Hi, I'm Trey Goff, Chief of Staff at Honduras Prospera, a private semi-autonomous charter city in Honduras. Ask me anything!

2021-07-01
Hi, I'm Trey Goff, Chief of Staff at Honduras Prospera, a private semi-autonomous new city project in Honduras. We have worked with the Honduran government to create the world's most advanced special economic zone, focused on catalyzing prosperity and improving lives.
As humanity continues to grow more urbanized, a more dynamic form of political organization will be required. Our long term goal is to catalyze this change, to create a world in which governments compete for residents and where residents voluntarily and easily choose their governance.
In Honduras, we are launching our very first prosperity hub on the island of Roatan.

A few key behind our implementation:
  • There is a yearly membership fee, $260/year for Hondurans, $1300/year for foreigners.
  • Próspera's charter does not allow income taxes to exceed 10%.
  • Total taxes may never exceed 7.5% of GDP, and total debt may not exceed 20% of GDP.
  • 12% taxes go to Honduras, 44% go to the General Service Provider (GSP) which subcontracts the provision of public services like water, power, waste management, etc., and 44% go to the municipal government to handle whatever services cannot be contracted out.
  • You may choose your own regulations with respect to housing, medicine, etc. from a list of Best Practice Peer Countries (a list of countries with reasonably good governance), for example iIf you're a doctor you may decide to operate under Norwegian law. If you can't find a country whose regulations you like, you can either opt to operate under Próspera's 3,500 page Common Law legal code with 3x liability for damages and other harsh penalties for causing harm, or create your own regulatory system by petitioning the Próspera Council to adopt a new regulatory option for everyone in your industry to use.
  • Prospera will be governed by a council of nine people, five democratically elected and four appointed by Honduras Prospera Inc. (the private company building Próspera). A 66% council majority is needed to pass laws.
  • Once Próspera gets to 100,000 residents, they may change anything about the charter with a 51% majority vote.
  • At scale, any council action can be veto'd by snap referenda immediately after the passage of the council action, but referenda cannot create new legislation, only veto recently created legislation.
Our progress so far:
  • The Honduras Próspera ZEDE (special economic zone) has been approved by the government of Honduras.
  • Currently Próspera owns 58 acres of land on the island of Roatan off the Northern coast of Honduras, and has purchase options on hundreds of acres more.
  • Prospera expects 10,000 residents by 2025.
  • Prospera has launched an e-residency platform based on and implemented by the leader of the Estonian e-residency project.

  • If you'd like to learn more, you may be interested in this Bloomberg article or this review by Scott Alexander.

    Links: Twitter | Website

AMA Rules:
  • This AMA will be open for questions until midnight UTC on 2021-07-01.
  • All plain text links will automatically be turned into hyperlinks.
  • Please keep your questions specific and to the point.
  • Be chill, we're here to have fun!

28 Comments

This AMA has concluded.
CuriousPenguin   Jun 30
Been following this idea for many years and happy to see it finally starting. A few questions: 1) Disappointed income tax exists at all, but what other taxes do residents face? VAT/Sales? Property tax? 2) Is the bill of rights available in English (only found Spanish so far) 3) To what extent, if any, can Prospera laws supercede those of Honduras? For example, could residents have the right to keep and bear arms (in contrast to Honduras)? 4) Given that Honduras is nearly a failed state (My family has done business there since the 1950s, it's only gotten worse), what protection does Prospera have from Honduran government policies, coups and other instability? 5) Are English and Spanish official languages? Is there one at all?
8♥   
treygoff ⭐  Jun 30
Thanks for the questions! 1) Taxes are super simple: 5% personal/1% corporate income tax, 2.5% retail VAT, and a 1% LVT--that's it.

But to your point about income taxes: there are many things going on here. First and foremost, as a startup jurisdiction, you don't want to land yourself on the OECD tax haven black list and potentially even get sanctioned as a result. That would kill the project before the first brick is laid.

