Villa Santa Cruz

Weathering the Storm (2003 - 2005)

Thursday, March 28, 2013

Here is the third installment in the crazy history of Villa Santa Cruz.  If you have not read the first two entries, make sure to check them out first - History Post #1:  The Journey Begins! Buying the Property (2001 - 2002) and History Post #2:  The Lettuce Debacle and Breaking Ground on the Villa (2002 - 2003).  Enjoy!

Weathering the Storm (2003 - 2005)

As the summer of 2003 approached, Matt and John’s only choice was to lay low and recover from the frustration and disappointment of the failed farm and stalled construction project. Again out of money, they resumed a simpler life - games of coconut bowling on the beach, sunsets with cold drinks in hand, and quick trips up to San Diego to continue their remodels. The weather in these late spring/early summer months was warm and breezy – exactly what one dreams of when they think of Mexico.

As the calendar turned from late July into August, the balmy weather gave way to a humid stillness and rumors of the upcoming hurricane season filtered throughout the town. Whenever Matt and John needed advice or wanted to hear the latest news in town, they would often stop in to visit with Barbara Perkins at La Canada del Diablo, their favorite watering hole. To them, Barbara, an American living in Todos for over 20 years, was the “town mayor” because she was always up for a chat, well plugged in to the town’s happenings and was a great source for help, recommendations, etc. While chatting with Barbara in mid-August, she cautioned them about the upcoming hurricane season which was predicted to be busy with several major storms. Like a mother hen trying to protect her chicks, she wanted Matt and John to be as prepared as possible. Barbara reminded Matt and John just how powerful and destructive hurricanes can be and urged them to stock up on extra water, food and supplies so they would be ready for the storm. Yet, for as much as they valued her opinions on most matters, Matt and John were relatively unfazed by Barbara’s warnings. They had heard many tales of Hurricane Juliette, a Category 4 storm that spun around Todos Santos for days on end in September 2001, leaving people without power and water for days. The townspeople mainly remembered the rains and flooding, there was little mention of strong winds. Matt and John shrugged their shoulders at the Juliette talk - they knew they could handle a little extra water.  

Even though they had no prior experience with hurricanes and had never gone through any type of severe storm, they just did not believe anything could live up to the “hype.” Within the next few days, they spotted a storm approaching Baja on the weather tracking websites, Hurricane Ignacio. As a boy from landlocked Winnemucca, Nevada, Matt was comforted that the weather service predicted that Ignacio would reach only a Category Two level – he figured that if the measuring scale went up to a Category Five, how bad could a Two actually be?

Within the next day or so, John headed up to the US on a long scheduled trip to visit his family and Matt stayed behind at Rancho Santa Cruz to hold down the fort. Matt was looking forward to some down time in the trailer on the dune with their dog, Molly, and her new litter of puppies. A few months earlier, when Tucker was still alive, Matt and John adopted Molly when they were driving down the Baja Peninsula. They had stopped in Mulege (pronounced Moo-leh-hay) for the night and were having dinner and beers at a local bar, when a man came in with a ball of fluff in a cardboard box. He said that someone in the bar had to take the dog, otherwise he would put it on the “Tecate truck” – a euphemism for driving the dog to the desert and leaving it to die. This was too much for Matt and John’s bleeding hearts and, after one too many drinks, decided to adopt the dog. Since they were giving this dog a second chance at life (like a Mulligan in golf), they named her Mulli, which quickly morphed into Molly. It turned out that Molly was pregnant and gave birth to a litter of nine puppies just before John left for the US in mid-August 2003. 

So, Matt would spend the next week in the company of Molly, her nine tiny puppies and their “Siamex” cat, Danny (named after Danny Noonan from Caddyshack). Matt occasionally checked the storm tracker websites on the internet and saw that Hurricane Ignacio was approaching the Pacific coast of Baja, yet he still didn’t take any precautions – he did not buy extra food or water, he did not close up the trailer windows or tidy up their campsite. He figured he would just hunker down inside the trailer, catch up on DVDs of The Sopranos and watch the storm go by.

The next afternoon, Matt noticed the winds picking up and sent a joking email to John letting him know that the storm was almost there. He wrote, “Nice knowing you, man….if I don’t make it out, it’s been a good ride…” As the sun went down and the skyline turned from a bluish dusk to pitch black, the storm hit and Matt started to feel panicked – had he prophesied his fate in that email? The rain was torrential and incessant, angrily falling from the sky in heavy sheets and flooding the property. The winds were overwhelmingly powerful and ferociously loud, shaking the trailer with immense force, frightening Matt to his core. All the windows in the trailer had rusted open after a year in the salt air, and the wind and rain barreled inside, creating a swirling chaos in the trailer. Matt raced around trying to shut the windows, but his efforts were futile. Hurricane Ignacio was inside the trailer – breaking glasses, whirling beach sand, and frightening the whining new puppies. His internet service was soon cut off and his solar system ran out of battery power, leaving him disconnected and in total darkness. He tried in vain to light candles, but it was impossible to keep a match lit – the wind and rain were omnipresent.

Satellite Image of Hurricane Ignacio

Utterly alone, afraid, and soaking wet, he had been a fool to disregard the hurricane warnings. He was unprepared in every way – not only was he without extra food, water and supplies, but he did not know a thing about the behavior of hurricanes. How long would this last? A few hours or days on end? As his thoughts began to spiral, he focused on a single terrifying thought – could the ocean surge? Could a huge wave rush up the beach and sweep the trailer out to sea? Would he be just a tin can bobbing out in the middle of the Pacific? This fear terrorized him for the rest of the night. 

Sleep was not in the realm of possibilities. The hurricane’s 110 mph winds blasted through the trailer with the ferocity and deafening volume of a freight train, rain poured in the open windows, and, along with Matt’s overwhelming fear of being swept out to sea, it was the longest night of his life. He remained intensely vigilant, using a flashlight to check the level of waves every ten minutes, reassured for the short term that the ocean was not yet a threat to him. He was thankful for the company of Molly, her puppies, and Danny Cat – at least he had someone to talk to throughout the night, even if the panic in their eyes made him feel uneasy. When his flashlight ran out of batteries in the middle of the night, there was nothing he could do except wait, curl up on the bed in a fetal position, and hope for the best.

