NY Times Story on the DR

CPYou

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In Pursuit of Fabulousness

August 13, 2004
By KAREN ROBINOVITZ

ONE sure way a destination can raise its public profile is
by piggybacking on the reputation of a better-known spot
that may, in the eyes of trend seekers, be losing some of
its heat. Thus, Columbia County, in upstate New York,
becomes known as the new Hamptons; Fort Lauderdale promotes
itself as the next South Beach; and Atlantic City puts out
the word that it is giving Las Vegas a run for its money.

Well, say hello to the Dominican Republic, "the new St.
Bart's."

Tourism is booming in the Dominican Republic, and so is
construction of second homes for people from northerly
climes. The trend doesn't appear to have been slowed by
unsettled politics in Haiti, which shares the island of
Hispaniola with the Dominican Republic; by flooding that
hit both countries this spring; or by the power cuts and
high gasoline prices that recently had Dominican citizens
demonstrating against the outgoing president. In the
seacoast gated enclaves, an insular bubble of luxury far
from the trouble spots, villas and condominiums are selling
fast.

Three years ago, Mikhail Baryshnikov visited the sprawling
Southern Greek Revival beachside vacation home of his good
friend the Dominican-born designer Oscar de la Renta in
Punta Cana on the country's east coast. Mr. de la Renta and
the singer Julio Iglesias are partners in the Punta Cana
Resort and Club there.

As Mr. de la Renta tells the story, Mr. Baryshnikov fell in
love with the place, put his house in St. Bart's on the
market and built one in the Dominican Republic. "He thought
it was a better environment for his children," Mr. de la
Renta said in a telephone interview. "And it's the best
place to really get away to rest."

"There's so much building going on," said Amelia Vicini, a
fashion editor at Town & Country magazine, who was born and
raised in the Dominican Republic. "Every time I go home, I
am amazed. The winter season is crazy, full of people -
celebrities, A-listers, everyone."

Air service is increasing, too. In 2003, the Dominican
Republic was the fastest growing Caribbean destination for
American Airlines, which now has 10 flights a day there
from Kennedy Airport, up from seven in 2001. In June,
JetBlue made the Dominican Republic its first non-United
States destination, offering daily flights for $199 each
way from Kennedy. Dave Ulmer, JetBlue's vice president for
planning, said that in addition to serving the large
Dominican community in New York, the airline will be
catering to the crowd that has made the country "a hot
leisure destination." (Recently, the airline was offering
special fares of $69 each way, before taxes, for flights
this fall between New York and Santo Domingo.)

The Dominican Republic, south of Cuba and the Bahamas, is a
direct three-and-a-half-hour flight from New York. "It's so
close," said Margarita Waxman, who lives in SoHo. When she
retired recently from a public relations job at Bulgari,
she spent $3 million on four acres of Dominican Republic
beachfront for a new villa, passing up St. Bart's, where
she has often vacationed. "I go back and forth on a monthly
basis." (Not only is St. Bart's farther away, but traveling
there requires flying to St. Maarten and then taking a
jumper flight.)

But the big attraction is the combination of classic
Caribbean assets - "the people are beautiful, the ocean is
beautiful, the weather is beautiful," Mr. Iglesias said by
telephone from the Dominican Republic - and surprisingly
favorable prices.

When a 20-unit condominium building by the beach in
Cabarete, on the north coast, went on the market in March,
prices started at $50,000 for a small one-bedroom, said
Peter Wirten, a broker with Josefina Covents & Associates
in Cabarete, and he sold every condo within a week. The
highest-priced unit, with two bedrooms and ocean views, was
$125,000.

The advantage is the same higher in the market. "It's so
much cheaper than St. Bart's, but no less lush and
tropical," said Ereka Dunn, a co-founder of D2 Publicity, a
lifestyle and fashion public relations firm in New York.
She and her family are eyeing properties priced at $400,000
to $1 million at Sea Horse Ranch, a 250-acre development on
the north coast with an equestrian center and a golf course
and a spa in the works. (Ms. Waxman's property is there,
too.) "For our price range, you can get an amazing home,
built out and furnished," Ms. Dunn said, at a third of the
price in St. Bart's.

A St. Bart's real estate agent, Alain Mora of CMI Real
Estate, said that the two places aren't even comparable.

"You can be a king in the Dominican for very little money,"
Mr. Mora said. "You need much more than that in St.
Bart's." Houses that are $400,000 to $500,000 in an
exclusive Dominican Republic development would start at
$1.1 million in St. Bart's, he said.

Until a few years ago, the Dominican Republic had a
reputation as second-rate, and affluent shoppers for second
homes largely stayed away. Then, in the early 90's,
developers, most notably the Cuban-American sugar magnates
Alfonso and Josi Fanjul, began attracting attention with
luxurious gated communities on the water. Gradually, their
marketing has paid off. The Fanjuls' Casa de Campo, on the
southeastern coast about 90 minutes from Santo Domingo, now
has 1,800 homes, with more being built at $400,000 to $10
million each.

