by Robert Fraga
“Interested in summer work? Mi padre runs a construction company. He’s always looking for summer workers. What do you think?”
José weighed the collateral advantages of working for Maria’s Dad. He mumbled something noncommittal.
“I’ll ask him if you want,” Maria volunteered.
José said, “Thanks,” and smiled at her.
Is that how things worked here, he wondered. Everything seemed to depend on who you knew. Tio Antonio, Maria. Everything was done through contacts. José began to feel as if the tide had turned. It was now running in his favor.
LOS CAMINOS REALES
The land or the roads: Which was the most valuable? The roads probably. And the railroads. Let’s not forget about the railroads. Without the roads and the railroads, the land wouldn’t be worth pig shit. But what would the roads or the railroads or the land be worth without water? Water was the key to everything else. That was the secular trinity, a triad of NAFTA-related development: land, transport, and water.
The master plan called for the El Paso-Juárez metro region to be turned into a transportation hub, a concrete and steel spider’s web of highways and rail lines. First a ring road around El Paso; then a road to link downtown Juárez with its western suburbs like San Judas; finally, a forty-mile rail spur to start south of Juárez, pass west of the city, then cross the Rio Grande to a spanking new Union Pacific facility on the U.S. side of the border. And the centerpiece of all this construction frenzy was the road south from New Mexico across the Rio Grande, shooting straight arrow through the heart of San Judas. This was the mother of all roads, targeting the biggest of all the maquiladoras in Juárez, the giant Fox-Conn plant, and from there thrusting like a dagger into the breast of the Chihuahua desert.
The plan smelled of money. A pigsty full of money! The infrastructure involved in these schemes included $150 million for the Union Pacific terminal, projected to handle one hundred thousand container cars a year. The state of New Mexico agreed to build a connecting road to the facility for $5 million. And the Mexican spur, which hooked up with the Union Pacific terminal, had a price tag of $40 million.
Of course, the owners of the land over which these roads and railroads passed stood to gain handsomely. The road through San Judas, for example, would go to a port of entry (POE) on the border. The crossing, five traffic lanes to a side, was expected to process between ten and twenty thousand vehicles a day. Each of these vehicles would be paying a toll. That volume of traffic would also benefit a casino conveniently located on the American side of the port. In 2006, the general manager of that casino pledged to contribute $12 million over three years to bring the port of entry to completion.
The Mexican railroad spur ran past a plot of land belonging to one of Mexico’s richest men, Eloy Vallina. Eloy was the eldest of nine children. In May 1960, Vallina’s father was murdered. The killer? None other than the chief of police of Chihuahua—the father of the woman Vallina was said to be having an affair with. The chief gunned Vallina down on the doorstep of his own bank; he was subsequently sentenced to fifteen years in prison for this crime of honor.
Eloy fils assumed the presidency of the family’s Banco Comercial Mexicano. When his bank was nationalized in 1982, Vallina told a Mexican publication, “They took my bank from me, so I shall take Chihuahua from them.”
The Vallina family had a multitude of business interests in Chihuahua. From the 1940s onward, it engaged in logging ventures in a region of Chihuahua called the Sierra Tarahumara. (This is the region known to Americans as Copper Canyon.) Their company, Grupo Industrial Bosques de Chihuahua—known more simply as El Grupo—grew out of Banco Comercial Mexicano. El Grupo was the largest of the companies logging in Tarahumara. By the early 1960s, El Grupo employed six thousand workers. Twenty-five years later, that figure had mushroomed to twenty-four thousand.
The family came under fire from environmentalists for its role in the deforestation of the Sierra Tarahumara. A survey in 1965, by which time logging was being carried out on a commercial scale, revealed that companies were blithely ignoring limits on extraction and slashing indiscriminately the most desirable stands of trees. Lumberjacks had poached timber on land specifically allocated to an indigenous community, sawing the choicest timber and leaving behind a wasteland prone to erosion. Local officials chose to ignore these transgressions and covered them up by filing bogus management plans.
