(Bloomberg News) When Charles Brewer was shown the piece of land in Guanacaste province, Costa Rica, back in 2006, he knew immediately it was what he had been looking for. Located on the Central American nation's Pacific coast, it consists of 1,200 acres of rolling hills, with numerous overlooks, a crescent beach and roaming monkeys.

Brewer, an Atlanta Internet millionaire turned New Urbanist developer, saw it as the ideal spot for his dream project: an eco-town he would call Las Catalinas. The resort would include a high-end hotel plus million-dollar second homes for wealthy buyers from the Americas and Europe.

One of the first calls Brewer made while negotiating a purchase option on the Costa Rican land was to fellow Atlantan Tom Claugus. Claugus jumped at the chance to invest. He's a hedge-fund billionaire who three years earlier had decided hard assets such as property were a good bet. And Costa Rica has a lot to offer: good weather year-round and a stable government that caters to the tourist trade.
Brewer, 53, and Claugus, 61, are now odd-couple partners in Las Catalinas. Claugus bought a one-third stake for $11.5 million; Brewer says his share is somewhat larger. They are also owners of a development that, six years after it was conceived, is still stuck in first gear. Just 10 hacienda-style beach mansions have been built, owned mostly by Claugus's and Brewer's partners and associates. There's a small retail center with a restaurant and shops. A hotel contract still hadn't been signed as of mid-August.

Unpaved Roads
Las Catalinas was challenged from the beginning by poor timing, with Claugus and Brewer attempting to launch their resort in 2007, just as the world economy was gripped by crisis. Two hotel groups backed away from buying land there for an anchor resort, which would have provided capital for construction of an initial 40 homes.

And with the economy seizing up, few buyers wanted to risk $500,000 to $2 million to build a house in a remote corner of Costa Rica accessible at the time only by unpaved roads.

The latest setback came from Costa Rica's constitutional court, which on August 3, prompted by complaints from local environmental groups, issued an injunction suspending any new construction at Las Catalinas until the court rules on claims of environmental damage and the legality of its water permits. Brewer says that the complaints are without merit and that he hopes construction can continue within months.

Andre Agassi
Brewer and Claugus aren't the only stalled Costa Rica land barons. AOL Inc. founder Steve Case led a group of investors who also bought land in Guanacaste province in 2007, with plans for an $800 million gated community that would include two luxury hotels, 300 residential units, a golf course and a tennis center designed by Andre Agassi and Steffi Graf. Construction, set to begin in 2009, started in May.

"Worldwide, it just got worse and worse everywhere," says Bob Davey, who heads a Century 21 real estate brokerage in Playa Flamingo, Guanacaste, and is a general partner in Las Catalinas. "Costa Rica relies on a lot of foreign investment. The North Americans stopped buying, and the Europeans stopped right after that."

A laggard economy was just one of the impediments to progress at Las Catalinas. Brewer, who founded Internet service provider MindSpring Enterprises Inc. and sold his stake for $50 million after he merged it in 2000 with Earthlink Inc., imposed exacting standards on the construction of the buildings; he insisted, for instance, that such items as roofing materials and doors be handmade. He fired one contractor who didn't measure up.

Claugus said it took him some time to appreciate Brewer's insistence on the finest materials and workmanship. "The product is higher quality and way more aesthetically pleasing than if I had done it," Claugus says.