THE resort, which has attracted celebrities like Elizabeth
Taylor and Sean Combs, though neither owns property there,
has a private yacht club, shops and restaurants, a hospital
and three golf courses, with a fourth on the way.

Lisa Kirkman, general manager of Sea Horse Ranch, said that
home sales there had gone up 50 percent in the last year
and that prices had risen more than 250 percent in a
decade. On the market there now are a four-bedroom,
4,304-square-foot house without water views for $1,050,000
and a four-bedroom, 7,409-square-foot house, also without
water views, for $3.4 million.

At Punta Cana, where Mr. Iglesias said that developers
expect to add 300 homes and a third golf course in the next
five years, the 35 homes now under construction start at
$310,000, for a three-bedroom villa away from the water and
rise to several million dollars for oceanfront properties.
(Mr. Iglesias's own home in Punta Cana, a six-acre
Balinese-style compound, presumably cost on the high side.)

So far, at least, the Dominican Republic is also avoiding
some pitfalls of places adopted by the jet set. "There's a
quaintness about it," Ms. Waxman said. "It has all the
beauty of St. Bart's, only more bohemian."

Rolando Gonzalez-Bunster, a 55-year-old business developer
from Argentina whose primary residence is in Greenwich,
Conn., said that it was easier to have a house in the
Dominican Republic than in St. Bart's. "It is more
accessible and easier to get staff." he said. He bought an
oceanfront lot in Casa de Campo five years ago and built a
16,000-square-foot house in the style of the Mexican
Pacific Coast. Such lots can cost several million dollars,
Mr. Gonzalez-Bunster said, but the cost of custom
construction is less than half what it would be in the
United States.

The Dominican Republic's half-discovered quality may not
last much longer. "Everyone is always looking for the next
place, and it is definitely the D. R.," said Shawn Prez,
national director of promotions at Bad Boy Entertainment,
Sean Combs's record label, and chief executive of Power
Moves Marketing and Promotions, a music promoter based in
New York. He plans a music conference there next year that
he hopes will attract hundreds of industry executives.

The Dominican Republic, he said, is "still sort of
untapped."

http://www.nytimes.com/2004/08/13/realestate/13DOMI.html?ex=1093507524&ei=1&en=3ee11caf8f185908
 

Lechero

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Aug 11, 2004
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Ny Times 8/14

Lights Out in the Dominican Republic

By SIMON ROMERO

Published: August 14, 2004


SANTO DOMINGO, Dominican Republic, Aug. 13 - The temperatures within Luis Eduardo Aybar Hospital, one of this city's largest public surgery centers, sometimes climb above 100 degrees, making its operating rooms feel like saunas. But when the lights flicker on and off, and then stay off for hours, the doctors truly begin to sweat.

"I never thought I'd be practicing my trade by candlelight," said Dr. C?sar Jesurum, a cardiologist who now does just that and frequently uses the glow from his cellphone to navigate the hospital's mazelike corridors. Backup generators often fail to operate during blackouts for lack of expensive diesel fuel.

"We learned to live without air-conditioning long ago, but electricity is another matter," he said. "This is absolutely harrowing."

While the medical staff manages to care for many patients, some complicated operations have had to be postponed.

A crescendo of blackouts is plaguing the Dominican Republic, a nation of 8.8 million that is festering while the government and foreign-owned electricity companies feud.

Its economy, which until recently was the Caribbean's most robust, has been thrown into upheaval in the last year after a banking crisis depleted resources needed to keep the nation's lights on.

President Hip?lito Mej?a, who lost a re-election bid in May, has shown little inclination to confront the issue, attributing much of the blame for the power failures to Leonel Fern?ndez, who returns to the presidency on Aug. 16 after a four-year hiatus. Much of the nation's generating system is owned by foreign investors, who bought their stakes during Mr. Fern?ndez's previous term in the late 1990's.

"After we take office it will be up to us," Mr. Fern?ndez, a lawyer, said recently.

A team from the International Monetary Fund, which suspended a $600 million aid package to the Dominican Republic last year, arrived in Santo Domingo this month to assess both the situation and whether Mr. Fern?ndez can quickly assemble a cabinet that can address it effectively, people involved in the negotiations said.

He has already named an economist, H?ctor Valdez Albizu, as the new president of the central bank, and has appointed other economic officials.

The Mej?a administration has been engaged in a dispute with the American companies - including the AES Corporation, Enron and Goldman Sachs - that control much of the nation's electricity industry. Mr. Mej?a has repeatedly called for their executives to be deported, describing the industry in a recent speech as a "mess" and a "disaster."

The companies, in turn, claim they are owed at least $300 million, much of it from the government itself.

"It's always a problem when things get personal," Julian Nebreda, the Venezuela-born executive who oversees AES's operations in the Dominican Republic, said in an interview.

