Model Charter

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The Charter Cities Institute, in order to aid developers and governments, has drafted this Model Charter. The Model Charter is a starting point for those interested in developing a charter city. It is written in plain language to make both the powers being granted by the government and the responsibilities being taken on by the developer clear to anyone who reads through.

The Model Charter creates the legal framework for a charter city to govern itself. Charter cities are designed to create the conditions necessary for sustained economic development. More specifically, this means ensuring a capable government, an open business environment, and rule of law. The Model Charter is the first building block.

The first distinguishing feature of the Model Charter is defining the relationship to the host country. For this section we borrowed from the Hong Kong charter which defines their approach to one country, two systems. This level of independence is crucial for the charter city to develop institutions to accelerate economic growth without undermining the sovereignty of the host country. Most countries would require legislation, if not constitutional amendments, to achieve the desired level of autonomy.

The second important feature of the Model Charter is the governance mechanism. We specify a city council which selects and oversees the city manager. While we do not specify how this council is chosen in the charter, in most cases we expect the councilors to be selected via negotiation of the city developer and the host country. We suggested a large number of council members (nine) to ensure that developers and the host country accommodate the wide range of interests that are necessary to create a city that meets the needs of its residents and businesses.

The third aspect of the Model Charter empowers the city to regulate itself. The legislation that enables charter cities will devolve authority,including but not limited to business registration, taxes, and labor law. The Model Charter accepts this responsibility and provides guidance on how the city will execute on it.

Lastly, effective dispute resolution is crucial for rule of law. The Model Charter gives the city government authority to establish a court system. We have modeled this section on the Dubai International Financial Center.

Charter cities are an important tool for economic development in low- and middle-income countries. We view this Model Charter as an important facet in the legal framework of charter cities and look forward to helping developers and governments implement it.