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Este informe no está disponible en español. CARIBBEAN BUSINESS Paradise Lost? Three Decades After The Ouster Of The U.S. Navy, Culebra’s 10 Square Miles Still Languish In Economic Development Oblivion. Will History Repeat Itself In Vieques And Roosevelt Roads? By MARIALBA MARTINEZ March 4, 2004 One last chance? A couple of companies trying to do business in a high-cost environment notwithstanding, economic development has eluded Culebra. Although the municipality’s residents have stopped believing politicians’ promises, its current mayor has a plan to turn it all around. Culebra’s lack of economic development 29 years after the U.S. Navy’s expulsion is a devastating omen for Vieques and Roosevelt Roads, which are looking to implement sustained development strategies after the recent departure of the military from their municipalities. The parallels with Culebra are startling and should be studied carefully to avoid the same mistakes. The Navy’s ouster from Culebra on June 25, 1975 came about mostly because of the uproar over a bomb falling in the wrong place at the wrong time, though no one died. A similar incident in 1999, which claimed the life of civilian guard David Sanes, eventually forced the military’s exit from Vieques and Roosevelt Roads in 2003. Instead of tourism being the largest employer in Culebra, it is the government, as it is in many other municipalities, that bears the brunt of the employment burden, followed by industries such as construction, services, and manufacturing. Culebra’s official unemployment rate may be one of the lowest in Puerto Rico, at 3% in December 2003, but it has a labor force of scarcely more than 900, out a total population of 1,900. Transportation services are deficient; local health services depend on Fajardo and San Juan’s Medical Center if medical complications arise; and the island’s infrastructure can barely support the population, let alone the influx of visitors brought in by tourism and commerce. Culebra residents waited patiently (after 29 years, perhaps too patiently) for an economic boom. It is now 2004, and Culebra’s economic bonanza hasn’t materialized, despite the island’s renown among international tourism connoisseurs, such as Conde Nast Traveler and National Geographic Traveler, as one of the most beautiful ecotourism destinations in the world. Even with the central government approving new tax incentives to attract more businesses, new companies remain absent from Culebra. Several tourism projects, among them the 164-unit condo-hotel Costa Bonita, have been unable to open because of delays in procuring regulatory and zoning permits. The great pity is the lost economic opportunity, not only for the people of Culebra but for all of Puerto Rico, to develop this paradise into a world-class tourism destination through which billions of dollars could flow into Puerto Rico’s economy. Given the Vieques government’s foot-dragging over the past 10 months, people are starting to wonder what the fate of that municipality will be. Vieques, Ceiba, and all of Puerto Rico must take a long, hard look at Culebra to avoid a similar fate. They must ask themselves the all-important question: Why hasn’t Culebra advanced economically in 30 years? Not your run-of-the-mill municipality It is obvious Culebra lacks the basic amenities which most residents elsewhere in Puerto Rico (except in Vieques) take for granted. Culebra’s school-age children attend the public school in the town of Dewey. In 2001, a $100,000 legislative allocation was used to renovate the school, which involved adding new classrooms and sanitary facilities, installing cement roofs, and buying materials such as blackboards, desks, and first-aid kits. In 2002, the central government granted Culebra $21.5 million to build a new elementary school for 250 students, which will have eight buildings, science and computer labs, a library, and a covered basketball court. Water and electricity are piped in underwater from Naguabo’s Punta Lima through Vieques and then to Culebra. Recently replaced at a cost of $16 million, the 22-mile-long pipeline and the generators to back it up should last 30 years or so. Still, the island depends on the Big Island (as the main island of Puerto Rico is called) to provide water and electricity. Out of 1,024 housing units recorded in the 2000 U.S. census, 40, or 3.9%, lacked plumbing; 26, or 2.5%, lacked complete kitchen facilities; and 206, or 20.1%, lacked telephone service. The census also revealed that out of 1,744 homeowners, 1,327, or 76%, said they had lived in the same house since 1995 and only 4.9% had ever resided outside Puerto Rico. Household income in 1999 for 589 of 704 households ranged from less than $10,000 to $50,000. Culebra’s lack of a sewer system means that 40% to 60% of the wastewater is dumped into the sea. Considering that the island’s principal attraction is its various ecosystems, this pollution is unacceptable. In 2002, the Puerto Rico Aqueduct & Sewer Authority began constructing a sewer system for Culebra. Work on 30% of the system is ongoing, but the remaining 70% is at a standstill pending regulatory permits, the