May 13, 2005

Increase of San Diego “Super-Commuters” From Calexico Insignificant in Comparison to Water Agreement’s Impact on the Desert Border City’s Economic Development

By Perlita R. Dicochea

Billed in numerous news outlets as an up-and-coming bedroom community for San Diego County, Calexico is in fact providing housing for thousands of Imperial and Mexicali Valley professionals—on what was once farmland.

A direct result of potential future fallowing Imperial Valley farmers may have to undergo in order to meet the recent Water Transfer Agreement with San Diego County, the northeastern corner of Calexico is now host of the city’s most refined neighborhoods with new home prices ranging from $170,000 to $400,000.

“About 75% of our buyers are government workers like Border Patrol agents, Homeland Security employees, and correctional officers. And they’re locals moving up or purchasing homes for the first time,” Vice President of sales for McMillin Homes Mark Gran said, who also sits on the City of Imperial’s City Council. “About 80% of those are Mexican Americans,” Gran added.


Pablo Orosco, Executive Director of the Calexico New River Committee, sits in his office beside the warning sign that the committee created, sought funding for, and posted along the New River.

The historic Water Transfer Agreement, a 75-year deal, includes up to 200,000 acre-feet of water that San Diego County Water Authority will be able to purchase from the Imperial Irrigation District (IID). Thus far IID officials estimate that 5,000 to 6,000 acre-feet of water have been transferred to San Diego. Rudy Maldonado, Director of the IID, said the water transfer is set to reach 200,000 acre-feet by 2015.

Concurrent with Calexico’s housing and population growth, new commercial units, including Starbucks, Carl’s Jr., Super Walmart, and Food For Less, consider the small border city, population of about 37,000, a safer investment. The turn of events is creating the economic diversity that some in the region believe the Imperial Valley desperately needs.

“It used to be that when the farm industry caught a cold, the entire Valley suffered,” Maldonado said.

Today, farm acres are more valuable when sold for economic development projects. “A given property that was worth $5000 (prior to the Agreement) is now worth $50,000,” said Barry Garman, director of sales with Victoria Homes, which has built in the Valley for 13 years.

“Some farmers are happy to see developers come along. There is a transformation in a number of areas: agriculture will no longer necessarily be in the cities and as new services are taking over there will be less of a need for any kind of guest worker program,” Garman assessed.

Assistant City Manager, Luis Estrada, confirms that Calexico is in the middle of a major transformation as 1000 acres of farmland have already been sold for housing development and 4000 acres of farmland are planned to be open for housing and other development over the next 10 years.

McMillin and Victoria Homes aim to build an annual average of 500 homes each as long as Calexico’s infrastructure can keep pace. One of McMillin’s newest projects, Las Brisas North, with homes selling from the low $200,000s, is already sold out.

From Rural to Urban

The relationship between farm acre sales and shifting water needs is another critical dynamic inciting economic diversification in Calexico and the Valley at large.

“For every acre of land taken out of agriculture and put into the economy, 66% of the water that was used on that acre of farmland goes back to other farmland still in production. Only 33% goes to municipal needs for new housing,” Maldonado explained. “In this sense, we will free up more water for farming and we will never run out of water,” Maldonado maintained.

As of 2005, reports from IID offices reveal that 97% of all of the Colorado River water that Imperial Valley receives goes toward farming, while only 4 % is used for residential and other industrial and city needs combined. Valley business leaders and public officials concur that this figure will continue to decline as also indicated by the growing concentration of jobs in the government and service sectors.


The New River just as it flows north into Calexico from Mexicali. You can see white foam and the day this photo was taken (a couple weeks ago), the river had a very strong odor. The international border fence can be seen on the horizon.

Data from the California Employment Development Department confirms the future direction of the Valley’s economy, citing that Imperial County’s largest employer is the government at 31% followed by agriculture at 23%. This trend of increasing employment in government and service sectors complements the decline of agricultural jobs.

“When Mexicali gets a cold, Calexico gets pneumonia”

The significance of Mexicali’s industrial sector cannot be understated. Indeed, the 30% to 35% growth of Calexico is largely attributed to the presence of executives, supervisors, and other higher income professionals from Calexico’s southern neighbor and its population of nearly 1 million.

Former resident, business person, and government leader, Barry Garman addressed Calexico’s dependence on Mexicali’s population and economic activity clearly: “When Mexicali gets a cold, Calexico gets pneumonia.”

In terms of purchasing power benefiting Calexico, 10% and 25% of McMillin’s and Victoria Homes’ new homebuyers, respectively, are from Mexicali.

In addition, Calexico consistently reports a zero vacancy rate on rentals demonstrating a demand for more housing. Maldonado states, “When an apartment goes up for rent, it is not on the market for long.”

San Diego “Super-Commuter” Hype

Gran, whose employer is one of 6 private developers in Imperial County, estimates that only 5% to 10% of their homebuyers are from San Diego, Orange, and L.A. Counties. Maldonado asserts that overall less that 3% of Calexico’s total growth is attributed to newcomers from San Diego.

