Business people flocking to Costa Rica
Minneapolis/St. Paul Business Journal - March 31, 2006
by Nicole Garrison-Sprenger and Sam Black Staff Writers

When Wayne Bishop visited Costa Rica 12 years ago, he was wowed by the country's natural beauty, but he was even more taken aback by its investment potential.

"If you had any entrepreneurial nose, you could see the raw opportunity there," he said. "Most developments have been mom-and-pop operations. ... There's an opportunity for them to be properly planned, Western style."

So Bishop, co-founder of Minneapolis architecture firm Walsh Bishop Inc., spent the next several years looking for land on which he could build a Western-style resort. In 2000, he and some co-investors, including the Marvin M. Schwan Charitable Foundation in St. Louis, broke ground on the first phase of Peninsula Papagayo, a project anchored by a golf course and a 210-room, five-star luxury hotel.
That's just a fraction of the investment he and several other Minnesotans have made, or will make, in the Central American country.

While he declined to share names of the Twin Cities developers and investors he's working with, Bishop said there are several.

" I've been inundated with calls from Minnesotans that have land and are looking for my advice," said Bishop, who sold his interest in Papagayo to the Schwan Foundation and is working on several additional Costa Rican developments of his own. (The Schwan Foundation was established by The Schwan Food Co. founder Marvin Schwan, but is not part of the Marshall, Minn.-based company.)

"We're at the beginning of a huge land boom," Bishop said.
Several other Minnesotans are taking part:

• Blaine Kirchert and Rich Pakonen, two St. Paul developers, have formed a joint venture and intend to enter the Costa Rican real estate market. Their first project is a 26-unit luxury condominium project in Playa del Coco on the country's West Coast. The pair is working on a much larger 250-acre mixed-use project in the center of the country.
• A group of Twin Cities investors, including former 3M Co. and Control Data Corp. executives, have opened a macadamia nut farm in the country.
• Graves Hotels Resorts of Minneapolis announced plans to develop a Graves-branded luxury hotel in Tamarindo, Costa Rica, also on the country's West Coast. It has two other properties there already. Graves operates Graves 601 Hotel Minneapolis, the former Le Meridien Hotel Block E development.

The relatively small country has become a popular vacation spot, and visitors are coming back to Minnesota enchanted, just as Bishop did. Word of what he and other entrepreneurs are doing in Costa Rica has spread, prompting more investment.

The reasons are many.

One draw is the sheer number of U.S. citizens expected to move to Costa Rica. Bishop said he's heard the U.S. government say it anticipates 1 million Americans will retire in Costa Rica during the next 10 years.

Others, like Bishop, say they simply become enchanted when they visit for pleasure.

"There's a long heritage of Minnesotans going to Costa Rica during college because of their environmental-studies programs down there," Bishop said. "Today those young folks are adults, so there's a huge connection."

Pakonen, owner of Pak Properties, was an exchange student in Costa Rica for a few weeks in college. He was drawn to the country for its stability and beauty.

There are many cultural differences between Minnesota and Costa Rica, he said, but for the most part, business is done the same way. People are educated and they do business "above board."

Pakonen decided to take a look more than a year ago after someone approached him with an opportunity to invest in some land. Potential developers need to consider that the Costa Rican government is active in protecting the environment. It limits the height of hotels along the coast so it doesn't become another Miami or Cancun, for example, Kirchert said.

Ecological tourism is the biggest contributor to the country's gross national product, and officials want to protect that. But it's not just developers pushing into the country. A Minnesota-based mortgage company is setting up shop down there, Bishop said. Other service companies will likely do the same as the Minnesota contingent there grows.

Several Minnesotans, including John Doleman, a former Control Data Corp. executive; Tim Stepanek, a Minneapolis venture capitalist; Jerry Robertson, a former top executive at 3M Co.; and Elli Ansari, owner of food-marketing firm Flavorroad, are partners in a macadamia-nut business in Costa Rica.

While the business started in 1989, investors say it's coming out of its shell.

The group of investors -- there are about 80 today -- bought the macadamia plantation, called Finca La Anita, to save it from loggers and to employ a village of about 350 people nearby. "It's an investment, but there's an altruistic component to it, too," Doleman said.

Finca La Anita isn't yet profitable.

It takes awhile to get such an operation up and running. Macadamia seeds must spend two years in a nursery before they are planted, and it takes another five years before trees yield nuts.

The company is starting to sell its nuts retail in co-ops across the United States instead of just on the bulk market. The plantation owners started a marketing program that offers customers a free stay at the plantation when they buy 40 boxes of nuts. The nut entrepreneurs also are promoting the fact that for every box of nuts they sell, they contribute enough money to a trust fund to save a full square-meter of rain forest.

" We're slowly doing better and better each year," Doleman said.

Getting there Costa Rica is by far the most popular destination for Minnesotans visiting Central America and South America, though easy access has declined, said George Wozniak, president of Minneapolis-based Hobbit Travel.

A few years ago, Sun Country ran two flights per week between the Twin Cities and Costa Rica. Today, Northwest Airlines runs one flight per week between January and May to an airport on the country's West Coast. Continental Airlines offers five flights every day into the capital city, San Jose, but Twin Cities passengers are required to transfer in Houston or Newark.

Flights usually run between $450 and $650 per person, but Northwest recently quoted a round-trip ticket to Liberia International Airport on Costa Rica's West Coast for $305 per person for mid-April departures.
Even though it's a fraction of the size of Brazil, Costa Rica claims to have more rain forests and species of birds and animals.

A couple of years ago, Wozniak and his family went on a river-raft tour through the center of the country.

"It's a pretty amazing place from the standpoint of going back and thinking you're in Jurassic Park." He said the monkeys, butterflies and birds reminded him of a Johnny Weissmuller Tarzan movie. "It's a heck of a way to see areas you'd never be able to see by land."
ngarrison@bizjournals.com | (612) 288-2112 and sblack@bizjournals.com | (612) 288-2103