Miraculously, as dawn began to break, the winds calmed. Matt cautiously stepped out of the trailer, wary of flying debris, and soon leaped for joy when he saw that the weather outside was quiet and peaceful. He let all the animals out for a few moments and breathed a huge sigh of relief. But, the respite was short-lived as the winds soon began to intensify and swirl again, quickly escalating to the same force as the night before. Figuring that the eye of the storm had passed over him, he was sickened at the thought of having to endure a second phase of the hurricane. Sleep-deprived and battered from the storm, he was zapped of every ounce of energy he had.  He had operated throughout the night on pure adrenaline, forgetting to eat, drink, or take deep breaths. Suddenly famished, he knew he had to step outside his fear to take care of himself. He opened his last can of tuna and ate it out straight from the can, shielding his meager meal from the wrath of the Ignacio. As he ate, and regained a sense of strength, his confidence was buoyed by the basic fact that he had survived the night in complete darkness and was mildly encouraged that the next round of the storm would be during daylight hours. The storm raged on for another eight hours and Matt witnessed every second of it.

Stepping out of the trailer that afternoon, it was time to survey the damage of Hurricane Ignacio. The campsite was a disaster – the winds had blown away parts of their solar system, the BBQ was toppled over and covered in sand and their outside patio furniture was piled in a broken heap. Matt walked around and was most shocked to see that the storm had sandblasted off all the paint on the north side of the trailer - it looked naked with its shiny aluminum body exposed, rather than dressed in the white and blue paint that he was accustomed to. He let the animals out of the trailer, and, in honor of them all surviving Hurricane Ignacio, named two of the puppies Inga and Iggie.

He walked through the wet, saturated dunes down to the stalled construction site and was delighted to see that the Villa weathered the storm like a true champion – other than being wet, it was untouched. For all the thought they’d put into positioning the house, and all the money they had sunk into its foundation, it had paid off. The Villa was the safe strong fortress Matt and John had intended it to be.

After surviving the hurricane, Matt was so exhausted from the ordeal that he could not fathom starting the clean-up process. Just the thought of it brought on an overwhelming compulsion to leave the property and head into town. He needed to feel the comforts of civilization and recover from the trauma of the experience. He hitched a ride into town on a passing 4x4 truck (the only way to pass through the washed out and flooded roads) and checked into a hotel to dry out, recover and recharge.  

A few weeks later, in September 2003, the weather service predicted that another hurricane, Marty, would hit Todos Santos. Barbara’s warnings of an intense hurricane season were right on point. Even though John was now back in town and Matt would have a buddy with whom to ride out the storm, Matt could not stomach the idea of having another panic-filled, sleepless night weathering a second hurricane. Since the storm was headed up the Pacific side of the Peninsula, they figured they could outsmart Mother Nature and avoid the hurricane by driving to La Paz, located on the Sea of Cortez. They were both excited at the idea of escaping Todos Santos and enjoying hotel amenities – air conditioning, television and a swimming pool. After settling into their hotel rooms and tuning into games on ESPN, the power suddenly cut out. They could not believe their ears when the concierge reported that Hurricane Marty had changed course and was now headed straight for La Paz. So much for their brilliant idea of leaving Todos Santos… 

Over the next day or so, Hurricane Marty hammered La Paz with 100+ mile winds and immense flooding, leaving them without power or water. In turn, all the stores and restaurants were closed (including the one in their hotel) and they were deprived of all the creature comforts that they had hoped to have in La Paz. The cruel irony that Hurricane Marty skipped right over Todos Santos was like salt in an open wound. Had they stayed in Todos, they could have reveled in the luxuries of TV, internet, and most importantly, ice cold beers and white wine.  

The Path of Hurricane Marty - follows the Sea of Cortez, right through La Paz

Even when the hurricane subsided, they were stranded in La Paz for days because the flood waters had washed out the tiny highway and filled the arroyos, making a drive back to Todos Santos impossible (this was before the construction of the amazing four lane highway that now connects La Paz to Todos Santos). Instead of the escape Matt was hoping for, he now had two hurricane notches on his belt.

After a crazy hurricane-filled summer, the rest of 2003 and beginning of 2004 passed in relative calm. Matt and John continued to travel back and forth to San Diego, working on their remodels, and enjoying life at Hobo Heaven and Rancho Santa Cruz in Todos Santos. Always struggling to find their financial footing, they lived simply and had to contain any grandiose visions they had of one day finishing construction of the Villa project that stalled the year before. At the moment, their only option was to keep their heads down, work hard, and wait for the next opportunity to come their way. Life was seemingly uncomplicated, for the first time in a long time, but, of course, it would not last… 

In mid-2004, Richard Rutowski (the Real Estate agent who had brokered the deal when Matt and John bought Rancho Santa Cruz), telephoned with an interesting proposition - he had a client who was interested in buying the south 30 meters of beachfront property at Rancho Santa Cruz. Matt and John were elated! Since taking possession of the property in 2002, they had always had such disparate opinions of the property. On one hand, they viewed the land as more of a burden than an asset. The land was so raw and they constantly struggled to make improvements, the lettuce and poblano chile farming venture was a disaster and their construction project was stalled indefinitely. They never saw the land as a “saleable” asset because, to them, it was a hunk of dirt that caused more pain than happiness. On the other hand, when they looked beyond the day to day struggle and considered the big picture, they romanticized the land and felt a deep connection to it – it was their dream come true. They had grand visions of what the land would one day become, and could not imagine selling off any part of this dream. So, for two very different and conflicting reasons, they had never contemplated selling a single acre. But, now, in a financial pinch, it was a miracle to realize that they were sitting on a pile of cash – if they could sell just a few acres of land, it would be an easy solution to their financial woes. Even though Richard’s client’s interest fizzled and she did not end up making an offer, the word was out that they were willing to sell.  

Soon after, they had interest in the same stretch of beachfront from a surfer guy, Mason Maddock, who was a regular at the La Pastora surf break, just a 10 minute walk down the beach from Rancho Santa Cruz. Friends in town introduced Mason to Matt and John and, at first glance, the deal seemed promising. Mason, although relatively young in his mid-30s, appeared to have quite a bit of money – he was connected to people who owned fast food franchises around the world. Even though he was a tad cocky and arrogant, Matt and John were willing to put with those personality flaws to escape their tenuous financial situation.

