A line in the sand over opening Mexico’s beaches to foreign ownership

ARROYO SECO, Mexico — To nationalistic Mexicans, it may sound like blasphemy. But Artemio Rosas doesn’t care. He wants more gringos living in his tiny coastal pueblo.

As it stands, a few hundred foreign surfers visit each winter to ride a strong north swell that moves across the smaller of Arroyo Seco’s two pristine Pacific beaches. Rosas wants them to stay, buy land and build retirement and vacation homes on this obscure pocket of coast, two hours south of Puerto Vallarta. It would help his surf shop and would help him with his new gig as a real estate broker. Most important, he says, it would mean better jobs for the town’s low-paid agricultural workers.

Rosas, 40, is among those hoping that Mexican legislators will soon modify a long-standing constitutional provision that prohibits foreigners from directly owning property along the nation’s coasts and borders.

If the constitution is changed, “it’s going to be good for a lot of people here,” Rosas said on a recent afternoon as he maneuvered his old Jeep Cherokee over the pueblo’s dusty unpaved roads. “Especially the poor.”

Since the late 1970s, foreign investors have worked around the ban by entering into trusts called fideicomisos with Mexican banks, which then hold the title to the purchased property. But real estate agents have long complained that the unorthodox arrangement can scare off would-be buyers.

In April, the lower house of Mexico’s Congress overwhelmingly approved a proposal to lift the ban on ownership of residential property in the area known as the restricted zone, which extends 31 miles inland from the coast and 62 miles inland from the border. (A ban on ownership of commercial property would remain intact.) The proposal now is subject to the approval of the upper chamber, where the chances appear good, and then of a majority of state legislatures.

Complications would still remain for foreigners who want to live on coastal land held by ejidos, the agrarian communes that are legacies of the Mexican Revolution. Such land cannot be sold to foreigners, although over the years, many non-Mexicans have entered into dicey arrangements that provide them access.

Proponents of the constitutional change are hoping it will spur new foreign investment, which has been limited of late by concerns about drug cartel violence and the 2008 financial crash in the United States.

Opponents — 88,000 of whom have signed an online petition — insist that Mexico’s beaches should remain solely in the hands of Mexicans. Some of the feeling is rooted in a historical mistrust of outsiders: Lawmaker Roberto Lopez Gonzalez, who this spring voted against the bill to ease restrictions, said in an interview that foreigners might use their beachfront property to set up military installations.

Here along the Costalegre, the partially developed stretch of Pacific coast in Lopez’s home state of Jalisco, the proposal tends to raise less dramatic, but still vexing, questions about what a future Mexico should look like: Will a new influx of outsiders transform and Americanize traditional coastal villages like Arroyo Seco? And if that happens, what would Mexicans gain or lose?

The 1917 constitution was drafted after decades of military intervention by Spanish, French and U.S. military forces. The next invasion, if it comes, is likely to be one of U.S. baby boomers — that is, if they decide that their warm, affordable but perennially troubled neighbor is a stable enough place to retire.

The tan, wiry Rosas considers himself a bridge between the two cultures. He was born in Guerrero state but attended high school in Orange County, where he was a regular on the surfing scene. The old Mexican fear of foreigners is alien to him. “It’s small minds who think like that,” he said.

He’s been in the real estate business only a few months but has sold several lots. But he’s also seen the foreign reluctance to buy here.

He recalls a Canadian surfer who eventually backed out after being confounded by the details of the deal. “He said, ‘Let’s wait until the constitution changes,’” Rosas recalled.

Arroyo Seco’s surf may be spectacular, but the village of 400 is a workaday place, with a handful of dusty stores and a humdrum concrete town square. Here, men in dirt-caked huaraches wait for pickup trucks to take them to nearby fields to plant chiles and cut papayas. Some of these workers express eagerness to supplement their incomes with jobs that cater to foreign snowbirds.

“There would be work,” said Geronimo Magaña, 55. “That’s the main point.”

Others, though, worry that new development would cut off locals’ access to the beaches, despite federal guarantees.

Farmworker Roberto Gudiño said it isn’t just a matter of feeling the sand underfoot. It’s about fishing to survive.

“It’s really important,” he said. “A lot of times when there’s no meat, at least there’s sea bass.”

The Costalegre is already home to several posh resorts that cater to foreigners and wealthy Mexicans. Today the region is bracing for more than $1 billion in new resort projects, including residential subdivisions and condo towers that would stand to benefit from a change in the constitution.

The future that Rosas envisions for Arroyo Seco might look something like La Manzanilla, a town of 1,300 people about 30 minutes’ drive down the coast. Roughly 15 years ago, that fishing village was “discovered” by Canadian and Mexican snowbirds; today, their Malibu-style luxury homes loom in the hills overlooking the traditional town like landed UFOs.

On a recent Sunday evening, half a dozen of the town’s taxi drivers were sitting in the main square, playing cards under an awning as fishermen launched small boats a few yards away. Driver Cesar Mendoza, speaking for the group, said the newcomers had created jobs in construction, housecleaning and gardening.

Yet even among some foreigners here, there is a fear that towns like this one will lose what’s left of their charm to an onrushing wave of ticky-tacky condominiums. Some echo the warnings of local environmental groups, which talk of damage that new development could do to the fragile coastal ecosystem.

La Manzanilla real estate agent Daniel Hallas said that even the pending legislation, if approved, might not do enough to boost foreign investors’ confidence. The Mexican legal system, he said, requires further improvements to truly protect the rights of such property owners.

Then there are the ejido properties. One way non-Mexicans can gain access to an ejido lot is by paying for it and then placing the title in an ejido member’s name. The practice often leads to heartache for non-Mexican investors who vainly attempt to assert their rights over land they may live on but do not really own, said David William Connell, a Puerto Vallarta real estate attorney.

Connell said that although a constitutional change would simplify the buying process for non-ejido coastal lots, he didn’t think it alone could create a flood of new foreign investment. That, he said, will come only with a healthier economy north of the border.

Still, the possibility of a big change concerns Mexicans like Susana Peña, a La Manzanilla property manager. She said the foreign contingent in town had done much good, sponsoring kids’ sports teams and local schools. But she wonders whether a tipping point is on the horizon — a point at which little Mexican towns like this one no longer feel very Mexican.

“They are taking away the only thing we have left,” she said. “I feel like this land is a part of us.”

richard.fausset@latimes.com