acquisition of land to install a water-pump system, and the approval to put the work out to bid. Culebra’s only landfill will be full in three or four years unless the Solid Waste Management Authority approves a new site and provides the funds to build it. In the meantime, the municipality has implemented a recycling program which has reduced the amount of solid waste disposed of annually by 30%. The island has only one Diagnostic & Treatment Center (DTC), which is run by a private company in conjunction with the Department of Health. Recent efforts to make possible telemedicine (or the use of teleconferencing to provide, enhance, or expedite healthcare) between Culebra and San Juan’s Medical Center have been unsuccessful, though Vieques is already part of the program. "There are no drugstores in Culebra to dispense prescription medicine to the general public," said Culebra Mayor Ivan Romero Peña. "The DTC dispenses drugs to residents who are part of the government’s Health Reform. Patients who aren’t part of the Health Reform have to get their medicine delivered by ferry or plane from Fajardo, which can take a day or two. Several major drugstores in Puerto Rico, among them Walgreens, have expressed interest in opening a branch in Culebra, but nothing has come of it." As for entertainment, there are no movie theaters, dance halls, or fast-food restaurants in Culebra. Residents needing to travel to Puerto Rico for medical, legal, and government services must do so by ferry or airplane. If they miss the last boat or plane to Culebra, they are stranded. That could also happen if the ferries break down, bad weather moves in, or a storm or hurricane hits the island. Ferries leave early in the morning and return late in the afternoon, making any trip to Puerto Rico an all-day affair. Residents have asked the Ports Authority to add a midday trip to Fajardo and Vieques, but the agency claims it doesn’t have the funds. A 20-minute trip to sister island Vieques would allow residents access to service providers currently not found in Culebra, such as lawyers and certain medical specialists. "When you compare the costs involved in running the Cataño-San Juan ferry and the Fajardo-Culebra-Vieques ferry, you see it is more expensive to run the Cataño ferry," said Romero Peña. "The Maritime Transportation Authority spends about $15 million on the entire ferry system’s operation. The trips made every 15 minutes between Cataño and San Juan add up to more nautical miles sailed than the Culebra and Vieques ferry trips combined." Whether because of the emotional scars left by the expropriation of Culebra’s first township, San Ildefonso; the bombs dropped during military exercises; or the transfer of 1,480 acres of Culebra’s best land, including San Ildefonso, to the U.S. Fish & Wildlife Service for the Culebra National Wildlife Refuge (established in 1909), the municipality’s residents have felt overlooked and become numb to politicians’ promises of a brighter future. Culebra after the U.S. Navy What happened to the early plans to transform Culebra into a tourist paradise, with its clear blue waters, fascinating wildlife habitats, nature paths that crisscross the island, and laid-back style of living—all of which make for a destination comparable to the best in the Caribbean and maybe in the world? Not much. The island’s zoning and conservation regulations were summarily taken over by central and federal agencies; the people of Culebra never had a say in the decisions. The municipal government depended on the central government to keep up what little infrastructure there was, including the island’s water, sewerage, electricity, and telecommunications services. Former Popular Democratic Party (PDP) Mayor Anastacio "Taso" Soto, who served from 1981 to 1989, told CARIBBEAN BUSINESS that any funds he got for the city came from federal or local legislative allocations. "The [executive branch] never helped us with any projects," he said. "The only ones that gave us money were the district legislators. As for federal proposals, we had to compete with other Puerto Rico municipalities for the same funds." Soto remembers well that several companies were turned off from setting up in Culebra by its lack of a sewer system and its poor health and educational programs. He blames these inadequacies for the dearth of industrial development in Culebra. Romero Peña can understand some of the frustrations of previous mayors. "The mayors had the best intentions but were in office to take care of the day-to-day municipal problems; it was a sort of micromanagement," he said. "Transportation to and from the island wasn’t Culebra’s problem to solve; it was the central government’s. The mayors complained but that was about it. We have tried to be more proactive. We visit the central government agencies and the legislators and tell them we want to be part of the decision-making process. And we have definitely seen improvements in the services Culebra gets." Romero Peña believes the Navy’s departure from Vieques has benefited Culebra by turning others’ eyes to the smaller, forgotten island. "Even though the Navy has been out of Culebra for nearly 30 years, there has been