The deal was progressing nicely and Matt and John were optimistic that they would actually walk away with some real money. They were shocked when Mason offered a price for 40 meters of beachfront (a small sliver of the 226m they owned) that was close to what they had paid for all 45 acres just 3 years ago when they bought Rancho Santa Cruz. They were incredulous! They had not realized that by jumping in the deep end and buying the land back in 2001, that it was appreciating each day and they were making money while they slept. They felt so vindicated – for all their struggles to buy the land, all their emotional and financial ups and downs with the lettuce and poblano chile farm, and their constant worry over making ends meet, it was finally paying off. They’d sell a small piece of land, still have over 40 acres to their name, and real cash in the bank. With just a bit of negotiation, Matt and John accepted Mason’s offer and they entered escrow. Mason paid a $50,000 deposit and Matt and John were thrilled to have spending money again.

That was the end of good news. Regardless of the fact that the property was still in escrow and that Mason did not yet have title to the land, he behaved as if the deal was long closed. He hired a small crew to start making landscaping changes on “his” property – hacking through the green mangroves that Matt and John had so carefully protected throughout their tenure at Rancho Santa Cruz. Matt and John were horrified that their soon to be neighbor had so little respect for the native vegetation around them and quickly put a stop to all his premature landscaping projects. Matt and John questioned their decision to sell to Mason – while they were desperate for cash, was this really the type of neighbor they wanted in the long run? Were his true colors showing through?

As the weeks passed on, the deal stalled. Mason had a litany of excuses for avoiding paying the necessary closing costs (i.e. appraisal, notary fees), effectively preventing escrow from moving forward. With a little bit of digging, Matt and John learned that Mason had talked a big game, but did not actually have funds in place to complete the Rancho Santa Cruz sale; rather, he was intentionally delaying the process because he needed more time to come up with the rest of the cash. Had Mason been transparent with Matt and John, they would have been willing to extend deadlines or structure a payment plan for him. But, Mason’s attitude turned hostile, rude and uncooperative – qualities Matt and John absolutely did not want in a next door neighbor. And so, in order to save the feel of Rancho Santa Cruz, they decided it would be best to cancel the deal with Mason and return his $50,000. The only catch was that they had already spent that money and had nothing to give back. They needed to find a substitute buyer – fast.  

One day soon after, John was talking to a neighbor, a long time organic farmer in the area, and mentioned the nightmare of an escrow deal that they had just backed out of. The neighbor was surprised to hear that Matt and John were up to sell a stretch of their beach frontage and told John that his business partner was eager to buy something near the La Pastora surf break. In a matter of days, Matt and John negotiated with the neighbor’s business partner, agreed on a price, and the new buyer sent a deposit of $50,000 that Matt and John immediately turned over to Mason Maddock to pay him back.  

With Mason out of the picture, they felt relieved and saved from their own naïveté. Looking back on their dealings with him, they realized they did not even know his plans for the property – he could have built condos right on their pristine beach (the horror!). Always too trusting and open, this experience taught them that they had to be street smart, rather than blindly assuming that it would “all just work out.” Luckily, they had dodged a bullet, and chalked up the experience to a cheap life lesson. 

Now, working with the new buyer, it was of utmost importance to Matt and John that any newcomer that bought a piece of Rancho Santa Cruz share their same vision. This new buyer was a perfect fit – as a New Zealand native, he loved the “off the grid,” low-density, rustic quality of the property and, as an organic produce distributor in the United States (his connection to the neighbor) who loved to surf, Matt and John knew they had made the right decision to get rid of Mason Maddock. The buyer had no current development or building plans, rather he intended to rent his land out for organic farming purposes, with dreams of one day building a vacation home for his family on the property. He knew the land was special, and stretched his wallet to buy the property now because he knew the pricing in the area would only increase as the years passed on. From beginning to end, the deal flowed smoothly, closed on time, and put money back in Matt and John’s pockets. 

Matt and John had weathered the storms Mexico had thrown at them (literally and figuratively) and their future in Todos Santos looked bright. They were excited to restart the Villa construction project that had been at a standstill for 1.5 years and finally had the funds in place to move forward. Was their perseverance finally paying off? Had they learned enough from their time in Mexico to avoid future disasters?  Only time will tell…

Check the Blog again soon to learn how Matt & John resumed construction at the Villa, created all the amazing design elements, and furnished it to boot!

The Lettuce Debacle and Breaking Ground on the Villa (2002 - 2003)

Wednesday, March 06, 2013

We are proud to post the next installment in the adventure of Villa Santa Cruz.  If you have not yet read the first entry about how Matt & John found the land, check it out here –  Blog Post #1:  The Journey Begins! Buying the Property (2001 - 2002)Happy Reading! 

The Lettuce Debacle and Breaking Ground on the Villa (2002 - 2003)

Matt and John were deep in it. It was September 2002 and they were now the proud owners of a very raw 45 acre parcel of land that needed work. It had no infrastructure, no easy way to access the beach from the road, no shelter, no nothing. They had to start at the very beginning, but lacked the resources, connections and know-how to move forward and develop the land. After tackling a few minor projects at the well on their own – cleaning tree roots out by hand, and covering the water tower (known in Spanish as a pila – this is the big concrete tower you see today at the front gate) with a palapa roof – they then focused on running basic underground piping up to their “home” – the Airstream Trailer on the Dune that Matt’s parents helped tow down the length of the Baja Peninsula just a few weeks before. They fondly called it "Hobo Heaven."

Hobo Heaven

Matt was a frequent visitor at Richard’s (the Natural Born Realtor) real estate office. Under the guise of stopping by to ask Richard for recommendations for plumbers and electricians, he would linger in the office chatting with the lovely young front desk girl, Maria. Matt and Maria soon started spending many hours together and quickly became a couple (much to the dismay of other young men in Todos Santos who were waiting their turn to date her).