Second, and more philosophically, I almost hesitate to even call our taxes "taxes" in the traditional sense. To become a tax paying resident of Próspera, you have to sign a literal social contract expressly consenting to the governance institutions, called an agreement of coexistence. We, as the Promoter & Organizer, then provide public services via our General Service Provider (GSP) and play a role in ensuring the governance institutions stay the best in the world. As such, the "taxes" are more like a fee you literally signed a contract to agree to in the beginning, in return for Governance as a service, basically, and are free to leave at any time. (also I wrote extensively about how we tried to get rid of the income tax and failed in our peer reviewed article in the journal of special jurisdictions here: https://assets.website-files.com/5d253237e31f051057dc0a2b/609af08dce182c1ae35d5883_4-3-PB.pdf)

2.) yep, all over the place, but it's in the Charter which is in english and spanish at prosperazede.hn or I can send you a pretty designed version if you email me at [email protected]

3.) The Próspera ZEDE is a politicial subdivision of the constitution of Honduras, akin to a municipality, but with more autonomy obviously. The constitutional amendment enabling ZEDEs expressly stipulates that certain areas of the constitution still apply, including all Honduran criminal law. Therefore, under no circumstances would Próspera ever violate those laws. The constitution would have to be amended to permit all ZEDEs to allow gun ownership for that to happen, and it's certainly not something we are working on right now.

4.) Lots! Legal stability agreements, international treaty backing, CAFTA membershipo+MFN status, whole bunch of stuff. Scott Alexander did a great job overviewing some of it over at Astral Codex Ten. 5.) Official government docs use English and Spanish, but you can use whatever you like! :)
6♥   
tldrdan   Jun 30
Hi Trey,

Thanks for being here, a few questions I had: 1) To what degree do you think Honduras Prospera Inc. will try to influence the culture of the city? Do you expect the city to be more anglicized than the rest of Honduras? Do you hope to innovate on culture as well as legal code? 2) Is there anything that is legal in Honduras but illegal in Próspera, or is Próspera's legal code strictly more lenient? 3) What are the best ways for someone in tech to help Próspera succeed?

Dan
8♥   
treygoff ⭐  Jun 30
Hi Dan,

Thank you so much for having me!

1) This is a complicated question that I could write a separate book about. Let me take a concise swing at it here:

If you look at the empirical literature on economic development writ large, there's this gaping hole when it comes to culture. Sure, many researchers have tried to measure the impact of culture and informal norms on economic development, and to varying degrees of success or failure. But it suffers from a fundamental methodological issue: culture is, by its very essence, nigh impossible to quantify and run a regression on!

Combine this with the newfangled assertion that any discussion of a culture's impact on economic development is tantamount to racism and bigotry for simply bringing the topic up, and culture flies under the radar in most economic development circles and literature.

But that's like attempting to deduce why a car is setting record lap times without ever looking at the driver, steering, or suspension on principle, only looking at the chassis, drivetrain, and engine. It makes no sense, and you miss a substantial portion of what is actually driving outcomes.

So, we start from the (IMO safe) assumption that culture matters for rapidly catalyzing prosperity, our primary objective. How does one control or influence something as simultaneously fluid and lindy as culture?

Luckily, we get to sidestep that thorny problem because we're starting from population zero. As such, we are working to attract, for the initial community culture trend setters, people who can create Próspera culture as something new from the ground up. Specifically, a unique synthesis of the American entrepreneurial, pioneering, innovating spirit with the beauty, presence, joviality, and amiability of Latin culture. In short, bringing the best of the world and the best of Honduras together to create a new culture entirely unique and entirely Próspera!

But after that, it's rather "set it and forget it." culture is very hard to intentionally change once up and running, so to speak.

2) That is a *fantastic* question! It depends on if you mean from a statutory perspective, or from an enforcement perspective. Let me give you an example: Próspera requires construction firms to make a regulatory election and get insurance for that election, which includes building codes, worker safety standards, etc. If they pick some European countries, that particular firm will have far stricter worker safety rules than the rest of Honduras or Próspera.

But assume they pick something more lenient than greater Honduras. From a statutory perspective, then, Próspera is still more lenient. However, from a practical perspective, Próspera's rules *will* be strictly enforced because of our decentralized regulatory enforcement regime (basically, any full legal resident can sue any firm for violating their regulatory code, rather than that power being vested only in a central authority). In greater Honduras, worker safety laws are nearly always ignored. As such, in actuality, rule of law means Próspera is more strict in real terms.

Próspera is more lenient on paper, but the fact that we are enforcing rules means we are far stricter than greater Honduras in most ways.

