The Supreme Court of Honduras has declared as unconstitutional the legislative decree that created the figure of the "charter cities".
With 13 votes in favor and one against, the Court decided to declare Decree No. 283-2010 unconstitutional, arguing that the reform "violates constitutional principles such as sovereignty, territory and the form of government."
A protocol signed by the Government of Honduras with the developer NKG does not include the Transparency Commission announced as part of the governance system for "private cities".
Honduras had planned to appoint five international experts, including the driving force behind the concept, economist Paul Romer, to form a transparency committee, to ensure the necessary safeguards to protect Honduras and its workforce, and to enforce good governance in the "private cities".
The Commission for the Promotion of Public-Private Partnerships has signed an agreement with the international consortium MKG Group who will initially invest $15 million.
The first Special Development Region (RED, by its acronym in Spanish) will be built in Trujillo on the north coast of Honduras.
According to the agreement signed on Tuesday, the new cities will have their own legal and tax systems.
Congress has approved a law governing the Special Development Regions (REDs in Spanish).
The law states that the REDs are allowed to have their own budget, the right to collect and administer their own taxes, to determine the rates they charge for their services, to hold all types of contracts that extend to the next period of government, and manage their own internal and external debts as long as they have the approval of the State of Honduras.