After spending a few weeks getting through their basic well projects and clearing the land of years of accumulated brush and overgrowth, they resumed traveling back and forth between Todos Santos and San Diego, continuing to work on home remodels as their main source of income. Starting a new home rehab project in Mission Hills, they took on two partners eager to break into the flipping business. The new guys put up the money while Matt and John contributed their remodeling expertise. Essentially homeless while in San Diego, Matt and John slept on the floor of one of the partner’s homes whenever they were up in San Diego to work.


Clearing the land at the Front Gate (looking to the ocean).  
Notice the tractor just to the left of the greenery on the right of the photo.

Always eager to get back to Todos Santos (especially so Matt could see Maria), Matt and John became fast friends with Maria’s family, the Davilas. The Davilas were well-connected, entrenched in the community, and also spoke English (a huge plus for Matt and John’s broken Spanish). Matt and John were grateful for the family’s friendship on many levels – the Davilas introduced them to the Todos community, put them in touch with local laborers to work on the property, and, most importantly, gave them a sense of belonging and “family” in this new town.

Over the next month, one of Maria’s brothers, Gerardo, just a 22 year old kid, repeatedly commented to Matt and John that they should consider farming their land. With 45 acres of rich soil, abundant water rights and a history of successful farming at Rancho Santa Cruz, he insisted it would be a natural step for them. Before these discussions with Gerardo, Matt and John had not given much thought to farming. In fact, they were so overwhelmed by scraping by on little funds and tackling small basic projects on the property that a large scale venture had not even crossed their minds. But, Gerardo was persistent, as young kids with big ideas often are. He would visit Matt and John in the evenings to watch the sunset over cervezas and recount telephone conversations he had had with his uncle in Mexico City, a farming expert. He explained that his uncle had big-time connections to food distributors in mainland Mexico and would easily be able to sell any product that grew at Rancho Santa Cruz. He promised that profits would be high, assuring them that farming would be an easy way to capitalize on their investment in the land. After all, he promised that the hardest part of farming was procuring the land and the water, and since Matt and John had so much of both, the rest would be a cinch. To further ease any concerns, Gerardo proposed that he would personally manage the farm operations, reducing Matt and John’s time commitment, freeing them up to continue to travel to San Diego.

Whether it was due to the sound of easy money, the cool taste of amber Pacificos, or, most likely, their absolute naïveté, Gerardo and his farming ideas were starting to sound sensible. Not only did Matt and John trust their deepening relationship with the Davila family and feel secure that they could depend on their support and advice, but they wholeheartedly believed Gerardo when he said they were already one step ahead by owning the land and water. Of course that must be the hardest part – you definitely cannot farm without either land or water. How hard could growing plants actually be? Wouldn't the seeds do most of the work on their own? Matt and John agreed to be equal partners with Gerardo, shook his hand, and starting daydreaming about lush green fields and cold hard cash.

Gerardo quickly got busy with the details of the farm. With hot, humid and wet summers, the growing season in Todos Santos starts in October/November, at summer’s end, and lasts until the weather starts to warm up again, usually June/July. By the time Matt and John were on board to farm, the calendar was creeping into November 2002 and time was slipping by.
 
They had decided to farm both the west and east sides of the property– close to all 45 acres of Rancho Santa Cruz – with two different crops: iceberg lettuce on the west side and poblano chiles on the east side. Matt and John knew that poblano chiles are a staple of the Mexican diet (think chile rellenos) and grow heartily in Baja, as evidenced by the many other poblano chile fields seen in Todos Santos and Pescadero. The prior year’s record high price for chiles ($13 pesos/kilo) made it an obvious choice. They reasoned that even if the price per kilo dropped more than half (to $6 pesos/kilo), they would still come out ahead. Assured by such reasonable profit calculations, they figured that poblano chiles were a sure bet.

On the west side, Gerardo originally planned to grow tomatoes, but with each passing day, the ideal window for tomatoes was disappearing and they could not afford the number of stakes needed to farm tomatoes on such a large scale – they would have to plant something else and save tomatoes for next year. As a substitute for the tomatoes, Gerardo proposed that they plant iceberg lettuce since no one else was growing it in Baja. Without much experience to bring to the discussion, Matt and John agreed, believing it to be a good business opportunity.

Still lacking a proper irrigation system but needing to get their seeds in the ground, they germinated thousands of seeds in trays that they could water by hand. With this small respite in the timeline, they had just a few weeks to run pipes and drip tape throughout the property and fortify the well pump to ensure that water would reach all the seedlings they would soon transplant. After running the calculations, they were amazed at the staggering expense of the material and labor costs of the irrigation project. Luckily, Gerardo’s connections came through and the Mexican government gave them a generous farm subsidy, allowing them to quickly set up the proper infrastructure. Impressed by Gerardo’s determination and success with the subsidy, Matt and John felt confident that they had made the right choice in partnering with him.

When the iceberg lettuce seedlings were starting to sprout in the trays, Matt and John had dinner and drinks in town one night and struck up a conversation with a man named Pierre. Coincidentally, Pierre was a lettuce farmer in Salinas, California, a region known as “the Salad Bowl of the World” because it produces most of the salad greens consumed in the United States. Matt and John were proudly telling Pierre about their Baja lettuce crop when they saw a disconcerting look cross his face. Pierre quickly interrupted to convince them, without mincing words, to immediately abandon their lettuce crop. He forewarned that the Baja climate was not suitable for growing iceberg lettuce and they should cut their losses now rather than risk the whole growing season. When Matt and John protested and informed him that they already had thousands of seeds blooming in trays, Pierre bluntly advised them to “stop watering and let the plants die.”

What were they to do now? They had advice from a true expert in the lettuce game vehemently warning them against continuing their crop, yet they were so emotionally connected to Gerardo and his farming optimism that they had lost all objectivity. Guided by their hearts and confident in their luck so far in Mexico, they put their money on Gerardo and let it ride. In just a few days, they had transplanted 230,000 heads of lettuce on almost 20 acres on the west side of the road, and 200,000 poblano chile plants on 20 or so acres on the east side of the property. Go big or go home.