no action to work out the problems left by the military before and after its departure. Just like Vieques, Culebra has its own set of problems, which we perhaps blame on the U.S. Navy. But there has been neglect by the central and municipal governments as well. We just thought everything would be resolved after the Navy left," said Romero Peña. Culebra’s economic development plan Culebra has elected four mayors in the past three decades or so. PDP Mayor Ramon Figueroa, one of the most well-liked, was in office from 1958 until 1980 and led the efforts to expel the Navy. Mayor Soto came next, holding office from 1981 to 1988; he was followed by New Progressive Party Mayor Abraham Peña (who is related to Romero Peña), from 1989 to 2001. PDP Mayor Romero Peña was born and raised in Culebra and has been in office since 2001. With the responsibility of bringing Culebra into the 21st century and creating a sustainable economy for its residents, he has proposed substantial reforms under a master plan called Natural Culebra (Culebra al Natural). "In the past, we lacked a good planning strategy, which is why Culebra al Natural incorporates a number of initiatives to restart Culebra’s economy, such as the municipalization of the Authority for the Conservation & Development of Culebra and the implementation of Law 153 of Aug. 10, 2002," said Romero Peña. "These initiatives include Vieques because [the future of] the two islands is very much interconnected. The implementation of a plan for sustainable economic development must be paced so that we don’t end up 10 years from now with communities lacking electricity, water, or other necessary services. "Culebra must expand the tourism industry without displacing our communities, as is happening today," he added. "The most important resources Culebra has are its people, its quality of life, and its services. To preserve this we must provide adequate resources such as education and an improved infrastructure. We must show residents that they haven’t been forgotten, that we are going to take care of their needs however we can." One of Romero Peña’s most pressing concerns is the protection and development of Culebra’s ecosystem. In 2002, the municipality finally gained control of the island’s environmental & zoning regulatory agency, the Authority for the Conservation & Development of Culebra, which had operated under the Puerto Rico Department of Natural & Environmental Resources. Culebra can now enforce the municipality’s zoning laws and prevent illegal construction, as long as it complies with the central government’s rules, as established by the Regulations & Permits Administration (ARPE by its Spanish acronym) and the Planning Board. The municipality has already brought two lawsuits against ARPE for approving permits for construction projects in prohibited zoning areas. The municipality’s chief argument is that uncontrolled construction, particularly of midsize and large hotels, could strain the island’s already tenuous water, sewerage, and electricity infrastructure. The municipality is concerned, for instance, about Costa Bonita, a $22 million, 164-unit condo-hotel expected to open this summer after more than a year’s delay. All the units have been sold since the project’s initial stages. "Based on what our engineers have said and done, we don’t believe our operation should adversely affect the island’s infrastructure," said Rick Newman, president of hotel operator Flagship Services Corp. "Costa Bonita was built to run efficiently, even with fewer staff if necessary. We have made arrangements for alternative sources of water and electricity but feel the municipality’s ongoing infrastructure improvements will be sufficient for everyone." Newman said the condo-hotel would need up to 70 employees. "What is most important is that the people of Culebra feel proud of Costa Bonita and of the exposure and benefit it will bring the island," added Newman. "Our guests won’t only want to stay in their apartments and eat only in our restaurants; they’ll want to visit other parts of the island. We at Flagship want to show we are far from being Culebra’s enemy. We want to create a positive destination with options for dining and excursions that will nourish the economy. Culebra hasn’t changed since the 1970s, and the development of Costa Bonita is an opportunity to march forward." One of the principal issues for Mayor Romero Peña has been whether to move homes built decades ago in Dewey’s maritime zone (where ARPE allows no construction) to other areas of Culebra. Because these homes are in violation of local law, most Dewey residents lack land titles. Of the 1,024 total housing units in Culebra, 342, or one-third, were built between 1939 and 1979. "Some 40% to 60% of the businesses in Dewey are where ARPE allows no construction," said Romero Peña. "The problem is that most of the town’s houses were built in the early 1900s, when the residents were relocated from San Ildefonso by the U.S. Navy, but ARPE wasn’t created until 1975. Local businesses developed here out of necessity and exist to this day for that same reason." Romero Peña insists on promoting legislation to allow Dewey’s businesses to remain