Changes to the Mexican Constitution in the 1990s eliminated land redistribution to peasants. These reflected the impact of Mexico’s participation in NAFTA. Lumber extraction increased. By 1997, less than 2 percent of the country’s old-growth pine and oak forests—which had originally covered 93,560 square kilometers of Mexico—were left standing. Something like half of the country’s forests vanished in the twentieth century alone.
Companies gained access to the timber of the Sierra Tarahumara through rental agreements that were patently unfavorable to the indigenous inhabitants of the region. This, of course, stoked resentment on the part of the inhabitants of the Sierra.
“Even though the land no longer belongs to us, don’t we belong to it?” cried one village elder. “We are the children of this land, and as children we have a greater right than some big shot who can remove its timber just because he has money.”
The plot of land that Eloy Vallina owned on the border, a fraction of his holdings in the Tarahumara—it measured forty-nine thousand acres—was still more than twice the size of the island of Manhattan. Vallina bought it in 1998 for approximately $5 million. Days before leaving office in 2004, the governor of Chihuahua, whose campaign Vallina had supported, expropriated 212 hectares of Vallina’s land (a bit less than 524 acres) for $4.6 million. That left Vallina with his original land purchase largely intact, for which he had paid, in effect, less than $10 per acre.
Vallina became chairman of a Mexican holding company that ultimately acquired a company called Elamex. Elamex managed a number of maquiladoras. Shares in the company were sold on NASDAQ starting in 1995. At that time, with seventeen manufacturing facilities in Mexico, it was ranked the fifth largest maquila operator in Mexico. It was delisted from the NASAQ in 2006.
What did Vallina hope to do with his land on the U.S./Chihuahua border?
The plan was to create a mirror image of what was projected to take place on the U.S. side of the border. Developers aimed to create a strip of land slated for industrial use, stretching from the Pacific Ocean to the Gulf of Mexico. They would proceed to stud it with maquiladoras, workers’ dormitories, and malls to supply the needs of people living there.
“Whether the country likes it or not, the manufacturing platform of the U.S. is going to be on the Mexican border.”
The man who let slip that judgment, the man whose vision was to transform the border area between the U.S. and Mexico into an industrial hub, was William Sanders—“Billy” to his cronies—a real estate developer who was born in El Paso. He had gone on to make a fortune in the Chicago real estate management business. The son of an advertising agency owner, Billy enjoyed a middle-class childhood in El Paso that included selling Coca-Colas to golfers at the thirteenth hole of the El Paso Country Club. Sanders showed initiative at an early age. In high school, he operated a landscape business. This led to a stint at Cornell University, where he earned an undergraduate degree in agriculture and life sciences. Young Billy then launched a successful career in real estate development. A canny sense of when to cash in his chips before things went south made Sanders a very wealthy man. One example was a real estate holding company in Santa Fe, NM, which Sanders founded and sold at the end of 2002 for an estimated $5.4 billion.
At that time, Businessweek called him the most powerful landlord in the country.
In December 2003, Sanders started yet another real estate company, the Verde Group, which invested in binational projects along the border. These included maquiladoras. We need to throw one more name into Sanders’s lucrative batch of holdings. The developer cofounded a c
oalition of business types from both sides of the border—bankers, media owners, and politicians. This one was called the Paso del Norte Group (PDNG).
“His business model in land speculation has been to raise the expectations of his project and then to sell them to third parties before conclusion, sometimes, even before starting them.” This was how one consultant for a binational border development assessed Sanders’s secret for success.
One property that Sanders did not sell was his 125-square mile ranch near Columbus, New Mexico. This, one should remember, was the site of Pancho Villa’s most daring and notorious raid during the Mexican Revolution. The Verde Group lost no time in purchasing a sizeable chunk of land surrounding the site for the International POE and lying astride the road leading from the U.S. south into the colonia of San Judas.
“The border is such a powerful generator of value,” Sanders told one reporter. (He gave few interviews. This was one of them.) “The United States is the largest consumer market in the world and the most efficient place in the world to produce those goods is on the U.S.-Mexican border.”