The land is cleared and ready for planting
(the area below the blue van and to the left is where the pool is today)

At the same time they were starting the farm, one of their remodeled homes in San Diego sold and they benefited from a financial windfall. Suddenly flush with cash, they decided to start construction on a home on the property (which would one day become Villa Santa Cruz). From the beginning, their “plan” for the home was always more of a romantic, vague, “shoot from the hip” rough sketch, than one based on forethought and prudence. They favored quick drawings on cocktail napkins and a “surely we’ll have enough money” attitude over architectural blueprints and calculated budget proposals. In so many words, they decided to get started and figure it out later.

The thought of designing a custom home on raw land was, at first, overwhelming – the possibilities were endless. They were not bound by lot size, homeowners’ association restrictions, city codes/regulations, and, naively, were not too concerned with the budget. Occasionally realistic, they did know it would be best to pool their resources and build one large home, rather than a separate home for each of them. As they really started to think about what they wanted the home to be, a vision of family took shape. Matt was so in love with his girlfriend and her whole family that he envisioned it would be a large family home for his future wife and kids, with plenty of room for “Uncle John.”

This basic intention for the home reigned in their unfettered thoughts and organized their creativity. With this “family compound” ideal in mind, coupled with their frustration of living in a tiny tin can of an Airstream trailer for months on end, the most important thing to them in the design was space. They greedily decided on 14 foot ceilings and a ground floor footprint measuring 12 meters by 16 meters, giving them over 2,000 square feet on the first floor alone. They would have three levels, 4 bedrooms, and 5 bathrooms. They had the space to do it, so why not go for it? Of course, they also wanted the home to be as near to the ocean as possible, but took great care to pick a site that would not interfere with the integrity of the dunes. Pacing off the footprint on the land and setting up ladders to check the views at different elevations and angles, they positioned the home due south, taking advantage of ocean views and optimal sun exposure (for their future solar system).

With basic decisions made, many of the design elements came easily. They paged through Mexican architectural books and fell in love with the old Hacienda style – they had to have a fountain in the center of the house with wrought-iron railings surrounding it. They wanted grand archways and a covered patio area, all reminiscent of Old Mexico. Their minds were racing with ideas and they were itching to break ground and get the project underway. They felt so fortunate that Gerardo and the Davila family, who they trusted completely, were also construction contractors and had time to take on a new project.

Without a clear set of building plans or the funds it would take to see the house built to completion, Matt and John could not afford to bid the project (usually, the avenue used to garner the best price from a contractor). While they had a comfortable construction budget from the proceeds of the San Diego house sale, they were counting on the success of the lettuce/poblano chiles to carry them through to the end of the project and beyond. Their only option was to tackle the construction bit by bit, paying the contractor on a weekly basis for time and materials plus a percentage. Matt and John never thought twice about the arrangement with the Davilas –they were confident that their “family” relationship and the love and respect between them would guide their interaction and prevent one from taking advantage of the other.

With a basic outline of the work drawn, the crew got to work on the foundation. The subterranean excavation and concrete work was enormous and consumed a huge part of their budget. While it was disappointing to see so much of their cash literally sunk into the ground, Matt and John loved knowing that the home would stand up to any future storm or hurricane. In fact, seeing the project underway and envisioning the house as a finished product only encouraged them to dream bigger.

They loved the freedom of being their own architects. As soon as they could draw an idea on a cocktail napkin and get it approved by a structural engineer, it went right into the design, often without regard for the rest of the plan. They were building multiple levels with grandiose architectural features (i.e. elevator shaft, gas lamps, archways), but had no plan for arguably the most functionally important element of the home - the stairs. Not too concerned, they simply left a huge hole in the second floor and figured they could add a staircase later. In the meantime, the workers rigged ladders and a rough dumbwaiter system to access the second level.


This is an outdoor toilet Matt & John built on the dune to escape the tiny trailer bathroom.  
In the background, the Villa is under construction (just the first floor done) 
and the lettuce fields surround the Villa.  

As the calendar changed from March to April (2003), both the farming venture and the home construction appeared to be right on track. The crew was starting to work on the second level of the home, heads of iceberg lettuce were forming beautifully, the chile plants were sprouting up toward the sky, and the land had turned from dull brown soil to verdant green fields. Gerardo was busy managing the farm, ensuring that the crop was properly watered and fertilized, and he also began to search for a buyer for the product. He soon connected with a contact at CCC (now Chedraui), a large supermarket in Cabo San Lucas, and contracted with them to sell their entire supply of Rancho Santa Cruz iceberg lettuce. By this time, the lettuce was just about ready to be picked for market, and Gerardo, Matt and John were thrilled with the potential profit they were going to make from the CCC deal. Not only would they recoup the $30,000 USD they had invested into the farm to cover expenses (i.e. payroll, seeds, fertilizer, etc.), but they would also realize a substantial windfall of almost $80,000 USD on the lettuce alone. They were amazed! For the entire growing season, they had doubted whether or not they could pull it off – not only were they novice farmers, but the risk was enormous (especially after Pierre’s discouraging advice) and they were so dependent on Gerardo. But, looking out over their green fields and seeing the calculations in black and white, they were effectively converted into believers. They would have plenty of money from this crop to continue construction on the Villa and they would be able to do it all again next year. The future had never seemed rosier.

A day or so later, Matt and John, normally accustomed to bright sun waking them up like a spotlight through the trailer windows, were surprised to see a coastal fog rolling in from the ocean over the lettuce fields, dimming the morning light. They could sense a cool change in the air, but thought nothing of it. In fact, they were delighted that the weather was turning cooler – didn’t lettuce thrive in cool climates like Salinas? The cooler temperatures would also make lighter work for the crew picking the lettuce over the next few days.

But, the fog lingered on with an ominous presence over the ocean, and Matt and John’s initial delight turned into apprehension. Walking through the fields as the laborers picked the lettuce heads and boxed them to transport to CCC, Matt and John’s apprehension quickly escalated into outright distress. Reaching to the soil to pick up a few of the lettuce heads, they each felt mushy, almost gelatinous, with an unappetizing brown tinge to the leaves. They knew this was not supermarket quality lettuce and probably barely made the grade as animal feed. But, how was this possible? Just a few days before, the crop was fresh, green and picture perfect and now had suddenly turned rotten. 