in this area. "After all, one of the maritime zone’s requirements is that it should remain an area for the enjoyment of all. This area is already economically developed and its impact on the maritime zone isn’t adverse. Most of those businesses have existed for over 50 years and should be allowed to apply for land titles and for the permits and licenses needed to operate," he said. One initiative to help Culebra’s businesses is the agreement between the municipality and the Puerto Rico Products Association (PRPA) to establish preference rates for PRPA members there. Suppliers interested in selling their products in Culebra are being matched with businesses on the island, which should generate lower wholesale prices for Culebra business owners. Another aspect of Romero Peña’s Culebra al Natural plan involves implementing Law 153 of Aug. 10, 2002, which established the Special Economic Development Zone for Vieques & Culebra. The law is intended to attract businesses through tax incentives. Qualifying businesses would receive a 50% to 100% exemption from property taxes for 25 years; a 10% special deduction on salaries for every new, full-time job created over a five-year term; and a 10% special tax deduction on the company’s lease over a 10-year period. In addition, 50% of the revenue generated from the value of products or services sold in the tourism, cultural, and agricultural sectors would be tax-exempt for 30 years. Local consulting firm Estudios Tecnicos is designing an economic development plan for Culebra that incorporates Law 153. "We still lack a good economic development strategy for our Culebra al Natural plan," said Romero Peña. "With Estudios Tecnicos’ study, we should be able to come up with an integrated master plan for Vieques and Culebra. The islands share many deficiencies in addition to infrastructure. We can’t discuss the development of Culebra without taking Vieques into account, and vice versa." Promoting the educational and social development of children is another component of Culebra al Natural. The mayor is personally involved in organizing and putting on sports tournaments on weekends. Five youngsters from Culebra were to have participated in this year’s World’s Best 10K Race over the Teodoro Moscoso Bridge. The municipality is planning to build a youth center at a cost of approximately $40,000. To join, children must obtain a letter of recommendation from a community organization or a church, be students with good grades, and volunteer in a community program at least 10 hours a month. In return, the center will offer recreational and educational activities, computers linked to the Internet, music lessons, sports, excursions to other municipalities, and leadership workshops. "The Legislature recently approved a $100,000 allocation for student scholarships in Vieques and Culebra," said Romero Peña. "This means at least five students from each municipality will become professionals in areas of particular need to Culebra, with the promise to come back to the island to work." Romero Peña wants to motivate Culebra’s younger generation not only to pursue the highest level of study but also to return to the island. To that end, he has been putting in order the municipality’s resources and government structure, including beginning the process to become an autonomous municipality. Romero Peña recognizes Culebra’s limitations, however, and is open to working with other eastern municipalities for their mutual economic benefit. "Tourism is our best shot right now. We have the best beaches and an enormous potential to develop successful ecotourism projects," he said. "But the municipality needs to streamline its government structure. Why have a permits department for five or six requests a month when a larger municipality such as Carolina could process them? I could pay Carolina a fee to process our permits. "In return, we would need support for our ecotourism projects, such as Blue Flag [a certification program for beaches and marinas]. Carolina’s Isla Verde beach has a lot more camping space than we have, not to mention resources, so the municipality could develop this tourism sector. Luquillo Beach is more of a tourist attraction than an ecotourism destination. This is the kind of support Culebra needs to overcome its limitations," said Romero Peña. A short history of Culebra Historians indicate that Taino and Arawak Indians inhabited Culebra before Christopher Columbus sailed to the New World. Used as a hideout by 18th-century pirates, the island has been called Isla Pasaje, the Spanish Virgin, and Isla Chiquita. In 1875, Spain appointed a black Englishman called Stevens to be the first governor of Culebra. It was in 1880 that don Cayetano Escudero established the island’s first settlement, called San Idelfonso de la Culebra in honor of the bishop of Toledo. By 1891, San Ildefonso had a few houses, a church, a government house, and a water tank. In 1894, Culebra’s growing population of 519 lived in five communities: San Ildefonso, Flamenco, San Isidro, Playa Sardinas I, Playa Sardinas II, and Fraile. By then, the residents had built 84 houses, a delegation house, a cemetery, a public order house, and a dock. Up