The developers had obtained a building permit for a residential construction from the municipal government.  Developers Mauricio Ponce and Antonio Noboa Cartwight Ycaza then began construction of a building in Punta Estrada, Puerto Ayora, Santa Cruz Island.  The picture below (courtesy Galapagos National Park Service) clearly shows that this is not a house - illustrating the brazen disregard developers have come to have for local regulations (and the municipality's incapacity to monitor how well builders are respecting their building permits!)

The developers later presented the findings of a feasibility study for the construction of a 26 room hotel to the Ministry of Environment, for its approval, hoping that with such an approval, bureaucratic processes would get muddled allowing them to proceed.    The Galapagos National Park Service learned of this inconsistency, and immediately ordered a halt to the construction of the hotel, as it did not comply with current legal regulations, which require that an appropriate building permit be obtained for different construction projects.    
The Park Service has asked the Municipal Government of Puerto Ayora to implement the necessary measures ensuring that the developers and their project go through the same approval process that applies to all other people.

CNH Tours is pleased to see the Park Service actively involved in ensuring that development in Galapagos does not continue in a chaotic fashion.   Land based tourism has increased dramatically in the last 10 years, but in an environment of poor regulation / planning.   As a result, hotels have been built even in park lands, and towns risk turning into chaotic, unattractive places.   CNH Tours has generally favoured more of a cruise ship focus for Galapagos visits, thus reducing the development pressures for hotels, restaurants etc. on land.