The mayor of El Paso asked Sanders to redevelop the city’s downtown. Over the years, the area had sunk into a state of dereliction. “The biggest failure that I know of in the United States is El Paso,” the developer once said. Sanders culled ideas from his stint in Chicago, where he had been a member of the Commercial Club, an organization that tried to discreetly guide the city’s development. The Downtown Plan that Sanders eventually proposed for El Paso was introduced by the group that he had helped found, the PDNG.
From the get-go, the PDNG generated suspicion. Its membership, which was by invitation only, remained a closely guarded secret. The group preferred to work behind closed doors. Eventually the group was pressured to divulge the identity of its members. The disclosure revealed a bevy of well-connected heavy hitters from El Paso and Ciudad Juárez.
The principal bone of contention that critics picked with the plan was its objectives for the city’s Second Ward. This was the Segundo Barrio, El Paso’s most history-packed neighborhood. Thousands of Mexicans escaping the revolutionary chaos of their homeland had crossed through the barrio. It was the first stop on an underground railroad that stretched all the way through the Southwest into the Great Plains and California. Lucy Carrillo, the Mother Courage of San Judas, the woman who had arranged meals for Hands Across the Border, had taken this route on her escape to Los Angeles.
And there was the barrio’s roll call of famous residents. This is where Pancho Villa came to lick scoops of ice cream and to sleep with his wife, where Francisco Madero engineered the overthrow of the dictator Porfirio Diaz during the Mexican Revolution of 1910, and where Victoriano Huerta, the drunkard who plotted the assassination of Madero and the overthrow of his government, died of cirrhosis of the liver, his bed positioned so that he was facing Mexico when he drew his last breath. The Segundo was where the saintly Teresa Urrea, who could miraculously heal the sick, sought refuge after being forced out of Mexico; where Mariano Azuela published his novel about the Revolution, Los de Abajo; where Sylvestre Terrazas published his own newspaper, editorializing about labor movements and exhorting his countrymen to remain loyal to the motherland; and where Henry Flipper, the first African-American graduate of West Point, who played a prominent role in the 1920s Teapot Dome scandal, had lived. They had all passed through at one time or another. Now only their ghosts lingered on.
Those ghosts did not lack for live company that made a lot more noise than they did: during the day, shoppers thronged the district’s two principal thoroughfares—El Paso Street and Stanton Street. Consumers bustled in and out of shops that sold everything from caged canaries to guitars to skintight jeans, the latter displayed on rows of half-body mannequins, their pert fannies thrust out toward the roadway.
The PDNG plan called for a gentrification of the Segundo Barrio. It envisioned beautifully scrubbed facades and leafy esplanades, coffee shops, and toney restaurants. This required the demolition of some buildings—it was unclear which ones—and their replacement by condos, parking garages, even big-box stores that would certainly have spelled the doom of the mom-and-pop shops in the neighborhood.
To promote the project, the city funded an ad campaign that included a representation of an old cowpoke and the caption “male, 50-60 years old, gritty, dirty, lazy, speak(s) Spanish and is uneducated.” The image ran in juxtaposition with photos of Penelope Cruz and Matthew McConaughey, avatars of the beautiful people who presumably would flock to El Paso once the bulldozers had done their level best. Who could find fault with that? Those who found the ad offensive were just shiftless paisanos whom Bill Sanders and his partners were trying to evict.
The area would be “de-Mexicanized,” according to a blunt observer, one not squeamish about his choice of words. The instrument of transformation—one that stuck in the craw of those who opposed the development—was the threat of eminent domain, not between private owners and government but between the current owners of property in the barrio and the developers. Opponents argued that such a use of eminent domain violated Texas law. That did not seem to deter backers of the Downtown Plan.
If “we weren’t able to work something out,” said one of Sanders’s associates, city officials would have to “begin the process of taking their property.” At fair market value, of course.
It was the largest land grab in the recent history of Texas, said one lawyer representing a group of downtown businessmen. Opposition to the deal coalesced around an organization called Paso del Sur. Father Joe had a hand in its inception. Its web page was a sort of bulletin board for opinions both pro and con the proposed development. Mostly con. People associated with the neighborhood in one way or another spoke out to oppose the PDNG plan.