until the Spanish-American War of 1898, Spain considered everything but the government’s property in Culebra to be public. After the U.S. won the war, the two sides reached an agreement whereby the property titles conceded by the Spanish government would be honored. But when the U.S. military arrived in Culebra in 1901 to set up a firing range and hold naval exercises, it took over San Ildefonso and relocated the town’s residents to other areas of Culebra, mainly to Dewey. The mortar-fire discharge landing on a Culebra beach where children were playing was the final straw for island residents in the early 1970s. After 70 years of military occupation, the residents organized and lobbied the U.S. Congress to force the U.S. Navy out. By 1975, the military had quietly transferred its operations to Culebra’s sister island of Vieques. Only a stone house built in 1908 and the island’s only cemetery remain as symbols of that era. After the Navy’s departure in 1975, San Idelfonso’s 1,600 acres were turned over to the U.S. Fish & Wildlife Service, partly to keep residents from stepping on live ammunition left behind by the military. When it left Vieques, the military agreed to clean up that island’s and Culebra’s ammunition-riddled land. In the meantime, a private environmental organization has persuaded two local toxic-waste cleanup companies to begin the process in Culebra. The companies estimate that 3,700 acres must be cleaned at a cost of $1.5 million per acre, for a total $5.5 billion. Note: Some of the information was gathered from www.islaculebra.com. Culebra at a glance Culebra is one of two offshore island municipalities of Puerto Rico (the other is Vieques). Located about 20 miles east of Fajardo, Culebra covers 10 square miles (seven miles long and four miles wide), making it one-fifth the size of Vieques’ 52 square miles. Part of a 145-square-mile archipelago of more than 20 islands, Culebra’s largest keys are Luis Peña, whose large coral reef is perfect for snorkeling, and Culebrita Cay, which boasts the oldest lighthouse in the Caribbean. The number of residents in Culebra fluctuates between 1,900 and 2,500, depending on the time of year and if second-home owners are included. During summer and winter, the population can double as U.S. mainland and foreign tourists visit Culebra, along with Puerto Rico residents looking to camp on the island’s beaches. Culebra was turned over to the U.S. government after the Spanish-American War and was taken over by the U.S. Navy in 1901. Culebra’s residents were relocated from the town of San Ildefonso, on the eastern shore of Ensenada Honda Bay, to the opposite side of the harbor. With no property titles or money to purchase the land, Culebra residents established a new town called Dewey, in honor of U.S. Adm. George Dewey, who had led the fight against the Spanish in the Spanish-American War of 1898. A tourist’s haven Over the years, Culebra’s residents have established four other villages, or barrios, close to Dewey, mostly in the island’s southwestern region: Barriada Clark, Barrio Sardina, Villa Muñeco, and La Romana. Culebra has dozens of beaches and inlets (close to 25 keys form the Culebra Archipelago), which are perfect for scuba diving, snorkeling, and spelunking; trekking through nature trails to observe flora, fauna, and birds; and witnessing the annual nesting on the beaches of hawksbill and leatherback sea turtles, two endangered species. Beaches on the island have such exotic names as Tamarindo, Flamenco, Resaca, Brava, Zoni, Larga, Punta Soldado, and Melones. Most of the more than 20 small inns and guesthouses on the island are operated by Culebra residents and some by U.S. mainland expatriates who were attracted during a visit by the island’s tranquility. Most of the inns are in locals’ original homes, from which they were relocated by the military, and provide modest accommodations. Culebra has about a dozen informal seafood restaurants offering the freshest catch possible. It is recommended that diners arrive early as each restaurant has unique operating hours—it closes when the day’s menu has been sold out. One of Dewey’s most popular restaurants is the Dinghy Dock, which Culebra resident Neil Romero operates out of his home. During lunch one recent weekday, about half the tables were full with a mix of leisure and business travelers from Puerto Rico and the U.S. mainland. From 1975 until 2003, Romero worked for Baxter and then RD Medical Manufacturing, with a few interruptions in between to take care of the Dinghy Dock (named by Culebra’s boat owners, who tied their dinghies to Romero’s dock to have breakfast and lunch every day). Last year, Romero decided to give the Dinghy Dock his full attention. "Culebra is still a virgin when it comes to tourism development," said Romero. "This is a shame as we compare ourselves to nearby islands like St. Thomas, which capture tourists’ money when they could very well spend it here. The problem is that attractive tourism projects haven’t been developed in Culebra. We have beautiful beaches, but Vieques’ beaches are just as beautiful, and they will soon be just as available to tourists." Romero criticizes the dearth of