Border ‘Idealist’ Raises Suspicion

When it comes to talking Mexico and its economy, few can match an Orange County financial consultant with the decidedly gringo name of Samuel Copeland Palmer IV.

He knows the number of Mexicans who read comic books each week (85 million), as well as the availability of telephones (3 for every 100 people). He can wistfully describe his childhood vacations on a Baja California ranch, wax philosophical about Mexico’s spiritual ties to the land, and become downright enthusiastic about the economic potential of its relatively young and eager population (half are under 18 years old).

Yet for all of his knowledge, there are those who want Palmer to shut up and go away.

The reason is his grandiose plan for the creation of a binational authority that would, in effect, coordinate government efforts and raise cash to help untangle the chronic problems of pollution, inadequate roads, traffic congestion and broken-down sewers along the border--problems that Palmer says will eventually sap the economic potential of the maquiladora industry.

Palmer’s plan, now embodied in a bill working its way through the Legislature, has angered many San Diego government and business leaders, who view the proposal as meddling in their painstaking efforts to forge economic ties with their counterparts in Tijuana and Baja. Openly suspicious of Palmer and his motives, the San Diegans are maneuvering to kill the bill, which comes up for a crucial vote this week.

“I was hurt,” Palmer said recently about the San Diego reaction. “I’m a sensitive person and a very idealistic person and I was crushed.

“Just because I live in Orange County, I was viewed as this monster that intervened in San Diego,” he said. “I couldn’t believe that someone who had spent hundreds if not thousands of hours and his own money (on the idea) was regarded as an outsider.”

But he is. And some San Diegans say they don’t know what to make of the 31-year-old Palmer, except for the fact that he is stubborn.

“We don’t know who he is and where he came from,” said Dan Pegg, president of the nonprofit Economic Development Corporation, a private group that works closely with Mexican businessmen and officials. “Although he may be well-intended, his persistance on this bill is counterproductive and distracting a lot of energy that could be put to good use.”

Added a San Diego city official, who met with Palmer but asked not to be identified: “He comes off as a brash, know-it-all kind of person. . . . We are all asking ourselves, ‘What’s his angle? What is he trying to do?’ ”

Palmer insists his motives are pure and that he’s looking for a way to tap the economic potential of Mexico, which he considers his second home. Reared in the privileged neighborhoods of La Canada, Palmer said he and his family spent weekends and vacations during his childhood at their 2,000-acre, eucalyptus-lined ranch in San Antonio de las Minas, in Baja California Norte.

His excursions, he says, left indelible impressions of the contrast between his two worlds, the affluence of Southern California and the poverty of his Baja vacationland.

“We passed a thousand times through the abject poverty of the transient shantytowns that choked and festered in the smoking fires of garbage and sewage that paralleled the lower side of the fence that ran along the international crossing,” Palmer wrote in a short paper about his impressions. “There, in those hideous encampments, children played among dead animals and scrap houses made from cardboard. That part of our weekly journey sickened me.”

Yet there was enchantment. Life was simpler, the people gentler than in his Anglo realm, which included playing water polo as a student at the exclusive Harvard School in Los Angeles. He said his affinity for Latin America was so strong that, at 17, he spent several months as a volunteer paramedic in Nicaragua.

While attending UC Davis, where he was graduated in 1982 with a degree in agricultural economics, Palmer demonstrated a continuing interest in developing countries. A former professor remembers how Palmer made his mark on a government-funded project to study Egyptian flower growers. Palmer was the one who perceived a fatal flaw: the Egyptians were growing dainty varieties that wilted before arriving to the European markets.

“If you ever worked with him, you would never forget him because he always exceeded your expectations,” chuckled Lee Garoyan, now director for the UC system’s Center for Cooperatives. “I don’t know what he’s proposing now, but I’m kind of laughing. . . . He was always very innovative.”

After moving to Fresno, Palmer became a financial adviser at Merrill Lynch while working on his master’s degree at Fresno State. Living in the hub of the San Joaquin Valley, he was perfectly poised to establish himself as an expert in the big business world of California agriculture.

But Mexico, it seems, wouldn’t let him go. One day, Palmer said, a family friend and Baja landowner named “Uncle Luis” telephoned the budding economist and invited him to a seminar in Monterrey, Mexico, about the booming maquiladora industry.

