Sisolak urges Nevadans to keep ‘open mind’ about plan for autonomous Innovation Zone run on cryptocurrency
Gov. Steve Sisolak urged critics not to write off a proposal pushed by Blockchains LLC to create an autonomous “Innovation Zone” in a large undeveloped tract of Nevada, saying the hard-hit state needs to embrace a unique and bold idea instead of waiting on economic recovery.
Sisolak hosted a virtual roundtable discussion on Friday to offer more details on the Innovation Zones, which are backed by Nevada-based Blockchains LLC and were listed as a cornerstone of the governor’s plans for Nevada’s economic rebound. The company envisions developing a 36,000-person Painted Rock Smart City that is run on a Stablecoin cryptocurrency and supports the company’s efforts toward wider adoption of blockchain technology.
But critics have panned the draft proposal — which has not been introduced yet as formal legislation — to have the Zone slowly secede from the surrounding county. They also question how it will secure enough water without harming the environment or touching off a nasty spate of litigation.
“I'm not afraid of the hard questions. And I'm not afraid to listen to those who believe the concept as proposed is flawed,” Sisolak said. “I just ask that all involved understand that the end goal is a massive economic development investment in Nevada, and a chance ... to set down a marker that Nevada is the blockchain technology center of the world.”
To pursue an Innovation Zone, a company needs to make an immediate investment of $250 million in land and infrastructure, commit to investing at least $1 billion over a 10-year period to develop a smart city, and own at least 50,000 uninhabited acres in Nevada. Presenters called it the highest bar for any economic development program in state history; Blockchains notably owns a 67,000-acre parcel of land in Storey County.
Michael Brown of the Governor’s Office of Economic Development said the project could bring the state 123,000 direct, indirect and induced jobs over the course of a 75-year development. That development phase would have an economic impact of $16.4 billion, according to slides shared during the presentation.
“This is a game changer for Nevada,” Brown said. “Opportunity is knocking here with a multi-generational employment opportunity.”
Economic analyst Jeremy Aguero argued that the model was different than in the past, when the state offered tax incentives to attract the Raiders stadium, carmaker Faraday Future and the Tesla Gigafactory. Innovation Zone leaders would be required to go to the Legislature and have a new, industry-specific tax imposed upon the technology being developed in the Zone, he said.
“The concept here isn’t one of abatements or incentives or anything along those lines,” Aguero said. “As a matter of fact, it's quite exactly the opposite.”
Presenters tried to head off concerns that the Smart City would be a “company town,” saying that the Zone would be governed by a three-member board of supervisors appointed by the governor and independent of the applicant. Those supervisors would be subject to the state’s ethics laws and the Open Meeting Law.
Asked why the proposal called for creating an entirely new political subdivision, Aguero pointed out that the proposed Smart City would be significantly larger than the 4,000-person county it’s currently in, and would require such a heavy administrative lift that starting over makes sense.
“We're not talking about retrofitting a community with some type of innovative technology we're talking about building a city from the ground all the way up,” Aguero said. “You're talking about orders of magnitude different in terms of that technology.”
To concerns that there may not be enough water to supply the development, Sisolak noted there is always a concern about water in any new development. As a city being built from nothing, it would incorporate cutting-edge technology to achieve a carbon-neutral footprint, he said, and “is everything that the environment absolutely needs.”
“They're responsible for providing water to the Innovation Zone. They'll have to buy the water rights, come up with the water rights in order to do that,” he said of Blockchains. “Environmentally, this is the most sound concept you can possibly have.”
Activists scoffed, with one saying the idea was an "outrageous corporate giveaway" that would set the stage for a water war.
“Blockchains LLC's plan is to build a 100 mile pipeline to the Black Rock Desert to drain remote aquifers important to indigenous people, endangered species and Nevada's outdoor recreation economy," said Patrick Donnelly, Nevada state director with the Center for Biological Diversity. "Governor Sisolak wants to give the keys to our state to tech bros, while enabling a water grab which would destroy the environment."
Above all, Sisolak touted the project as a way to provide affordable housing, diversify the tourism-heavy state economy and provide jobs “that our young people that are in college and in university are looking forward to.” He urged people to keep an open mind.
“We have a long history of embracing innovative creators and bold ideas that others dismiss too quickly,” Sisolak said. “Together, we can turn this big idea into reality that can change Nevada's economic future forever.”