entertainment activities in Culebra, besides the beaches and diving. There are few offerings for visitors seeking nature trails, tours of the island, or visits to nearby cays. He offered as an example Luis Peña Cay, where fishing has been banned to protect a coral reef nearby. Only certified divers will ever get to see the coral reef. He suggests building an underwater observatory like the one in St. Thomas to attract tourists from Puerto Rico and abroad. Visitors and residents must reach Culebra by government-sponsored ferries operating between Fajardo, Vieques, and Culebra or by private airlines offering service from San Juan and Fajardo. Once in town, cars, Jeeps, scooters, and even bicycles can be rented for traversing the island’s rather narrow roads. For the faint of heart, taxis are also available. There are one bank and two real-estate agencies. Buyer beware, however: conjecture about Culebra’s future has caused real-estate prices to skyrocket. A half-acre of beachfront property was recently put on the market for $1 million—until the owner learned no construction was possible because of maritime zoning laws, a problem which Popular Democratic Party Mayor Ivan Romero Peña is trying to resolve. "The development of Culebra has always been a kind of secret, which has led to a lot of speculation by real-estate buyers," said Romero Peña. "This has turned the island into one of the municipalities with the lowest housing occupancies in Puerto Rico, because most houses are leased as guesthouses or inns." Out of a total 1,024 housing units, there are 482 owner-occupied houses in Culebra. Of those, 178 houses are worth less than $50,000; 145 are valued at $50,000 to $99,000; and the value of 159 homes ranges from $100,000 to more than $1 million. The business environment Culebra’s municipal budget in fiscal year (FY) 2003 was $3.4 million, compared with $2.8 million in FY 2002. The municipality collected $178,450 in municipal licenses, or patentes, in FY 2003, up from $82,000 the previous year. Culebra’s three major employers are the municipal government, one manufacturing plant, and a recently opened fish hatchery. Romero Peña, the fourth mayor elected by the municipality, heads a government that employs approximately 260 people. "We have asked the central government to determine the minimum requirements to run our municipality, to define the municipality’s efficiency at providing services to the community," said Romero Peña. "I have a $3 million budget to operate, while Ceiba has a $9 million budget but more residents. The Comptroller’s Office still hasn’t allowed us to reduce the number of personnel in departments such as finance, which could probably run with only a couple of people. The Comptroller’s Office forces me to operate each department with 10 or 15 employees, so I end up having the same operational structure as the largest municipalities but with the smallest budget of all," said Romero Peña. Baxter established the first company in town in 1972: medical devices manufacturer RD Medical Manufacturing. Acquired by former Baxter General Manager Rafael Diaz in 1995, when the plant was about to be closed, RD Medical currently has 70 employees, of whom some 25 travel daily from Vieques and Fajardo. Since 2003, Diaz has been negotiating with the Puerto Rico Industrial Development Co. (Pridco) to receive tax incentives for transportation and jobs creation which could help to keep the plant open, but the agency has made no final decision. Pridco has also been working with Snapperfarm Inc., a company partnering with public, private, and educational sectors to develop an offshore aquaculture business. With a labor force of 30, Snapperfarm breeds cobia and red snapper in 3,000-cubic-meter cages several miles off the Culebra coast. The fish are sold and distributed in the Caribbean and on the U.S. mainland. In December 2003, Culebra reported a work force of 922, down from 967 in December 2002. A total of 962 people were employed and 30 were unemployed in December 2003, compared with 932 and 35, respectively, in December 2002. Culebra’s unemployment rate was 3% in December 2003, compared with 3.6% in December 2002. According to a recent study by the mayor’s office, an average of 900 residents had jobs with average annual salaries of $12,886 during FY 2003. Culebra’s top employment sectors were government (23%), services (20%), construction (15%), tourism (14%), and manufacturing (11%). On an island with enormous tourism potential, it is incomprehensible that tourism rates lower than other sectors. The study also revealed that Culebra boasts one of the highest self-employment levels among municipalities in Puerto Rico’s eastern region, at 18.9%, mostly because of the limited employment opportunities on the island. By comparison, Vieques has a self-employment rate of 13.6%, while Trujillo Alto has 7.6%, Luquillo 6.9%, and Canovanas 6.5%. Unlike elsewhere in Puerto Rico, the private sector accounts for the lion’s share (83.4%) of economic activity in Culebra; the municipal government generates only 16.6%. The study by the mayor’s office also indicated that the informal, or underground, economy is estimated at 20%, a level comparable