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In Panama, beauty, but growing crime

BOQUETE, Panama — New Zealand was too far, the south of France too cold and Colombia too unsafe for Casey and Susan Koehler. So the former Floridians settled on this mild and isolated coffee-growing town in western Panama for their retirement home.

A former U.S. government official, Casey Koehler had the bucks to spend his golden years anywhere. That he and his wife chose this hilly, horsy town of 20,000 over their three other "finalist" destinations speaks volumes about Panama's growing attraction to American retirees.

"I'm a heart-attack survivor, so I like the laid-back thing. And knowing that every day I wake up it's going to be between 72 and 80 degrees," said Casey Koehler, 66. Two years ago, he and his wife plunked down $192,000 cash for a three-bedroom, 4,000-square foot house in the Los Molinos subdivision.

The purchase price was a one-third of what they would have paid in Naples, Fla., where they used to live. The Koehlers' home is near a scenic canyon and waterfall, a typical Boquete tableau. But they and 1,000 other foreigners who have retired or bought second homes here have been lured by more than tranquillity, the weather and beautiful scenery.

For expatriate retirees, Panama offers big discounts on plane fares and hotels, good health care and shopping. All foreign income — such as U.S. pension benefits or Social Security — is exempt from tax. And for Americans, financial matters are simplified because Panama uses the U.S. dollar as its currency. The atmosphere is friendly and more pro-American than many other Central American countries.

"The cost of living is much lower and the roads much better than places like Costa Rica," said Shirley Bynum, a former Huntington Beach, Calif., resident who moved here two years ago from Gracia, Costa Rica. "And the tax system is more favorable."

Bill Schroff, a former investment banker who advises U.S. investors and companies moving here, said Panama's cost advantages over "Miami, San Diego or other nice-weather places that people want to retire to" are dramatic.

"Plus, Panamanians welcome us," Schroff said. "It's been an international banking and transportation hub for decades. They're used to having gringos around, and they like us."

Although Mexico and Costa Rica have been gaining popularity for several decades, Panama was "discovered" just a few years ago. Special retiree visas granted by the Panamanian government over the past 12 months exceeded 1,300, triple the figure for all of 2004.

Schroff's company, Panama Real Estate Holdings, specializes in the Panama City high-rise market, in which foreigners are snapping up condominiums in the dozens of projects going up in the capital's frenzy of construction. Americans aren't the only buyers: The expansion of the Panama Canal and the booming economy are drawing multinational companies whose executives need housing.

"A lot of little things have gone our way," Panamanian developer Jose Antonio Bern said.

But some clouds are on the horizon.

Rapid growth has overloaded streets with traffic and been a drain on the local water system. During the January-to-April dry season, Boquete residents go days without running water, a period during which they have to rely on cisterns or delivered water. Crime, once unheard of, has reared its ugly head: The area averages two break-ins a month, Mayor Manolo Ruiz Castillo said. To cope, the town, about 200 miles west of Panama City, soon will inaugurate a new municipal police force. Until now it has relied on the national police for protection.

Line Vreven, director of international affairs at AARP, the Washington-based advocacy group for the 39 million Americans age 50 or older, noted that Panama recently reduced the length of tourist visas to 30 days from 60 days, making shopping for a house more complicated and pressure-packed for newcomers.

But perhaps the most disturbing development for investors and officials at the U.S. Embassy in Panama is that there is an increasing number of complaints about shady dealings by developers and land sellers who take advantage of Panama's murky land-title rules to cheat foreigners.

Schroff said he knew of 150 cases of Panama City high-rise developers engaging in the unethical — if not illegal — practice of canceling preconstruction sales of condos to customers to take advantage of a rise in market prices by the time their projects reach completion.

"In some areas of Panama, land titling is not always clear, if it exists at all," said one high-level embassy official in Panama City who asked not to be identified. Title complaints have risen steadily over the past 18 months, he said.

Many disputes occur with transactions in which buyers do not receive clear title but "rights of possession," a piece of paper that typically involves the buyer acquiring property to which the government never fully relinquished control. Often, scam artists appear after deals close to contest ownership and demand a bribe to go away, the official said.

Even the placidity of Boquete has been broken by "range wars" between neighbors who can't agree on property boundaries, said one transplanted retiree from Arizona.

Still, retirees with such horror stories are at this point in the minority, and officials here say they hope that the rule of law and dispute-resolution mechanisms will improve if the pending U.S.-Panama free-trade agreement becomes law.

For most residents, Boquete's climate and physical beauty far outweigh annoyances including traffic, rising prices and a housing scam. Boquete, 200 miles west of Panama City, has become a popular destination for retirees from abroad. - Los Angeles Times