Touted as a godsend for a struggling Mexican economy, the maquiladora plants tap the plentiful supply of cheap labor south of the border by hiring Mexican workers to assemble goods at American and foreign plants and later sold in the United States and abroad by .

To many, the maquiladoras are the best of all worlds. They employ Mexican workers. Since the workers are paid in American dollars, it helps the Mexican government ease its foreign debt. American and foreign manufacturers keep their production costs low. And border cities such as San Diego reap secondary benefits by selling supplies, making repairs and building matching warehouses for the plants on their side of the border.

As an added bonus, studies show the Mexican workers spend about half their wages on American goods.

Currently, there are 600 plants in Tijuana employing about 65,000 Mexican workers. About 42% of these plants use warehouses, distribution or other facilities in San Diego.

The glittering promise of the maquiladoras , however, has been tarnished somewhat by a welter of chronic border problems, some of them ironically underscored by the industry’s success.

As the plants proliferate, public and private improvements to support them cannot keep up. Experts say there is a woeful lack of adequate roads, water pipes, sewer mains, border crossings, cheap utilities, reliable telephone connections and housing for workers.

Perhaps the most notorious example: Millions of gallons of raw sewage spills daily from Tijuana’s antiquated sewer system and onto South County beaches.

Problems are compounded because any solution must be struck between two countries, two states and a patchwork of local governments, all with their own agendas and styles. The result, some experts criticize, has been years of international buck-passing and inaction.

It was the kind of puzzle that appealed to Palmer, who said he saw in the maquiladora mess the grander challenge of unlocking Mexico’s economy. That seminar three years ago, he says, sparked an obsession that prompted him in 1988 to move from the rich fields of Fresno to the rich neighborhoods of Newport Beach.

After taking a $120,000-a-year job with Smith Barney, where he learned about public finance, Palmer said he quit and became a $39,000-a-year consultant so that he could dedicate more time to his border passion.

Palmer’s said his quest led him through conversations and literature studded with statistical gems about Mexico, gems he polished and put in his files: It sometimes takes 15 to 20 tries before making a long-distance telephone call to Mexico. One million Mexicans will turn 18 between now and the end of the century. By the year 2000, more than one million Mexicans will be employed in maquiladora plants, which will add $10 billion to the economy. Public sector deficit is down from 12.3% in 1988 to 5.8% currently.

The major find, Palmer said, was a book published in November, 1988, by the Bilateral Commission on the Future of United States-Mexican Relations, a now defunct panel run out of UC San Diego.

Among the array of recommendations was the idea that “a binational authority on border affairs” be formed to “undertake the management of carefully specified activities (such as the environment, customs, and trans-border infrastructure projects).”

“I said, ‘OK, here’s a pretty good proxy of minds agreeing to form a binational authority. Who’s going to do it? And how’s it going to get done?’ ” Palmer recalled. “I found out nobody’s going to do it. There wasn’t anyone around the state who wanted to take the time and commit the money to get the bonding authority.”

Palmer took up the cause. He chatted up the bonding authority to total strangers. One of them, Irvine attorney Doug Davidson, said he met Palmer and his one-man campaign during a weight-lifting workout at the Pacific Club in Newport Beach.

“He said, ‘I’m playing around with something that’s kind of neat and maybe you would want to get involved,’ ” recalled Davidson, a real estate attorney who eventually agreed to help Palmer promote the border agency idea.

Meanwhile, Palmer said he had only limited success with his first sortie into San Diego.

“I tried to talk to these people but a lot of them didn’t know who I was and didn’t return my calls. They basically said, ‘It’s going to take too long a time and we don’t want to take up causes,’ ” he said.

San Diegans tell a different tale. Elsa Saxod, binational affairs director for the city of San Diego, said Palmer made an appointment with her but failed to show. Assemblyman Steve Peace (D-Chula Vista) said he talked with Palmer and told him his idea wouldn’t fly.

Augie Bareno, the county’s binational affairs coordinator, said Palmer left him cold. “He struck me as not being particularly knowledgeable about the subject. He didn’t seem to know about one of the biggest issues--the renegade sewage flowing from Tijuana to San Diego--and that’s the big-ticket item down here in terms of infrastructure,” he said.