to other municipalities in Puerto Rico. Romero Peña is attempting to convince his constituents that sustainable economic development will bring about a sea change in their lifestyle. They must realize that keeping the decades-old homes and businesses near the waterfront might not be possible. If Culebra wishes to attract new ecotourism developments and light-industry companies, it will have to provide an adequate labor force, which will require population growth. This additional population, in turn, will stress Culebra’s housing, education, and even its infrastructure. The encroachment of technology also will change Culebra—hopefully for the better. Big islands, little islands not easy to mix By JOHN COLLINS The relationship between mainland Puerto Rico and the island municipalities of Culebra and Vieques isn’t unique, as an examination of multiple island states in the Caribbean demonstrates. The best-known example is Trinidad & Tobago (T&T), situated at the end of the Antillean chain off the coast of Venezuela. Together the two islands have 1.26 million inhabitants on 1,981 square miles, divided lopsidedly between Trinidad with 1,864 square miles and Tobago with 117 square miles. Trinidad is much larger than Tobago not only in size but also in population, as Tobago has only about 45,000 inhabitants. Industries of all sorts have developed on Trinidad, not only because its large population means it has a large available work force, but also because the big island is endowed with vast oil reserves and liquefied natural gas, making production energy-efficient and cost-effective. Since before Trinidad’s separation and independence from Great Britain, successive governments have pursued development policies for the island that encourage industry and, more recently, services. Tourism initiatives, while not necessarily downplayed for Trinidad, were concentrated on Tobago. The two islands were separate colonies of Great Britain, but they were joined administratively at the end of the 19th century and emerged independent as one unit. While Tobago has considerable autonomy, its citizenry has often complained about being overlooked or not taken seriously in the central government’s policy for distributing revenue, even when its distinguished native son, A.N.R. Robinson, first served as T&T prime minister and later as president. It is in tourism that Tobago has shone. With its own airport, it has been a major destination for jet charters, principally from Europe. Tobago has some 2,000 hotel rooms and year after year it hosts faithful visitors from Great Britain and Germany. In recent years, it has welcomed travelers from Scandinavia, France, Italy, and elsewhere. Its popularity with Europeans allowed Tobago to recover from 9/11 faster than some other Caribbean destinations. Under the present government of Prime Minister Patrick Manning, tourism has been elevated to a more prominent position in T&T’s overall development plan. However, the country continues to experience problems because of its relatively small size and difficulties promoting itself as a destination in the U.S. A few years ago, a local investment group built the Tobago Hilton, a deluxe property complete with golf course. Although rumors of the resort’s closure have been denied, the operator reportedly has complained about inadequate promotion of the destination. American Eagle initiated flights directly to Tobago from its San Juan hub several years ago, but then suspended the service because of poor demand. St. Kitts & Nevis another example A similar, but much smaller, example is nearby St. Kitts & Nevis, a federation of two islands 225 miles northeast of San Juan. Together, they occupy only 104 square miles: 68 square miles in St. Kitts and 36 in Nevis. Their total population is about 39,000, with fewer than 9,000 residing in Nevis. While tourism is important in St. Kitts, the bigger island also has the most government and commercial activity as well as a declining agriculture industry. The two islands were formerly part of a tri-island group that included Anguilla, but it broke away to become a British colony (as it remains today) after St. Kitts & Nevis became independent in 1983 as a federation. The relationship between the two can be described at best as strained, with the leader of Nevis agitating for the separation and independence of the island. A similar initiative a few years ago almost succeeded. While Nevis has its own airport and receives airplanes directly from San Juan and elsewhere, a majority of its visitors reach the island via St. Kitts or nearby St. Maarten. Observers say that should the citizenry of Nevis opt to separate, it would result in a considerable disruption of traditional relationships as well as inconvenience. No small feat running a business in Culebra By MARIALBA MARTINEZ Running a business in Culebra requires a great deal of preparation, compromise, and yes, even sacrifice, given the island’s isolation from Puerto Rico’s mainland. "Culebra’s largest employer is the government. The number of government employees has doubled or nearly tripled in the past three years mostly as a result of the new initiatives that have been approved by the