3) Thank you for asking! There are a few ways: 1. Hire remote workers via PES.hn 2. purchase a residency (email me at [email protected] if interested) 3. More coming very soon :)
5♥   
jordan   Jun 30
Since you are funded by several prominent venture capitalists (Naval Ravikant, Balaji Srinivasan, Peter Thiel, etc.), what does an exit event look like for Prospera? Do you have eventual plans for IPO?
7♥   
treygoff ⭐  Jul 1
Hi Jordan, first and most importantly, as per investor privacy laws, I cannot confirm or deny that any of those people are direct or indirect investors. :)

having said that, our dream is to have publicly traded cities in some way, shape, or form. So yes, IPO!
1♥   
salexashenko   Jul 1
Wouldn't that create incentives for the Prospera corporation to be as extractive as possible? Once you go public, you will owe it to shareholders to fleece your residents to the max. I wouldn't want to live in a city like that.
1♥   
salexashenko   Jul 1
You can build a phenomenal city that's great to live in, or you can build a city that maximizes the profits for the corp running it, but you can't do both.
2♥   
treygoff ⭐  Jul 1
Oh contrare! to put it in economics terms, the supply of entreprenuers and residents is fairly elastic to changes in institutional quality. Further, our company only makes any money if businesses and residents are prospering--that's it. As such, we have a STRONG incentive to optimize all institutions around catalyzing prosperity, precisely because that is how we make money.

This is a crucial, crucial point of what we're doing that's often missed: we were very careful in our work with CAMP setting up the Charter and governance structures to once and for all fix the fundamental principle-agent problem at the root of many governance issues by aligning the incentives of the governing with those being governed, which does not exist elsewhere in the world. This is why council actions require a 2/3s majority vote, and the Promoter & Organizer (our company) appoints a few of those seats (NOT a majority). The short term incentive driven democratic council members have to agree with the long-term financial incentives of the P&O to pass anything substantive, and the reverse is true as well--democratic concurrence is needed for the P&O to do anything. we carefully structured the council around this fundamental incentive alignment.

So imagine the institutions decay and become extractive in the Acemoglu sense. businesses and residents leave, because the Próspera ZEDE can't force them to stay. This drives losses at the P&O level, which then has a direct incentive to fix whatever it was driving them away.

Add the transparency and accountability of being a publicly traded company after an IPO, and that incentive only grows stronger!
1♥   
davehall   Jun 30
1) What do you expect the economy of Prospera will look like? 2) What sectors do you think will be the largest percentage of GDP? 3) Is Prospera allowed to negotiate trade agreements with countries, or is it forced to only use those the Honduran federal government negotiates?
4♥   
treygoff ⭐  Jun 30
1.) For the initial hub in Roatan, St. John's Bay, we intend to focus on knowledge work, the financial sector, and medical innovation with medical tourism. it plays to all the natural strengths of Roatan and is a great fit for our regulatory environment! Imagine going to Roatan to, for example, have a knee surgery, then recovering for 3-5 days on the most beautiful island in the world. Not a bad value prop! :)
1♥   
treygoff ⭐  Jun 30
(sorry accidentally posted too fast) 2.) Financial and medical, followed by tourism 3.) Absolutely not! The PZ is a political subdivision of the government of Honduras, and as such, are subject to whatever treaties and trade deals the government of Honduras negotiates.
1♥   
jessiew   Jun 30
Have you read Balaji Srinivasan's thoughts on cloud cities? Here's a podcast where he talks about it: https://www.chartercitiesinstitute.org/post/charter-cities-podcast-episode-15-a-city-in-the-cloud-with-balaji-srinivasan This approach seems sensible to me, did you guys ever consider building a large community on the internet before physically breaking ground on a city?
4♥   
treygoff ⭐  Jun 30
Absolutely I have! My dear friend and fellow builder in the cities space, Dryden Brown, is doing exactly that over at Praxis Society & Bluebook Cities. Go look him up!
1♥   
jerry   Jun 30
Awesome project, I have a few questions:

1) How do you plan on dealing with income/wealth inequality within Prospera? 2) What inspiration have you drawn from other planned cities? 3) What countries other than Honduras are candidates for another Prospera hub? 4) If Prospera fails, what would be the most likely reason why?

Jerry
3♥   
treygoff ⭐  Jul 1
1.) Great question! first and most importantly, we want to ensure any inequality arises out of naturally occuring differences in the utility functions of individual residents, NOT from rent seeking, cronyism, regulatory capture, or any of the normal mechanisms driving inequality in developed nations like the US. That alone--removing the mechanisms for the big players to cement themselves into economic rents--deals with the source of unfair inequality at the ground level.