Gerardo drove the first truckload of brown jelly lettuce to the supermarket CCC and breathed a sigh of relief when the manager handed him a check for the product - maybe the lettuce was not as bad as they thought, after all. The relief was short lived. As Gerardo drove away, his cell phone began to ring incessantly. Anticipating bad news, he reluctantly answered the phone and the manager on the other end informed him that the product was unfit for human consumption, violated the terms of the agreement and demanded that Gerardo return the check. Exasperated at this turn of events, there was nothing to do except honor the contract and give the money back. 

In a state of disbelief and utter panic, Matt and John needed to figure out what had happened. The only contact they knew who could answer their questions was the original lettuce expert, Pierre – the one who had fervently urged them to abandon their iceberg seedlings months before. Sitting in their trailer on the dune, John slowly dialed Pierre’s number, and sheepishly admitted that they had completely disregarded his prior advice and gone ahead with their lettuce crop which was now rotting in the fields, just as predicted. For the rest of the phone conversation, John was relatively quiet – all he could do was listen to Pierre, shake his head and rub his forehead in frustration. Pierre explained that iceberg lettuce is rather susceptible to disease and that, from John’s description, it seemed that the crop had succumbed to a new problematic fungus, Phoma Basal Rot, and there was nothing they could do to fix it. The crop was done.

Hanging up the phone, Matt and John did not fully understand the issue– was the rot caused by the cooler coastal fog? Was it wet soil conditions? Did the fungus live in the soil or was it airborne? Ultimately, the answers to these questions did not matter one bit – the crop was destroyed and their lettuce farming business was bankrupt. The expected $80,000 USD profit vanished and they were in the hole $30,000 USD from the farming expenses.

They pinned their last ounce of hope on the poblano chile crop. If they could just get a reasonable price per kilo, they would realize a $60,000 USD profit, which they could use to cover their losses from the lettuce disaster and still put money in their pockets. It would not be the wealth they were hoping for, but it would definitely help take the sting out of the ordeal.
Selling the poblano chiles was an easier task because the buyers essentially came to the growers. Six or seven huge semi-trucks had parked themselves in different areas of Todos Santos and Pescadero, waiting to buy poblano chiles from local farmers. Gerardo and Matt loaded up their first truckload of chiles and drove it into town to sell to the waiting trucks. Negotiating with the merchants brought them to their knees. They were astounded at the offered price – just $2 pesos/kilo – one of the lowest in recent history. The crop was basically worthless. How was this even possible?

Encouraged by last year’s record high price of $13 pesos/kilo, apparently every farmer in the area had decided to grow poblano chiles. Principles they had learned in high school economics class flooded back – when the market is oversaturated with supply, a surplus occurs, leading to a lower price. And this year, the price was really low, so low that farmers could barely afford to hire laborers to pick the chiles off the vines; in some cases it was more cost effective to hire tractors to disc the crop back into the soil rather than pick the chiles and take them to market. Gerardo and Matt bounced from buyer to buyer, finally negotiating a price of $2.8 pesos/kilo, earning them just $4,000 USD for their entire chile field. This was a far cry from the $140,000 USD in profit they expected to earn from both crops, leaving them with an overall loss of $26,000 USD. Matt and John felt a huge range of emotion – they were devastated, incredulous, dumbfounded, speechless, enraged, panicked and humiliated – all at the same time. The experience cracked the rose-colored glasses they had worn throughout their time in Mexico and the high they had thrived on since purchasing the property was suddenly over.

The farming fiasco was all-consuming and created so much tension in their relationship with Gerardo and the Davila family that it quickly deteriorated and came to an abrupt end. Whether warranted or not, Matt and John felt misled and betrayed by Gerardo’s inexperience and embarrassed that they had let such a novice lead them into financial ruin. These feelings bled over into their construction relationship, prompting them to question material orders, budget transparency and work ethic. Ultimately, out of money and without any foreseeable future income now that the farm had failed, Matt and John had no choice but to stop construction on their home, essentially firing the Davila family contractors. To make matters worse, Matt’s relationship with Maria could not survive the tumultuous episodes with her family and he found himself alone, heartbroken and depressed at the sudden turn of events.

The status of the Villa construction after the farm failed.  
Behind the truck, many of the lettuce plants sprouted and went to seed.

As it seems could only happen in a country song, in the midst of all this turmoil, their dog, Tucker, was tragically killed in a hit and run accident outside the front gate. Wanting Tucker’s soul to live on nearby their future family home, Matt carried the dog’s limp body to a grave dug next to the construction site. Matt and John planted a plumeria tree at the head of his grave (still there today near the parking spaces at the Villa) to honor his spirit. Losing Tucker left them with a crippling sense of loss and emptiness. His death shattered their hearts and was, in effect, an embodiment of so many recent failures and frustrations at Rancho Santa Cruz that it was hard to remember why they even got started in Todos Santos in the first place.


Tucker inside the old blue van

They had reached a low point, to say the least. All the cornerstones they had depended on in Todos had suddenly disappeared: the farm was over, they had lost their way to make a living in Mexico, the construction was stalled for an indefinite amount of time, their “family” connection to the Davilas and Todos Santos was ruined, Matt’s relationship had ended and Tucker was gone. They only thing Matt and John had left to cling to was their friendship, the one constant they could always depend on. This was the rockiest of times and seemed insurmountable, but at least they were enduring the low points together. They had no choice but to forge ahead. With huge farming losses and all their money tied up in the land, they had to be a united front against whatever Mexico would bring them next.

Check back in a few weeks for the next installment in this crazy story!

**We'd like to extend a huge thank you to Matt's good friend, Jason Doucette, for contributing many of these pictures. This was an era before email and digital photos, so it is difficult to find prints. Jason, thanks for digging through boxes in your storage unit to find these. They bring the story to life!**

The Journey Begins! Buying the Property

Monday, February 11, 2013

The Journey Begins! Buying the Property  (2001 - 2002)

When guests arrive at Villa Santa Cruz, often before they even make it upstairs to their guest suite, they want to know the story of the Villa. They pepper us with questions like: Who owns it? How did you find the property? Did you renovate or build from scratch? Who was your architect? Where did you find the furniture? How do you run everything “off the grid?” The history of the Villa, the incredible risk and hardship involved in its evolution, the depth of relationships forged along the way, and the rewards, mistakes and learning experiences that have come from the last decade are enough to fill thousands of pages. Over the next few months, we’ll attempt to illustrate, through a series of blog posts, the journey we have taken to create what is now today’s Villa Santa Cruz.

