Roatan’s Charter City Project Grows Despite Controversy

Próspera’s planned towers on Roatan will easily surpass Cayman Islands where only a couple of ten story buildings have been built to date. The Colors, Cayman Island’s tallest building in Georgetown at 40 meters, is only nine stories tall. The Colors will pale in comparison with the Duna tower that is being constructed just east of Crawfish Rock.

Próspera had a busy 2021, and 2022 is looking even busier. The company acquired a joint venture in Pristine Bay, a development residential community located around a 18 whole golf course. The over 400 acres large investment by Próspera took place after its original Guatemalan developers lost it to its lender Banco Atlántida.

In spring of 2022 a school opened its doors on site of properties Próspera recently acquired. Guidepost Montessori, a middle school opened its doors under the company’s framework. The school is managed by Academy of Thought and Industry and it operates out of a building that used to house the Sky restaurant on the ridge above French Harbour.

There was not the business that took advantage of Próspera’s umbrella that sees itself as an economic development hub. According to Gabriel Delgado, Próspera’s Chief Development Officer, six other businesses already call Próspera their base.

While that expansion is impressive what Próspera is planning for Roatan in the next several years is nothing short of transformative and revolutionary. Próspera’s website sees its impact expand exponentially. Its projects “foreign direct investment of at least $500M and new jobs created (direct) of at least 10,000” by 2025. “We are working ourselves to the bone to get there,” said Delgado.

On an island of around 100,000 people theses numbers are staggering. If Próspera’s goals will ever be achieved the key will lie in tying the project to Honduras’ “Zonas de empleo y desarollo económico” [ZEDE] – Zone for Employment and Economic Development.

Próspera wouldn’t have been formed and the capital couldn’t have been attracted, if it wasn’t for ZEDE. These Honduran laws have come under a lot of criticism especially in the last two years. While Próspera is likely to be grandfathered in under ZEDE laws, current Honduran Congress is arguing that ZEDE law has not been ratified in a correct manner.

As of late legal uncertainty in Honduras’ congress abounds. It could be argued that current Honduran Congress, whose legitimacy is in itself questioned, is arguing that the last congress was illegitimate, and didn’t pass ZEDE laws correctly. Some argue that the ZEDE law needed to be passed with two-thirds majority of congress and it wasn’t. This confusion could spell trouble for Próspera.

What Próspera is planning for Roatan in the next years is nothing short of transformative and revolutionary.

One of the attractions of becoming part of Próspera and ZEDEs are the lower overall taxes: income tax of 10%, land tax of 1 to 2.5%, and 5% VAT sales tax. “Those are the taxes you pay to Próspera ZEDE. A percentage of these taxes are then paid to five destinations including central government and the Municipality,” said Erick Brimen, the man behind Próspera.

Erick Brimen is the company’s Venezuelan born and US educated CEO. His 2005 thesis in Babson College was “how one could direct market forces to solve social problems,” and he sees Roatan Próspera doing just that. While Brimen has been coming to the island since 2016, he has been thinking about Roatan since high school.

In 2002 Brimen heard a high school friend talk about Roatan and describing the island’s potential as being held back because of the lack of legal infrastructure that Cayman Islands had. That friend was Tristan Monterroso, a Roatanian pastor who now sits on Próspera’s council. “When Honduras passed the ZEDEs law and the Supreme Court ruled it constitutional it clicked on me that that could be a delivery mechanism for a place like Roatan to have more prosperity,” said Brimen.
Two islanders are now part of the project: Tristan Monterroso and Duane McNab, owner of Max Communications and Próspera’s Council Member.

Próspera has begun its operation on Roatan on an elongated, meandering 58-acre property just east of Crawfish Rock. The site has about 300 feet of beach but its 750-acre master plan calls for 1.2 kilometer beachfront. “Real estate is heavily financed with debt and other sources of capital,” said Brimen.

Próspera aims at not to be limited to one location on Roatan, and Brimen sees his project not only expanding around Crawfish Rock, but thought the island and beyond. “The idea is to have multiple hubs throughout the island that voluntarily annex,” said Brimen.

Brimen says that Próspera has already raised $17.5 million from investors, one of them being Pronomos Capital. Pronomos Capital bankrolls the construction of experimental cities on available land in developing countries. Pronomos is set up like a venture fund and is making investments in not only Honduras, but the Marshall Islands, Nigeria, and Panama.

Pronomos was founded by Patri Friedman, an American anarcho-capitalist transhumanist and a grandson of Nobel prize winner Milton Friedman. Pronomos in turn is financed by another transhumanist and billionaire Peter Thiel, co-founder of PayPal.

Próspera’s master plan on Roatan includes several high rise buildings, a Marine Center, a University and a Hospital that would provide jobs and create a hub and an “economic development platform” for entrepreneurs from around the world and Honduras. “A platform like Próspera is the future of the island,” said Duane McNab.

Distributism envisions an ideal society where property ownership is widespread and protected, and where means of production are owned by families not corporations. Distributism envisions a state that supports and maximizes family ownership of businesses and land.