In recent months, the companies, led by AES, which is based in Arlington, Va., have occasionally cut off electricity to the nation's distribution grid, contending that because the government has not paid its bills, they cannot import the natural gas and oil needed to fuel their operations. That decision has placed the companies at the center of a political and economic maelstrom over blackouts lasting as long as 20 hours a day.

In a country that is already reeling from an economic downturn brought on by the government's handling of a string of bank failures in the last year, protests over the blackouts are becoming a regular feature of daily life.

In one recent protest in front of AES's headquarters in Santo Domingo, for instance, community organizations carried signs painted with skulls and crossbones describing the company as a pirate. Some of the protests are turning violent. In the northern city of Santiago this month, for example, a policeman was shot in the leg after residents blocked roadways with burning tires and trees.

Dealing with the blackouts, meanwhile, is turning into a national obsession. Similar to the way people in neighboring Caribbean countries follow the fluctuating value of their currencies against the dollar, Dominicans measure the number of megavatios, or megawatts, available daily on the nation's electricity grid.

Using figures from a government agency overseeing the electricity industry, newspapers here fill their columns each day with reports on the amount of electricity flowing toward consumers, often noting that less than half of the Dominican Republic's demand of about 1,800 megawatts is being met.

"We're dealing with the consequences of one bad decision after another in the reaction to this crisis," said Bernardo Vega, an economist and a former ambassador to the United States. "Things would have been bad enough without a confluence of factors, from the rising price of oil to a devaluation of the currency that have put the squeeze on us."

Analysts trace the electricity industry's difficulties to the 1990's, when the Dominican Republic was one of the fastest-growing economies in Latin America with export-oriented manufacturers and a vibrant tourism industry, and international energy companies invested heavily to meet the growing demand for electricity.

Now a slow-burning financial crisis is contributing to the blackouts. Discoveries of fraud at several of the nation's largest banks last year and the government's decision to compensate depositors for potential losses threw the economy into a tailspin. That bailout cost the government an amount equivalent to about a fifth of gross domestic product, making a policy of subsidizing electricity for poor residents increasingly untenable. That, in turn, led the central government to clash with foreign power companies over late payments.

"We have worked closely with the government over the past two years," said Mariella Mahan, regional manager for the Caribbean at Prisma Energy. "However, the bottom line is that there are insufficient funds in the sector to meet generating costs."

Prisma Energy is a unit of Enron that controls many of its parent company's flawed forays into international energy markets, including a generator in the Dominican Republic that has been idle for much of the past year.

"High levels of losses, poor collection records and subsidized tariffs are the key elements," Ms. Mahan said.

Enron, which is hoping to emerge from bankruptcy protection this year, is seeking a buyer for its Dominican assets, as are AES and Goldman Sachs, the investment bank which became exposed to the electricity crisis last October after acquiring Cogentrix of Charlotte, N.C., a power company with a large presence in the Dominican Republic. Ed Canaday, a spokesman for Goldman Sachs in New York, said Cogentrix was trying to work with the Dominican government to resolve the crisis.

Adding to the sense of chaos associated with the blackouts, gunmen on a motorbike in June shot and killed Craig Hiserote, the general manager of Cogentrix's power plant about 40 miles east of Santo Domingo. Authorities investigating the murder said, however, that it was a contract killing arranged by Mr. Hiserote's Dominican wife and not related to tension over power failures.

With American power companies declaring their wariness to continue operating in the Dominican Republic, the only foreign utility that seems to have pried itself away from the situation with any degree of success is Union Fenosa of Spain. In a move that confounded foreign creditors, Mr. Mej?a's government agreed last September to buy a 50 percent stake in two ailing electricity distributors that the government sold to Union Fenosa in 1999.

The decision, which effectively renationalized the concerns, was what led to the I.M.F.'s suspension of the $600 million aid package, as well as to the worsening of a financial crisis that resulted in $2 billion of capital flight last year and a further weakening of the peso, according to Standard & Poor's. (Showing their ire over the transaction, many Dominicans refer to the deal as "Union Penosa," a play on the company's name and the Spanish word for "painful.")

Despite the I.M.F.'s action, the World Bank, sensing that the electricity crisis was deepening last February, approved a $100 million loan to help the Dominican government pay for electricity.

By June, however, after disbursing $50 million of the loan, the bank suspended the remainder until either the outgoing or incoming administration could come up with a cohesive plan for paying the electricity bills.

In the meantime, some residents are better prepared than others to deal with the blackouts. Most wealthy Dominicans have backup generators to provide electricity when the lights go out, transforming Santo Domingo into a crazy-quilt upon nightfall with leafier districts brightly lighted while most of the city smolders in the dark.

Then there are those who illicitly connect their homes or businesses to the grid to siphon off what current might be derived from the ailing system, transforming the rooftops of some neighborhoods into a labyrinth of wires. Jesus Nivar, a 40-year-old mechanic in a working-class neighborhood near the Luis Eduardo Aybar Hospital, justified this approach.

"It's not robbery when the desired object is hardly even there," Mr. Nivar said over the blare of Spanish-language rap music from a radio powered by an illegal electric connection at his garage.