The journey begins back in the late 90’s when the Villa’s owners, business partners Matt and John, were in the midst of their first business undertaking together – flipping homes in San Diego. Focusing on neighborhoods like North Park, Golden Hill and Sherman Heights, they’d buy a home, remodel it and either sell it or keep it to refinance and rent out, using the equity earned in the home as the down payment for their next “flip.” With their meager funds tied up in the remodels, they had little left over for any type of normal personal life. As only single men can, they lived like homeless vagabonds, sleeping on the floors of their remodels, crashing on friends’ couches, and living in ugly motorhomes they would park on a different street block each week. It was a crazy time – something pulled off by young guys willing to dream big, play the risky real estate market, sacrifice conveniences, and work hard.

By living on the cheap, they found themselves with enough time and money between remodels to escape construction life and travel the world. They visited Ibiza on one trip, Thailand on another, and then decided to head south of the border in November 2001 to explore Baja. Just two months post-9/11, with the threat of terrorism palpable, it took a bit of chutzpah to travel to Mexico, but, like their current lifestyle, risk was never a deterrent.

Winding their way down the Baja Peninsula in Matt’s 1973 ocean blue Westfalia camper van with Australian Shepard mix, Tucker, they rolled into a small, relatively undeveloped bohemian fishing village on the Pacific ocean called Todos Santos, located 50 miles north of Cabo San Lucas. On the days preceding their arrival in Todos, they’d heard rumors that it was known as the “jewel of Baja.” Once there, they understood it was aptly named. With beautiful golden light cast on lush palm trees serenaded by a soundtrack of crashing waves, tweeting birds and a soft breeze rustling pink bougainvillea petals, the town certainly stood out against the monotonous brown desert that covered the rest of the peninsula.


The Ocean Blue Westfalia Camper Van

Although Todos was a “beach town,” they were surprised that the town itself was set back a mile from the beach. Determined to camp on the sand, they headed north out of Todos to find beach access. Bumping along the dirt road, they were pulled farther and farther north by the beauty of the expansive landscape. With the Pacific to the west, a purple hued mountain range to their right, and oases of dense palm groves dotting the coast line, they’d found their Mexican heaven. Eventually, about five miles north of town, they turned left off the main road and headed to the beach. They came upon a young Mexican man, and in their broken Spanglish, asked the price for camping on the beach. The man requested only one beer. Feeling that they must have misunderstood (who would want just one beer?), Matt and John offered him a six pack. The man replied, no, that he’d prefer only one beer – he did not want to get in trouble with his wife. Having paid their toll, they set up camp on the beach. Intending to spend just a night or two in Todos, they just could not pull themselves away from their spot of paradise and stayed for over a week.

Each morning they would run along the shore, between the surf and the dunes, remarking that the landscape looked eerily similar to the green bluffs of Pebble Beach, scalloped by the waves. Spending the days napping, reading and watching Tucker dog paddle waves and dig for sand crabs, they were always well rested for sunset happy hour and a few games of coconut bowling. 


Matt is Coconut Bowling

After a few days on the beach, and having run out of the essential supplies (beer and ice), they headed back into town to restock. Considering that their “campsite” was just a patch of sand and didn’t come with showers, soap or razors, they were quite a haggard duo walking around Todos, looking, true to form, like homeless guys. Passing by the Amerimex real estate office window on their way to the grocery store, Matt recognized a fence line in one of the listings as the one that they would run past each morning on the beach. On a lark, they went into the office to find out more details on the property.

Behind the desk was realtor Richard Rutowski, a tall man with a big smile, casual demeanor and cowboy boots. A Hollywood transplant to Todos Santos, he is most well-known for writing the screenplay Natural Born Killers. Almost instantly, Matt and John coined the moniker “Natural Born Realtor.” To a different kind of guy, Matt & John’s filthy appearance may have suggested that said property was out of their financial reach. But, to the Natural Born Realtor in a town like Todos Santos, opportunity came in all forms. Without pause, Richard took them out to see the land and discuss details.

The three of them intended to walk the perimeter of the 24.7 acre (10 hectares) property to get a feel for the land, but after arriving at the property’s front entrance, they knew this would be a challenge. With dense cactus and overgrown desert brush, there was no defined pathway to travel the quarter mile from the road to the beach. Gingerly stepping through growth and brush, scraping legs and stubbing toes, Richard explained that the main value in this land, besides the obvious stretch of beach frontage, was water. Historically, the property, commonly known as Rancho Santa Cruz, was a rich farmland. Neighbors remember days of working the land, cultivating sweet potato and papaya plants. Old brick canals that begin at the well tower and wind their way through the property evidence antiquated irrigation methods in which farmers flooded their vegetable fields to water on a large scale (this was before the invention of modern methods like header pipes and drip tape). Matt and John now understood why this property felt so special on their morning runs – it was green. Juxtaposed against the dry brown desert lots with scraggly brittle brush that surrounded Rancho Santa Cruz, the green dunes, thick saguaro cactus and palm groves on the property were simply magnetic.


Just Raw Land
(the Van is exactly where the Pool will one day be)


Raw Beach Front Coastline at Rancho Santa Cruz 
(the Palapa will later be built here)

The three of them finally broke free of the overgrowth and made their way up the dunes as the ocean came into full view. The clear sunny November day was captivating - whales splashed out in the Pacific, ocean waves gently rolled up the white pristine shore, and sand felt warm and soft between their toes. Looking from the ocean back over the property and out to the mountain range in the east, they were overcome by the serenity of the landscape. What a discovery! They had to have it. But, there were two main problems: one, they didn’t need a 25 acre parcel of raw land in southern Baja and two, they couldn’t afford it. Not ones to let need or lack of resources stop them, they put their heads together to learn more about the deal.
Talking with Richard, they quickly learned that buying property in Mexico was radically different than doing so in the United States in one very important regard - money. As real estate flippers, they were well-versed in the business of bank mortgages, accumulated interest and down payments and were thus shocked to hear that none of this applied in Mexico – they were expected to pay all cash, all at once. Frenzied by their love for the property, but uneasy about coming up with such a large sum of money, they devised a plan.
 
