I would take this story with a huge grain of salt. There's illegal development everywhere in Mexico. Here's a story (one of many, and from an actual newspaper) about illegal development in Tepoztlán: https://www.jornada.com.mx/noticia/2022/08/15/estados/edific.... This goes on in the open -- you can look towards the mountains from town and see fancy houses that are literally within the national park.
I picked Tepoztlán because it's very beautiful, very close to the capital, and is one of Mexico's most visited "Pueblos Mágicos" (the most visited so far in 2026). If the government isn't stopping obvious illegal development here then one would wager they aren't really stopping it anywhere. Insitutions are weak, so crackdowns are limited and temporary, and they're usually just aimed at developers that aren't properly "connected". "For my friends, everything; for my enemies, the law" and all that.
- https://en.wikipedia.org/wiki/Pueblos_M%C3%A1gicos
- https://www.infobae.com/mexico/2026/05/21/por-esta-razon-tep...