Thomas Storck, a Catholic writer and philosopher, argues that “distributism seeks to subordinate economic activity to human life as a whole, to our spiritual life, our intellectual life, our family life.” That is a reality we should all aspire to.

While the Honduran state, nor our local government are far from supportive of empowering families in that manner, nevertheless a majority of Roatan’s business are family owned. Hybur, Serrano’s, Galaxy and Island Shipping are shining examples that families can sustain and grow business over generations empowering their employees and keeping wealth on the island. BIP, MaxCom and Eldon’s are examples how driven single individuals can out compete foreign corporations.

The island cooperatives and small family businesses have thrived on Roatan since 1800s. In fact, Roatan’s many industries are still decentralized, family owned and based on distributism system. The seafood packing industry is held by several island families since 1960s. The construction industry is managed by families and individuals or sometime partners.

Living on Roatan we interact with individuals, not corporations which is ever increasingly the case in US. For example, I know my Roatan doctor personally. I don’t choose her because I pay in some huge insurance scheme that limits my choices. I also know my carpenter, plasterer and my electrician, neither of whom work for a corporation. All these professionals stand behind the quality of their work. Interacting with them and knowing who they are enriches my life.

Biggest land holder on Roatan is another corporation with unclear owners.

The base of independent spirit of a community often lies in ability for that community to educate its own children with their own means and according to their own values. That is also the case with Roatan. The island’s educational roots from 1840s rest in private, family educational system. Even today the island has a healthy private education system that is not beyond the reach of the people with stable employment.

Distributism follows the principle that the means of production should not be held by the state stratocracy as it is in China, Cuba or Saudi Arabia. The economic power should not rest in the hands of a few individuals (plutocracy) as in today’s Mexico, United States, or Switzerland. Distributism also sees a major problem where the means of productions are held by corporations (corporatocracy) as it is in today’s Germany, Sweden and France.

By early XXI century most countries have become hybrid economic models where multiple types of economic players monopolize power. US, China, France have now become examples of places where monopoly of power is held not by families, but with the state, corporations and oligarchs.

Some smaller countries, like Honduras, have resisted this globalization trend. Living here we still have relative freedom to pursue family life, individual spiritual life and personal autonomy. These opportunities attracted people to Honduras and Roatan for the last 200 years. While our island is still very much an attractive, know your neighbor, grocer and shoemaker type of place, these values are gradually being eroded.

In fact, capitalism has been making inroads on the island for decades. Capitalism has arrived with international corporations: Banco Atlántida, Royal Caribbean and Diamonds International and 10 years ago RECO from a coop model became a corporation. Próspera is one of the newest arrivals to the island and its vague ownership and control structure combined with international capital will likely cause further disruption

Things have gradually become less personal here, more like in the US or the Honduran mainland. Roatan is gradually entering the de facto glorification of usury disguised as interest-rate loan contracts. There are several thousand corporations incorporated on Roatan. Most of them are land holding entities created so foreigners could hold a land in Honduras.

Many stores on Roatan have become in fact usurious loan institution offering quick access of products such as motorcycles, furniture, appliances or construction in exchange for years of high interest debt guaranteed by personal assets. Electra, MotoMundo and Banco Atlántida for example have been making quick loans that have pushed many into losing their property and land.

Thus, the island’s biggest landholder is not an individual or an island family like it has been since 1850s. The biggest land holder on Roatan is another corporation with unclear owners – Banco Atlántida. Honduras’ oldest bank has managed to acquire land holdings through predatory lending for developers and individual homeowners. Sometime around 2010 Roatan’s biggest landowner became a corporation whom we do not know who controls it and who owns it.

There are alternatives to usurious encroachment of international “banksters” to the island. Some island run family businesses offer low interest loans for employees so they could purchase their land and build their home in an affordable fashion. The exceptions are the banking coops like Cooperativa Isleña, Cooperativa Santos Guardiola and Cooperativa Ceibeña.

Roatan remains a thriving garden attracting people from around the world.

The breaking down of distributism system that has existed on Roatan for 200 years is not pleasant to see. One of the results of spreading of the Socialist or Capitalist systems is the breakdown of social contract. The workers don’t really care about the welfare of the business they work for, and the employers see their employees as a source that can be exploited and replaced when needed.

To give communism an acknowledgment, there are and have been for centuries enclaves of communism on Roatan. These “communist” enclaves here were and still are called families and family business. In fact, “communism” has been functioning on family scale on the island well before Carl Marx wrote down his famous 1875 slogan: “From each according to his ability, to each according to his needs” had been already practiced on Roatan. There are family members working harder and sacrificing for family members that cannot pull their own load for one reason or another.

For now, at least Roatan remains a thriving garden attracting people from around the world and from all over Honduras. They sometime come here sometimes without full understanding why they like it so much. They know however what they left behind in US and Canada, failing social systems, overpowering government and neighborhoods dominated by impersonal and ever expanding corporations. For them Roatan offers a glimpse of hope.