After scribbling numbers and punching calculator keys, Matt and John asked Richard to communicate their offer to the seller – they would buy 1/5 of the beachfront with an option to buy the second fifth within 2 years, with a first right of refusal on the third, fourth and fifth portions, and so on until they had purchased the entire parcel over 10 years. While impressed with their creativity, Richard knew the seller would reject it outright. The seller, an elderly American man, was wrapping up affairs in anticipation of the end of his life and originally intended to donate Rancho Santa Cruz to an orphanage in Cuernavaca (mainland Mexico) where he was living. The orphanage was flattered that the seller would want to gift it such a valuable property, but had to turn it down because it lacked the resources to deal with a property in Southern Baja – to them Rancho Santa Cruz might as well have been on the other side of the world; money was the only thing it needed. Motivated by the needs of the orphanage, the seller responded to Matt and John’s offer with a surprising counter – if they could come up with the full asking price, in cash, on the 24.7 acre parcel within one year, he would throw in an additional 21 acres (8.5 hectares) located on the east side of the road for the same price. Upon hearing this news, Matt and John’s jaws dropped wide open – double the amount of land for the same price? Was this for real? They would not let their lack of funds impede their great luck.

Bubbling with excitement, their minds were instantly racing, hatching plans to come up with the funds. They knew that their only option was to liquidate all their assets in the San Diego remodels. They put a few of the homes up for sale and refinanced another, putting the equity towards the purchase price of Rancho Santa Cruz. The year they had to come up with the money was soon running out and they were still short by almost 50% of the purchase price. One of their properties had been on the market for many months and would not sell, so they decided to take on a partner in that home and put his contribution toward the purchase price. Yet, they were still short by 25% of the purchase price. Defeated and disappointed, they remained steadfast in the desire to own Rancho Santa Cruz. Playing their last card, they were forced to borrow against a property in the United States that John owned with other partners – committing Matt & John to covering a monthly payment until the amount of that loan was repaid. Without a reliable income to ensure that they could afford the monthly loan payment, it was a gamble, but they ignored that worry and instead focused on the prize – they had bought Rancho Santa Cruz, their piece of paradise. 


John with Tucker at the Front Entrance of Rancho Santa Cruz
(starting to clear the land in the background - read about that step of the journey 
in the next installment)

Finally taking possession of the property in September 2002, Matt & John pulled an Airstream trailer onto their parcel of raw land to bask in the glory of the Mexican sun and surf – it was their hobo heaven. They spent that first evening playing bocce ball on the sand, watching Tucker chase pelicans at sunset, and sitting around a fire, congratulating themselves on becoming “Mexican land barons.” It was a night of celebrating good fortune, good friends and good luck. Ignorance was bliss. Had they known of the tsunami of problems, struggles, hardships and desperation that were about to hit them, they would have packed up that first night, relisted the property, and never have looked back.

Focused solely on the thrill of the deal for the past year, they had not given much, if any, thought to what they’d actually do with the property once they had it. Waking up the next morning, they had a few sobering realizations. While the property did come with abundant water rights and a well, there was no functioning infrastructure to pump the water out of the well, let alone any existing hose bibs or faucets they could turn on to fill a bucket with water. There was no electricity (the property was located way outside the town power grid), no septic system, no liquid propane gas tanks – none of the infrastructure needed to make raw land inhabitable at even the most basic level. Alarming them further, they had sunk every last penny they had into the purchase price of the raw land, and still owed a large sum to a US bank. Out of money, the land they had labored so hard to buy began to feel like a weighty liability. Where would the money come from to make basic improvements? What jobs could they get to keep them afloat? What was their next step? How in the world would they dig themselves out of this one?

To see what happens next in the story, check the blog in a few weeks to read the next installment in the crazy adventure of Villa Santa Cruz.
Mandy and Robert pepe commented on 11-Feb-2013 11:40 AM
Awesome story! Love hearing every word of this! Can't wait for the next installment! As a previous guest (and one sure to be back) I can only thank you for keeping the dream alive and seeing it through.. You have a one of a kind property.. We will never forget it.. We will be back.. and we can't stop talking about it. We must drive all of our friends crazy talking about our trip to Villa Santa Cruz.
Anonymous commented on 11-Feb-2013 12:24 PM
... great story, fun to read... keep up!...
Dr. Amir
Bill commented on 11-Feb-2013 01:19 PM
crazy gringos
Sarah V. commented on 11-Feb-2013 05:29 PM
What a great read so far! Looking forward to more. Jess, so happy for you and this incredible journey you are experiencing! If you are ever in New York let me know, would love to see you.

-Sarah

History of Villa Santa Cruz

Sunday, March 13, 2011

This is the story of how we came to be...

In 2001, Villa Santa Cruz founders Matt Canepa and John Brown, came down the Baja Peninsula on a surf trip and camped just north of Todos Santos and the famous La Pastora surf break. They knew immediately that the area was special and fell in love with the white sand beaches, ocean views and solitude of such a private beachfront spot. After discovering that the 45-acre property, known as Rancho Santa Cruz, was for sale they quickly decided to buy it. Over the next few years, they transformed the raw land into today’s Villa Santa Cruz, overseeing every aspect from conception to construction, and completed the estate in 2006.

Later that same year, Matt met his future wife, now Jessica Canepa, when she came to visit Villa Santa Cruz. Matt proposed one year later in the Villa’s ocean-side Palapa and in 2009 the couple was married on the roof terrace. After two years living together in the United States while Jessica pursued her law career, the couple decided it was time to make Todos Santos their full-time home and began converting the estate into a boutique hotel on the beach. Now, Villa Santa Cruz has opened its doors for all to experience the beautiful house, relaxing pool, secluded beach and gorgeous ocean views.

Lindsay commented on 16-Mar-2011 10:08 AM
Wow! What a story! How fun. I hope to visit one day!
Philipp Stelzner commented on 23-Mar-2011 02:57 PM
Beautiful story! True romance happens at Villa Santa Cruz!