(I haven't read the story.)

I don't think this is necessarily all that unusual. E.g. large universities often have their own security forces and similar "governmental" type aspects. Property management, physical plant operations, grade and high schools, etc. (I'm thinking in particular of the University of Chicago.)

If (honking big if) these "Innovation Zones" have similar features, it might not be that big a deal. The courts thing does sound different, but I assume that just means that they would (somehow) be able to eventually fast-track incorporation into a town-like entitty. Dunno.

But either way, of course, there must be oversight to prevent abuses.

Cheers,
Scott.