In retrospect, it is not surprising that Palmer’s first trek to San Diego caused more than yawns. Not only was he viewed as an outsider from Orange County, his big-fix approach was vastly different from the years of working through official channels and trying to solve the border infrastructure problems via painstaking alliances and negotiation.

Indeed, Palmer’s campaign came on the cusp of some promising signs for San Diegans. Most importantly, the federal government was planning for a $200 million treatment plant to catch and neutralize the flow of Tijuana sewage at the border.

But Palmer would soon get San Diego’s attention. Using his father’s connections, he shocked the locals by persuading an influential state legislator to introduce a bill in March, 1989, establishing a binational bonding authority for the border.

The measure, introduced by Sen. Ken Maddy (R-Fresno), alarmed the San Diegans because it would give a California and Baja California Enterprise Zone Foundation unusual powers to condemn property, impose taxes, charge tolls and appoint a number of members to its own board.

The San Diegans hit the roof, however, when they learned that the CABEZA Foundation was under the direction of Palmer, who had incorporated the entity the same month that Maddy introduced the bill.

Who was Palmer? Who else was behind the foundation? How could it be given the power to override local decisions? What was Palmer going to get out of all this?

The San Diegans demanded answers.

“Mr. Palmer has been pursuing this thing for two years and several groups have asked him for specific projects and financial models to show how this program would work,” said Pegg. “Because he has not been forthcoming, there’s a great deal of suspicion.”

And that, Palmer says, is the kind of talk that hurts.

Although he concedes that he makes some money advising businesses about prospective investments in Mexico, the Orange County financial adviser insists that he has no personal stake in the border authority idea. The intention of CABEZA, he claims, was simply to make sure the private sector participated in decisions about which border projects would be funded.

“This has been my life for three years. Do you understand that I haven’t made any money doing this?

“You’re just going to have to trust me,” he said. “It’s all altruistic. If you knew how much I struggle each month to pay my bills, you would trust my assertion of altruism.”

Occasional evasiveness like this has continued to fan the suspicion, especially in the wake of a second border authority bill that surprised San Diegans last November.

Author Assemblyman Richard Polanco (D-Los Angeles) and his staff have discussed provisions of the measure with Palmer, but they adamantly deny the Orange County resident is behind their bill.

Pegg, the San Diego Chamber of Commerce and city representatives say they are unconvinced. They have joined forces to fight the measures, striking out so ferociously that Maddy announced earlier this year that he would all but abandon his proposal.

Polanco has continued to push his bill over the objections of the locals and his measure comes up for a crucial vote in an Assembly Ways and Means subcommittee on Wednesday.

That Palmer’s bonding authority has gotten so far in the Legislature is “amazing,” said Pegg. San Diegans can’t seem to convince Palmer and legislators supporting the bonding authority idea that the region’s economy will not be able to support the taxes and tolls it would take to pay off the projects bankrolled by the authority’s bonds, he says.

“If this fellow is as sophisticated in the financial area as he claims to be, he should understand that . . . the ability for this community to pay is tapped out,” said Pegg.

“Maybe the guy is, indeed, well-intended and has no personal ax to grind in this, other than to see something accomplished for Mexico,” said Pegg. “In which case I can only say he’s not a very good listener.”

But Palmer said he will continue to advocate the border authority, which has been modified in the Polanco bill to be more of a “clearinghouse” for international cooperation and capital to build sorely needed roads, sewers and other infrastructure along the maquiladora -sensitive border.

Palmer admits he’s goofed along the way. It probably wasn’t wise to originally propose a border authority that would supersede the powers of local governments, he said.

It also looked “self-serving” when his CABEZA Foundation was designated in the original Maddy bill to lead the charge on border problems, Palmer conceded.

Since the outcry, any mention of the foundation has been dropped and Palmer has failed to follow through on plans to make the entity a nonprofit concern, state and federal records show. Attorney Davidson has also resigned from CABEZA for reasons unrelated to the political controversy.

As for San Diego, Palmer says he didn’t do enough “groundwork” to defuse the “parochialism” of a chosen few.

“There’s a very strong sense of community there that cannot be underestimated,” he said.