Tough Times among Uncertainty, Fear and Government Restrictions

Roatan’s tourism services and hotel sectors have been hit the hardest by the March shut down. While many hotels have fired most of their employees and shut down completely some have dug in and focused on renovations and expansion. Anthony’s Key Resort is building a new seafront restaurant for their future cruise ship guests and Meridian hotel in West Bay has focused on finishing construction of condominiums.

Edward and Laura Moulder, Meridian’s owners, take the lockdown as a time to do improvements, maintenance and construction. The Meridian is a hotel and condominium development that started in 2007. Meridian has dug into their rainy-day fund, but most of Roatan’s hotels don’t have that luxury. “I am shocked how few businesses have had reserves set up,” said Laura Moulder. “We are continuing to pay employees. We feel the island is going to get worse off if we don’t pay. (…) Important to maintain the impression that Roatan is safe and organized.”

Laura Moulder believes that the key for Roatan’s recovery lies in local businesses working together at presenting the island businesses join together and market Roatan as a safe place just like Cayman Islands or Belize have been doing. She feels that recovery from the shutdown will be different than after the 2008-2009 financial crisis and Micheletti political coup that caused the island economy to retract for over two years. “The turnaround should come quite quickly,” she says. “People have been putting their lives on hold. We will see a lot of urban money leaving.  A lot of urbanites will make that move.”

That is as long as these “urban refugees” have funds to do so. With over 40 million Americans who filed for unemployment over the US shut down policy, fewer and fewer have the money to invest or travel.

There is a noticeable capital flight as Americans are ready to sell their homes in urban areas and look for safety in rural areas and the Caribbean. Turks and Caicos are benefiting from a luxury home boom as North Americans look for safe place to live, seek refuge or telecommute. This Caribbean country has cut duty and planning fees and waiving duties on construction materials. If it plays its cards right Roatan could also be in line to benefit.

Before the economic turnaround many businesses will go broke. Businesses that didn’t have a rainy-day fund aren’t doing that well. Casa Marmol, a stone finish store, closed its store at the Megaplaza Mall alongside several other businesses there.

RAS Express, an air shipping company that has been doing business since 2001 has called it quits. Gil Garcia, RAS Express’ owner, had to let go of six of his eight employees in Coxen Hole. With the airport being closed he can’t provide shipping services his business is based on. “I blame both municipalities. For the longest time Roatan was clear [of COVID-19]. They should have helped people that were stuck on the mainland instead they just came here illegally,” says Garcia. “I gave up on central government a long time ago.”

Garcia is one of the few people not afraid to criticize the almost five month long, chaotic and indiscriminate government policy of locking down healthy people and business. The isolation, fear and confusion has produced a chilling effect on the island. Many are fearful to criticize the local government officials, central government, or police.

Other than shipping dozens of COVID-19 positive police officers to the island the central government has been doing little to help Roatan handle the shutdown crisis. For one, the title registry office has been open only for two days in May, and that’s it. There is no way to proceed if someone wanted to buy or sell a property.

The next financial crisis on Roatan might come from the looming foreclosures on thousands of loans on properties and vehicles.

Some businesses are getting creative in trying to pay their staff dependent on tourists. West End’s Sundowners Bar has eight local staff and its owners resorted to doing a raffle to pay some of the staff’s $4,000 monthly salaries.  “The island has been shut down for almost four months. No cruise ships, no flights, no tourists. (…) our local staff is hurting,” wrote on social media Aaron Etches about his iconic Roatan bar.

Some businesses are actually thriving. Island Shipping, cargo shipping between Roatan and the mainland, has taken over freight business that before the shutdown was handled by the Galaxy Wave ferry.

While Galaxy Wave had practically no business since mid-March but it has managed to update much of its on-land facilities and two of its ferries. “We took time to do the general maintenance. We painted the engine room, seats, we redid lifeboats, (…) we redid the sales counter,” said Jesus Reyes, Galaxy Wave manager, adding that the operations are aimed to return in mid-August. “We are quite ready to start operating. We are just waiting what the airlines and airport want to do.”

Some businesses have managed to opened new locations, or even expand their operations. Serrano Industrial hardware store opened a long planed second location in Coxen Hole. CARNIAGRO, an agricultural supplies store, moved to a new, bigger location in French Harbour. “Now we are selling many seeds and plant products,” said Greg Norman, owner of CARNIAGRO.

While hardware stores and agricultural supplies stores are not as dependent on tourism and keep the island economy afloat, they are struggling as well. “We are doing half the sales we did in January,” said Oscar Oseguera, Madeyso’s General Sales Manager who moved to Roatan form La Ceiba several weeks ago to help run the two Madeyso stores on Roatan.

The next financial crisis on Roatan might come from the looming foreclosures on thousands of loans on properties and vehicles. While Honduras Central government have imposed a moratorium on banks not to require payments from debtors for three months that expired in mid-June. On July 1 many struggled to renegotiate terms with their Honduran lending institutions.

Banco Atlántida, Honduras’ biggest lender, owns a big stake in Roatan’s defaulted properties. “[Banco] Atlántida is not very forgiving under normal circumstances,” said Laura Moulder. For over 20 years Banco Atlántida has amassed hundreds of acres of Roatan land and properties and it is likely to take over more properties in the months to come.