Clearly, the hype over Calexico as the newest San Diego suburb is just that—hype. A report released by the California Center for Border and Regional Economic Studies (CCBRES) at San Diego State University’s Imperial Valley Campus addresses the misguided projections concluding that Imperial Valley’s housing growth cannot be characterized as a “boom.”

“Instead,” the November 2004 report reads, “the expansion of the market is a delayed response to normal growth in the demand for housing over time…the county is simply catching up.” Indeed, Imperial Valley experienced an increasing housing shortage throughout most of the 1990s.

While Imperial Valley’s population grew 30.2% from 1990 to 2000, the number of households only grew by 19.9% during the same decade. Thus, the number of persons living under the same household unit increased. Both figures indicate a need for new housing. Yet, the number of additional housing permits remained stagnant in the Valley from 1995 to 2000, reports CCBRES.

Furthermore, as reported by the San Diego Association of Governments in June of 2004, the percentage of commuters traveling from San Diego to Imperial Valley versus east to west on a daily average is still 2 to 1.

SANDAG’s figures could not speak more loudly: 400 people commute to work from Imperial to San Diego County while 800 people commute from San Diego to Imperial County. While these figures are not specific to Calexico, the case has been made: Calexico is not yet a hub for San Diego flight.

Growing Pains

While Calexico is a vibrant site of opportunity for middle-income and first-time home-buyers, the reality of the Imperial County’s average unemployment rate of 19% (CCBRES) and lack of real job increase raises eyebrows.

“Starbuck’s wages aren’t going to cut it,” Gran said, referring to the recent commercial chains that have opened for the first time in Calexico.

“It’s hard to bring people down here. We are trying to get a workforce from Coachella Valley—they are used to the weather—because there are not enough local people here, not enough sub-contractors for all the work that needs to be done in order to build,” Gran explained.

There are also capacity concerns particularly in terms of city infrastructures and funding and staff for that infrastructure. Calexico City Manager Estrada said it could take several hours to complete inspections, particularly for projects like the Super Walmart.

“We have not seen real growth in real jobs” Gran concluded.

Calexico’s New River Region Remains Underdeveloped

Coincidentally, the housing growth is concentrated in the northwest corner of Calexico city limits – the area farthest from the portion of the New River that flows through the city.

Located just west of HWY 111, which leads through Imperial Valley and into Mexicali, the New River is considered one of the most polluted rivers in California. Beginning in Mexicali, the river water brings north a lethal combination of human waste, heavy metals, and agricultural runoff.

A longstanding pollution problem and public health hazard, the Calexico New River Committee has spent the last decade investigating state and federal political procedures in order to garner the financial and technical support to cover and mitigate the river at the Mexicali/Calexico border.

The New River Committee’s goal is to cover-up or encase the New River, as has been done in parts of Mexicali, facilitate the river’s natural filtration processes via wetlands, and possibly redirect a portion of its flow. In addition, the committee proposes to add recreational amenities such as greenbelts and bike paths.

Recently, the committee overcame one of its greatest obstacles: state and federal bureaucracy. “We have so may air quality and odor nuisance laws. We regulate the sewer plans on these kinds of issues, but there is nothing for the New River,” Estrada explained. “We had to convince the EPA that while the river bed is natural, the actual water that flows in it is no natural—this is drainage ditch, no denying,” he furthered.

Arguing for the New River to be accepted as a drainage ditch with no “natural” water flow means limitations on how to mitigate the river would be lifted. Under current law, natural bodies of water cannot be altered in the way that the committee’s plan proposes. Consequently, the California-EPA was the strongest opponent of the New River Committee’s plans. The recent passing of SB 387 lifts such barriers to New River cleanup and also changed CalEPA’s stance.

Pablo Orosco, New River Committee Executive Director, stated, “SB 387 provides the language that allows for encasement and could potentially provide government funding for our project.”

Orosco took the lead with the guidance of Senator Denise Moreno Ducheny (D-San Diego) in officially redefining the New River so that the committee would then qualify for government backing via funding and national and international attention.

What might this mean for Calexico development west of HWY 111? Estrada, Orosco, and Maldonado are hopeful that the completion of the committee’s plan will open the doors to economic development on the southwestern and western corners of Calexico.

Gran stated that if the New River Committee is successful in reaching its goals, developers might consider the southwestern region of Calexico. However, several variables seem to contradict the optimism.

“You go with the flow,” said Gran. “Obviously we won’t look at a piece of land right next to the New River if there is more valuable land elsewhere.”

Garman stated more forcefully, “Calexico will always grow to the northeast. Buying land near the New River and waiting for the New River to be cleaned up is a big risk.”

The new port of entry east of Calexico is another factor drawing growth away from the western regions of Calexico.

Roselyn Guerrero of Calexico’s Redevelopment Agency added that the New River area is a flood plain. Construction for recreational activities would be acceptable, but housing construction would not. Guerrero also commented, “If the soil near the New River were tested, who knows what we would find.”

For all intents and purposes, San Diego’s own growth and need to service more water to its expanding households is certainly influencing current and future changes in Imperial Valley as a whole. The task for the Valley is to consider opportunities for smart growth and sustainable development.

Send comments and questions to Perlita R. Dicochea at perlita@berkeley.edu.

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