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The Nevada Independent

‘Innovation Zones’ promoted by Sisolak would create semi-autonomous county at behest of Blockchains LLC

Riley Snyder
Riley Snyder
Michelle Rindels
Michelle Rindels
EconomyLegislatureTechnology
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A proposal created by Blockchains LLC and circulated in the Legislature describes the fantastical contours of a plan to create a semi-autonomous county that slowly assumes powers of the county it’s based in and is supported by a cryptocurrency known as “stablecoin.” 

The plan, obtained by The Nevada Independent, includes draft language creating “Innovation Zones,” a concept touted by Gov. Steve Sisolak in his State of the State address last month but that otherwise has not been described publicly in detail. Sisolak touched on the idea as one element of an economic development plan to create close to 200,000 jobs and help Nevada dig out of a crushing, pandemic-driven recession.

It comes as the company argues existing rules governing municipalities are too inflexible for the  kind of revolutionary project Blockchains LLC hopes to realize.

The proposal by Blockchains LLC would create essentially autonomous districts that function as a county-within-a-county, taking over responsibilities such as tax collection, K-12 education and other services normally provided by county governments. Such “zones” could only be created by a private developer who owns more than 50,000 acres of land (such as Blockchains), promises to invest up to $1 billion in the Zone and agrees to levy an industry-specific tax on an “innovative technology” based in the Zone itself.

The bill language has not yet been submitted to legislative bill drafters, and could change substantially between the initial version and whatever version is introduced in the Legislature. A spokeswoman for Sisolak said the governor looks forward to releasing more information on the “Innovation Zone” concept in the future, but at this time “has not submitted a bill draft request related to this initiative so we will not be commenting on any language at this time.”

But the proposal is the most detailed plan yet for just exactly how Blockchains, LLC plans to build a proposed blockchain-powered “smart city” on more than 67,000 acres of undeveloped high desert land east of Reno at the Tahoe-Reno Industrial Center.

Blockchains LLC CEO and founder Jeffrey Berns announced the company’s grand plan to build a blockchain-orientated city on the purchased property at a conference in Prague in 2018, with plans to hire more than 1,000 employees by 2021 (a plan the company later said was “too optimistic.”)

Blockchain technology is described as “a decentralized, distributed ledger that records digital information that can be used for business transactions, personal finances, civics, record-keeping and many other applications,” and describes the company as well-positioned to help people connect to “Web3” (a re-imagination of the backend of the internet through blockchain technology) through various applications now under development.

Proponents say that massive amounts of tax revenue could be captured through a financial transaction tax if there is worldwide adoption of stablecoin. Blockchains’ property in tiny, rural Storey County would be the global headquarters for the technology needed to support the cryptocurrency.

Blockchains already envisions developing “Painted Rock Smart City,” which over a 75-year period would include an estimated 36,000 permanent residents. Renderings in the document illustrate Space Age-style silver buildings in the style of Frank Gehry set in rolling brown hills of Northern Nevada.

The company is drawing on the cities of Boulder, Colorado, Provo, Utah, San Jose, California and Seattle, Washington for inspiration. The document projects the company will break ground in 2022.

The smart city is envisioned to eventually employ 1 in every 50 Nevadans and account for nearly 2 percent of all wages produced in the state.

“Blockchains’ investments not only generate meaningful impacts for the State of Nevada, they are expected to propel the Silver State’s global positioning,” promises the document, dated July 2020.

Here’s how the proposed “Innovation Zone” concept would work. First, a company or person would need to submit an application to the Governor’s Office of Economic Development (GOED) for approval to create the “Zone.”

Such a zone is required to consist of at least 50,000 contiguous acres of undeveloped land owned or controlled by the applicant, be located within a single county, not have any permanent residents at the time of the application and not be part of any pre-existing city, town, or other governmental division established by law — all provisions that would apply to Blockchains, LLC.

The application is required to include at least nine pieces of information or planning documents, including a comprehensive general plan for future development, an estimate of construction and future employment, documentation showing sufficient investment promises ($250 million initially, $1 billion over 10 years), an economic impact statement and certification that a qualified developer has been obtained and has secured or can secure access to public utilities and natural resources needed to complete the project.

The plan also requires any “Innovation Zone” to be tied to an industry-specific tax applied to an “innovative technology,” with creation of the “Zone” contingent on creation of the tax. Such a tax could be applied to a variety of “innovative technology” such as blockchain, autonomous technology, the Internet of things, robotics, artificial intelligence, wireless technology, biometrics and renewable resource technology.

If approved by the state, an “Innovation Zone” would then be created and given authorities typically granted to local governmental bodies like a county commission or municipality. It would be led by a three-member Board of Supervisors, all appointed by the governor (though two must be appointed from a list of five applicants provided by the “Innovation Zone” applicant, and none can have a “pecuniary interest in the applicant or a commitment in a private capacity to the interests of the applicant”).

“The traditional forms and functions of local government political subdivisions existent under Nevada statute are inadequate alone to provide the flexibility and resources conducive to making the State a leader in attracting and retaining new forms and types of businesses and fostering economic development in emerging technologies and innovative industries,” a draft bill creating the “Innovation Zone” states.

The smart city would inform the actual county where it’s located when it is prepared to assume basic service responsibilities such as police and fire, wastewater treatment, health care, a judicial system and education. Officials in the existing county retain their authority and provide services with the Innovation Zone until the board of the Zone elects to assume the responsibility.

Once the transition is complete, the Innovation Zone is no longer subject to county ordinances. The proposed bill language specifies that any references to “county” in Nevada law would also include Carson City and the Zone.

Residents would vote in the surrounding county until there are at least 100 eligible voters — then they would vote in elections organized by the Zone.

Every other year, the Zone must provide to the Legislature a report that estimates the progress and investment in the Zone and includes “a description of the use of the innovative technology in the Zone and how the innovative technology is being advanced in the Innovation Zone.”

Blockchain’s proposed industry-specific tax through the “Innovation Zone” would be based on transactions using stablecoin, a kind of cryptocurrency that aims to achieve price stability by being backed by a reserve asset. It can be pegged to a currency like the dollar or something like gold, and Blockchains envisions creating its own kind of stablecoin to serve Painted Rock and, eventually, the world.

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