Calderon administration," said a source from Culebra’s private sector. "While municipal government jobs have brought security to those residents, it has placed Culebra’s private sector in a quandary as it competes for employees. To remain in Culebra, private sector businesses need to consider extra costs such as transportation, insurance, and the difficulties of finding personnel. This is not easy." According to a study commissioned by the Municipality of Culebra and carried out by the economist Gustavo Velez, the private sector is responsible for 83.4% of economic activity; the government is responsible for the remaining 16.6%. And businesses face challenges trying to succeed even in industries where the private sector should be able to thrive. For example, although plans for economic development have always referred to tourism as a potentially successful industry in Culebra, only 14% of employment is related to this sector; a full 23%, the largest percentage, is in government. According to Velez, the Puerto Rico Tourism Co. is partly responsible for the lack of promotion Culebra receives as a tourist destination. "Culebra has not been promoted. While many [water-sports] tourists visit the island, the information about the island is [only] disseminated through trade magazines or websites. Not even the endangered turtles’ migration is given the promotion it should get," he said. Following are two profiles of businesses and the challenges they face on Culebra. Costa Bonita A luxury resort to be operated by Flagship Services Corp., Costa Bonita has the potential to attract a different type of tourist to Culebra, albeit one that the local government isn’t quite sure it wants, as explained in the main story. The 164 villa condo-hotel will have three restaurants, a convenience store, game rooms, a giant free-form pool with a swim-up bar and Jacuzzi, a children’s pool, guest laundry services, and a meeting room for up to 45 people in the main building. "Our target market is tourists who have visited similar destinations looking for adventurous water sports along with silence and tranquility," said Flagship Service President Rick Newman. "Our guests will come from the U.S., Canada, and Europe. For example, we expect boat renters from England, Germany, Switzerland, and Spain. We also expect islanders from Puerto Rico’s mainland in the summer because this kind of experience will be unique to Culebra." Newman said he has been receiving a fair number of applications for the 70 positions he needs to fill, but given the difficulty in finding employees, he said the hotel could be run efficiently with fewer people if necessary. Another challenge the hotel operator is dealing with is transportation. To solve the problem caused by the island’s isolated location, he is forming alliances with several small airlines to provide direct service from Old San Juan’s Seaborne pier and Isla Grande Airport to Culebra. RD Medical Manufacturing RD Medical Manufacturing, the only production company and the second largest employer on Culebra, is a success story for this island municipality. Still, president Rafael Diaz has to make some crucial decisions in the next couple of weeks regarding the plant’s continued operation there. Established by Baxter in 1972, the company was acquired by then-general manager Diaz in 1995, when he signed a four- or five-year contract to produce medical devices. While the company continues producing medical devices for manufacturers such as Pall Biomedical, Allegiance, and AMO in Añasco, its success has been in the creation, production, sale, and distribution of its own proprietary products under the brand name Parset. "We are producing nearly 75 Parset products for our clients, 50% of our production is sold on the U.S. mainland and the remaining 50% in Puerto Rico," said Diaz. "We are close to opening operations in Las Piedras in our new 22,00 square-foot plant where our administrative offices will be, along with a 6,500 square-foot clean room for production." Does this mean that Culebra’s RD Medical Manufacturing 44,000 square-foot facility can be easily discarded? No, said Diaz. "I need the Culebra plant because it is already established and validated, with good facilities that can allow me to increase production from the annual four million to five million units we make now to 25 million or 30 million. With Las Piedras’ 15 million-unit production, the company’s growth would be significant." However, he will soon have to decide whether the Culebra plant will continue to be feasible without the tax incentives that are available to manufacturers. Therefore, Diaz is looking into taking advantage of those incentives to help him run his business. "Operating in Culebra under present circumstances no longer allows me the production capacity that we need," he said. "Recently, I finally sat down with the Puerto Rico Industrial Development Co. (Pridco) to negotiate incentives for our plant in Culebra. These incentives will balance the additional costs I incur from operating on an isolated island," said Diaz. This Caribbean Business article appears courtesy of Casiano Communications.
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