect historical execution rates. This sub-execution of public investment is the result of problems in tenders and unexpected delays in large-scale works.

In this context of global and domestic economic slowdown, persistently high unemployment and moderate growth expectations, the Central Bank oriented its policy actions, first, to strengthen its commitment to price stability, as a fundamental pillar of solidity Macroeconomic and growth. And, indeed, inflation has remained low. Moreover, inflation prospects for economic agents, measured by 12-month term surveys, have converged to the midpoint of the Central Bank's target range. This is a valuable vote of confidence about future price stability.

These actions have begun to bear fruit: recently, several financial entities announced a greater availability of money to lend and reductions in interest rates.

Credit incentive Secondly, the Central Bank, aware of the difficult situation that the country is going through, and once the financial and exchange rate tensions of 2018 have been overcome, has oriented its policy measures to stimulate credit conditions as a way of invigorating economic activity, based on the provisions of article 2 of its Organic Law.

In the first half of the year, the Central Bank reduced the monetary policy rate (MPR) three times, for an accumulated 75 basis points (bp), to 4.5%, and decreased the minimum reserve rate legal and liquidity reserve on obligations in national currency from 15% to 12% as of June 16. Likewise, the National Financial System Supervision Council approved several initiatives that facilitate access to credit.

These actions have begun to bear fruit: recently, several financial entities announced a greater availability of money to lend and reductions in interest rates. It is hoped that their actions contribute to incentivize the request for credits and, in that way, favor the recovery of economic activity and employment.

Note the logical and temporal sequence of these measures, and their adequacy to the circumstances. The stimulation of credit conditions would not have taken effect in the midst of the marked tensions that financial markets experienced last year. On the contrary, it would have fueled currency pressures and compromised financial stability. Once the tax reform was approved and the calm in the markets restored, the Central Bank took advantage of the space to adopt these measures based on technical studies, a sense of responsibility and a firm commitment to macroeconomic stability.

Program Review In line with these policies, in the Review of the 2019-2020 Macroeconomic Program, the Central Bank reiterated its inflation target of 3% ± 1 percentage point (pp), which is consistent with the Bank's objective, set forth in article 2 of its Organic Law, to maintain low and stable inflation. The fulfillment of this objective contributes to the achievement of macroeconomic stability, which in turn promotes economic growth and employment generation, and results in an improvement in the well-being of the population.

In addition, the Central Bank agreed to lower its MPR by 50 bp, the fourth reduction this year, for a cumulative 125 bp. The measure was based, in the main, in that, although the regulatory changes of the tax reform - particularly the adoption of the value added tax - would push inflation around the central value of the target range in the next 18 months, they persist downside risks associated with a slow growth in economic activity - with a production level below potential - a high unemployment rate and a low growth in monetary and credit aggregates.

These gaps in production and unemployment enable an expansive monetary policy stance. However, the Central Bank will keep an eye on the evolution of macroeconomic conditions and will act in a timely manner if it considers that inflationary or deflationary pressures threaten to divert inflation from its target range in the medium term.

The author is president of the Central Bank of Costa Rica (BCCR).

4) Chronicle of the markets: Under the exchange sword

The Central Bank expects for the following months a greater entry of foreign currency into the country, which worries productive sectors for the appreciation of the colon, the loss of competitiveness and the reactivation process.

With the financing needs of the Treasury practically covered until the beginning of 2020 , and confirmed the suspicions that this year the growth of the economy will be lower than expected, the board is a little clearer to pay attention to the exchange market. Specifically, how the price of the dollar will influence the process of economic recovery in the country.

In this debate many arguments are crossed, some very close to the textbook and others more connected to the Costa Rican reality, dollarized wherever you look.

Rodrigo Cubero, president of the Central Bank, acknowledged this week that they expect a good amount of dollars to enter the country in the coming months; First, through the external financing of the Government, where the budget support credits with multilateral partners and the $ 1.5 billion of Eurobonds will be placed before the end of 2019.

The reference price of the dollar is close to ¢ 575 the sale, this July 26. One of the arguments of those who advocate the need to allow further devaluation of the colon is that the currency is practically at the same level of 10 years ago. Archive / John Durán

In case it is not enough, the Bank identifies the presence of some financial flows from abroad, which pay the availability of dollars. Let's add here the lower internal demand for foreign exchange due to the deceleration of imports and we will obtain a market that promises high availability of foreign currency in the medium term.

Whether in private conversations, or in public, the concern of several economists and business chambers points to the effects that this flow of dollars is having on the country's competitiveness. Exporters, especially, are alarmed by the latter as their products and services become more expensive compared to other countries. But they are not alone: tourist entrepreneurs know that a weak dollar makes the experience of visiting Costa Rica more expensive.

The solution without taking your finger off the textbook would be to admit further devaluation of the colon. If at the time - I read around - the Central Bank had given up strengthening its reserve position with the $ 1 billion loan from the Latin American Reserve Fund, the possibility of a greater increase in the price of the dollar would have been incorporated; or if the Government borrowed in a currency other than dollars requested abroad, there would be room for that adjustment. None of the above happened.

Now, you can not remove the finger of the other line, the debt of households and businesses. A few days ago the General Superintendence of Financial Institutions (Sugef), shared some revealing data. He showed how almost 90% of the dollar debt of natural persons was in the hands of non-currency generators. It is not necessary to be a fortune teller to predict the effect that an accelerated devaluation could have on the payment capacity of these debtors and the confidence of consumers, already very weak.

The exchange variable as Damocles' sword threatens to fall, or on the employment and competitiveness of the country, if the dollar remains low; or on households and companies in debt in this currency (financial system included), in case of a devaluation. As we say popularly, do we have to choose?


Brian C. Timmons
Property Manager RLJ and Newsletter Author

Costa Rica:
Cell: (+506) 8-455-59-35
Land line: (+506) 2282-4142 Ext. 101

VOIP: (+416) 461-2203


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