Gov. Steve Sisolak today unveiled further details concerning proposed legislation that would allow tech companies to take advantage of so-called “innovation zones,” within which they would be responsible for the creation of the equivalent of county governments and “smart cities.”
The types of companies that would be eligible to create innovation zones include blockchain and autonomous technologies, the internet of things, robotics, artificial intelligence, wireless technology, biometrics and renewable resource technology, according to a draft of the legislation received early this month by the Las Vegas Review-Journal.
Applicants for an innovation zone would have to have made a minimum capital investment of $250 million within the territorial boundaries proposed for the zone prior to submitting an application. The applicant would also have to commit to an additional $1 billion in investment within the first 10 years of the zone being approved.
Sisolak stressed during a livestreamed roundtable that the companies would not be creating company towns. After building and supplying for all of the infrastructure and services normally provided by a county government—done under the guidance of a board appointed by the governor, like a county commission, and mandated to be independent of the company—the city within an innovation zone would be transitioned to be governed by officials elected by their residents.
Sisolak also stressed that innovation zones would not require the types of tax incentives the state has given to companies like Tesla to draw them to the state. The tech companies behind their development would have to put forward the resources to build them from the ground up.
Blockchains LLC most likely candidate
The “innovation zone” city that would most likely have the ability to come fruition would be located near the Tahoe Reno Industrial Center (TRIC) east of Reno.
Adjacent to TRIC is 67,000 acres of undeveloped land owned by former lawyer and founder and CEO of Blockchains LLC Jeffrey Berns. As the company’s name suggests, it was created to promote innovative uses for the database technology that powers Bitcoin digital currency. Blockchains has for three years promised to build a technological research and development facility and a “smart city” on the property. That project was announced in 2018, in a presentation reminiscent of a TED Talk, in Prague, Czech Republic.
However, things haven’t gone entirely smoothly. To start, the company has struggled to secure water rights for the land—a challenge in a state where most water basins are already over-appropriated.
Pete Ernaut, a representative for R&R Partners, which works with Blockchains on lobbying and marketing, told New Republic earlier this month that Blockchains “is actively involved in acquiring water rights and will be probably for the next decade,” adding that the company has acquired about 8,000 acre-feet out of a needed 12,000 acre-feet of water rights.
Additionally, last year, the company laid off nearly 10% of its staff in an apparent effort to refocus on less tangible projects in the vein of digital identity-management products.
A bold approach, from the ground up
Nonetheless, the governor said he has faith in the idea of what he called a “bold and admittedly non-traditional approach to economic development” within innovation zones and the cities intended to be built within them—stressing the idea that they would be built from the ground up, without the challenges of operating within and retrofitting established communities to meet their needs—and would be carbon neutral and powered by renewable energy grids.
“We’re not talking about retrofitting a community with new technology. We’re talking about building a city from the ground up,” said Jeremy Aguero, principal analyst at Applied Analysis, during the roundtable.
The COVID-19 pandemic, Sisolak said, has hit Nevada as hard, if not harder, than any other state. He noted that discussions among government officials and business stakeholders in the state have focused on how to diversify the state’s vulnerable, tourism-and-entertainment-based economy for years.
Sisolak, his Director of the Governor’s Office of Economic Development, Michael Brown, and Aguero said during the roundtable that projects like Blockchain’s would create new, high-wage jobs and infuse the state’s economy with money.
“Think, in the last 12 months, the pandemic has changed the delivery” method for sectors ranging from education to government services, Brown said. “The pandemic and the resulting economic destruction is bringing the future faster.”
He said the Blockchains project—which would be slated to be completed in a total of 75 years—would, within its initial phases, create more than 79,000 jobs and direct wages to employees of $4.9 billion. In the long-term, a smart city like Blockchains’ proposed one would sustain 40,000 jobs, Sisolak said.
In order for a tech company to be able to apply to create an innovation zone, it would have to seek approval from the Nevada Legislature and be able to offer a taxable innovative technology.
Additionally, the tech companies would not initially be allowed to collect sales or property taxes within their “smart city” jurisdictions. They would be allowed to license businesses within them in order to get cities off the ground. After building the infrastructure and resources to take over government services, the elected government of a smart city could charge sales and property taxes within its jurisdiction.
As yet, the proposed legislation to approve the creation of innovation zones has not been introduced in the Nevada Legislature, though it is expected to be soon.
“I’m not afraid of the hard questions,” Sisolak said. “I’m not opposed to the people who think the proposal as put forth is flawed.”
Still, he said, he believes Nevada can and should be the blockchain technology leader of the world.