“This does not pass my smell test,” said Paul Moreno, a state representative who had grown up in the Segundo Barrio. “It’s too heavily slanted toward a few wealthy families in El Paso.”
In the face of unrelenting pressure from the opposition, the El Paso City Council decided in the summer of 2006 to prohibit the use of eminent domain for the plan. We should add an important footnote in this episode of El Paso history: Bill Sanders’s son-in-law Beto O’Rourke served on the city council at this time. It’s worth noting that O’Rourke distanced himself from racist promotion for the redevelopment plan like the one presented in the Cruz-McConaughey ad. “Beto does not approve of that kind of language to describe those in his community,” said his spokesman. A charismatic politician, O’Rourke went on to serve three terms in Congress before challenging Ted Cruz (R-TX) for his Senate seat. He came within a whisker of defeating the incumbent. Beto, who is universally known by his Spanish nickname, then made a run for the presidency, which the media lost no time in lavishing attention on.
The Downtown Plan was eventually shelved to be replaced by another one that was more expansive. This new proposal encompassed the whole city. It was called Plan El Paso.
The PDNG climbed on board, and all seemed to be going well until developers announced that the plan involved the erection of a sports stadium, to be built on the site of the city hall. To make room for the arena, the El Paso city hall, which was less than forty years old, would have to be blown up. Old suspicions about the motives of the PDNG resurfaced. Nonetheless, voters approved overwhelmingly the $225 million bond issue floated to finance the new construction, and the “old” city hall disappeared in a cloud of dynamite-induced dust on April 14, 2013.
PDNG offered an example of the chumminess of the big players on the Texas-New Mexico-Chihuahua border. For example: Eloy Vallina Garza, the son of Eloy Vallina Laguera, was a member of PDNG (as was Sanders, of course); Eloy Vallina Laguera himself was on the board of the Verde Group (as, of course, was Sanders); the elder Vallina and Pablo Schmidt both sat on the New Mexico-Chihuahua Commission for Binational Development; Pablo’s mother, Doña Patricia, joined the Strategic Plan for Ciudad Juárez, to which she contributed financial support.
Not land but water was the most precious commodity in the Southwest. Without water, much of the land would be worthless. The land that Eloy Vallina owned on the Mexican side of the border lay atop an aquifer known as Conejos Médanos—Rabbit Dunes in Spanish. The governor of Chihuahua announced plans to drill two dozen wells into the aquifer and to build a pipeline to supply Ciudad Juárez with water. The pipeline was to be constructed by a company belonging to Mexico’s wealthiest man, Carlos Slim, who was understood to be sinking $100 million into the project. In return, he wrung a concession out of Ciudad Juárez to sell water to the municipality for a decade. The pipeline would cross land owned by Vallina, together with San Judas, which the Schmidt family claimed.
On the U.S. side of the border, one big water issue wound up in court. Bill Sanders’s company, Verde Real Estate, undertook negotiations in the fall of 2003 to buy nineteen thousand acres of land opposite Eloy Vallina’s property in Mexico. At the same time, Sanders’s reps sought to acquire the water rights then owned by a bankrupt developer and to work out an agreement with Doña Ana County in New Mexico, where the land was located, to secure permission to dispose of waste water.
Sanders’s co-chairman for the Verde Group, Ron Blankenship, explained it this way: “Everything has to work together. We don’t buy the land if we don’t have the water rights.”
The water rights permit that Verde aimed to procure was unprecedented in its magnitude. For starters, all the water in the lower Rio Grande Basin had already been appropriated. New Mexico routinely turned down requests for new permits. With each passing year, the water situation in the Rio Grande Valley had grown ever more dire. In the summer of 2003, it was actually necessary to irrigate the Rio Grande because the river had dried up so much. Climatologists reckoned that by the halfway point of the new century, the median streamflow of the Rio Grande would decrease by 13 percent. By the end of the century, they predicted that the river would lose 30 percent of its water.