Bill 673.

Summary.

The bill establishes rules for the creation, organization, financing, oversight, and dissolution of Special Intermunicipal Funds for Territorial Development. Each fund would consist of a joint bank account and assets dedicated to shared projects of two or more municipalities that have already formed an association. It would have neither separate legal personality nor nationwide jurisdiction. Establishment would be voluntary and would require matching resolutions from the municipal councils and a founding agreement. That agreement would specify, among other matters, the participating municipalities, contributions, projects, banking rules, budget, administration, admission, withdrawal, liquidation, and dispute resolution. No municipality could be compelled to join, finance, or remain in a fund.

Each fund would have an Administrative Council (Consejo de Administración) representing the mayors’ offices, municipal councils, an independent technical member, and civil society. The Council would approve investment plans and budgets, ratify projects prioritized through public participation, authorize contracts, review audits, and appoint the executive director. The Executive Directorate (Dirección Ejecutiva) would manage operations and finances, prepare the budget and reports, maintain the accounts, and sign authorized contracts on behalf of the intermunicipal association. Its director would be chosen through a public competition for a three-year term, could be reappointed once, and could be removed only for just cause with due process.

Fund resources would remain separate from ordinary municipal accounts and treasuries. Each municipal contribution would require council authorization and inclusion in the relevant budget; no municipality could unilaterally draw on the joint account. A fund could receive municipal contributions, public appropriations, transfers from the Central Government (Gobierno Central), non-repayable international cooperation, private donations, proceeds from environmental instruments, investment returns, and trust resources. Borrowing, guarantees, or obligations affecting municipalities would require prior express authorization from each affected council. Private contributions would have to be identified and disclosed and would confer no control, contracting advantage, or influence over decisions.

Eligible projects would include infrastructure, water and sanitation, waste, environmental protection, territorial economic development, tourism, mobility, technology, and risk management, provided they served a shared interest. Before approving a project, the Council would determine ownership of resulting works and assets, responsibility for operation and maintenance, and cost allocation. Prioritization would follow Law 37 of June 29, 2009, with participation through open town meetings, participatory investment budgets, and Municipal Planning and Development Boards (Juntas de Planificación y Desarrollo Municipal). Fund resources could not cover ordinary municipal operating expenses. Essential administrative expenses would be limited to ten percent of the annual budget, subject to the stated exclusions for work directly connected to project delivery.

Each fund would have its own annual budget, subject to approval and publication, and would follow public procurement and public fund management rules. The Office of the Comptroller General of the Republic (Contraloría General de la República) would oversee transactions involving its resources and assets. An independent annual audit, reporting duties, and a public portal would cover agreements, budgets, contracts, contributions, projects, and reports. Decentralization resources could enter a fund subject to the bill’s requirements for authorization, permitted purpose, participation, and traceability. The bill would add Article 149-A to Law 106 of October 8, 1973, consistent with Article 235 of the Political Constitution (Constitución Política). The Executive Branch (Órgano Ejecutivo) would regulate the specified matters within ninety days after promulgation, and the proposed law would take effect the following day.

The National Decentralization Authority (Autoridad Nacional de Descentralización) would receive annual reports and take part in regulatory coordination. The framework could concern intermunicipal associations, participating communities, infrastructure and service providers, the water, waste, tourism, and mobility sectors, international cooperation partners, and private contributors in the Republic of Panama (República de Panamá).