Second, we are setting up mechanisms to capture a small percentage of the upside in initial startups or ventures in Próspera by participating at an equity level with our ventures arm. As businesses grow in the jurisdiction, so too does that venture arm. We want to copy the Temasek model and use the returns from that to fund education, social programs, and other things to help create a much stronger ladder out of poverty and into prosperity. Matt Breunig has written extensively about this type of "sovereign wealth fund" driven social programs, and it's a fantastic model we are seeking to emulate. 2.) We learned what not to do! In particular, Alain Bertaud's work in "Order Without Design" has been a great resource for us. We are avoiding creating the zoning and planning restrictions that cement and ossify urban designs based on the whims of the urban planner instead of what the market and the residents dictate through spontaneous order with our severable development rights regime.

Perhaps most importantly, though, we studied "ghost cities" in China and the errors made in places like Songdo that made some of them fail, or only be partially successful in Songdo (in fact, the company that build Songdo, Gale International's former CDO is an executive director at Honduras Próspera Inc!). They all centrally planned everything, and spent billions building a ton of stuff they had no way to know if the market was demanding or not.

Our approach is market driven, and we call it "MDPA", or massively decentralized, powerfully aligned. Instead of making the errors of previous central planners, we are working with businesses and real estate development firms to catalyze third party developments within Próspera, driven by our conceptual master plan, but ultimately determined by what is demanded by residents and businesses. We've got some announcements on that front very soon--stay tuned! ;) I recommend joining our subreddit, https://www.reddit.com/r/Prospera/ , to stay up to date on the latest and greatest. 3.) Anywhere that adopts similar special jurisdiction legislation to the Honduran ZEDE regime! We are focused on making the first hubs successful in Honduras right now, but other countries in the region are already taking notice, so I imagine it will be more Central American or Caribbean nations; we can also have the highest impact there. 4.) The most likely failure mode is, put simply, a failure to execute on our part. It looks something like only a few buildings and a few communities forming within Próspera because we failed to attract the businesses and residents needed to make this thing work, and we become an interesting but ultimately unimpactful historical footnote.
1♥   
alex   Jun 30
@tldrdan the links in the text all have problems
3♥   
tldrdan   Jun 30
Fixed!
2♥   
Jeff   Jun 30
Will Prospera be friendly to digital nomads (people that work remotely and stay for 1-3 months at a time)?
2♥   
treygoff ⭐  Jul 1
Absolutely! Digital nomads are our initial target market, in fact. We've got some developments coming very soon which digital nomads will love. Stay tuned! :)
1♥   
monostos   Jun 30
Interesting idea.

1. You expect 10,000 residents by 2025. How many are currently living on the 58 acres? (No judgment if no one is there yet... just want to get an idea)

2. How can I visit? Get a physical tour?
2♥   
treygoff ⭐  Jun 30
1.) 2, with more to come by end of year! stay tuned ;) 2.) absolutely! if you're on the island, email [email protected] and we'll get you set up.
1♥   
zzzz   Jul 1
The 3D property rights system is fascinating, but are there going to be any regulations on it to prevent abuse by bad actors?

For example, I’m assuming individual voxels are cheap and there’s no restrictions on who can buy, where they can buy them, or how many they can buy. What if someone were to buy a large smattering of individual voxels a few meters above areas of likely development or other people’s land, and then charge exorbitant rents when the city eventually starts to expand upwards?
1♥   
Hal   Jul 1
Hello. A few questions: - How are the fees set up for families with children? Is the fee per person, which would discourage families from coming? - Where can I find a list of Best Practices Peer Countries? - How do you handle Best Practices Peer Countries Conflict? - How will the cost of living compare to the US?
1♥   
Iopheam   Jul 1
Hi Trey,

Can you clarify the U.S. and Prospera taxes? Like, will a U.S. person have to pay the prospera taxes on top of the federal taxes?

Thanks, George
1♥   
Mmalaguti   Jul 1
Hi Trey! I love this concept! How do you deal with the fact that people might want to live in other locations while benefitting from your government's benefits?
1♥   
MAB   Jul 1
1) How does Prospera feel about cryptocurrencies? Does Prospera plan on integrating crypto into the project? 2) How do we determine prices? 3) I’m American, but I can claim Honduran citizenship through my mother who is Honduran; how would I be charged?

Thanks!!
1♥   
Brandon   Jul 1
Allowing anything in the charter to be changed with a 51% vote sounds like a really bad idea. Why did you include this provision?
1♥   

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