Nevada Governor Pulls Controversial Innovation Zone Bill

Gov. Steve Sisolak has pulled a controversial proposal that would allow tech companies to form local governments throughout the state. Instead, it will now be carried out as a study.

The entrance to the Nevada Capitol building.
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Earlier this year, Nevada Gov. Steve Sisolak proposed a bill to create “innovation zones” that would allow tech companies to form local governments throughout the state. However, after facing pushback from state lawmakers and rural counties, the bill has been pulled and downgraded to a study.

Senate Concurrent Resolution 11 (SCR11) looks to create a joint special committee of the Legislature to conduct hearings and a complete analysis around the creation of innovation zones in Nevada, said Scott Giles, senior adviser to Gov. Sisolak, during a Senate committee hearing.

The controversy surrounding the bill began in March, after Storey County Commissioners passed a resolution against the construction of an innovation zone within the county, explaining that they don’t want to cede control over local decision-making to Blockchains LLC, which purchased 67,000 acres of land in Storey County for $170 million in 2018.

At the time, Blockchains lobbyist Pete Ernaut responded to the county’s resolution, saying “a smart city with 35,000 residents is essential to the vision of this innovation zone, which makes permitting a city of this size key to this discussion.” However, he added, “we understand their initial reaction to such a unique idea and look forward to finding a path forward that works for everyone.”

Fast-forward to last month, when time constraints created by the state’s legislative session coming to an end pushed the governor to pull the bill.

“The reality is that there are limitations that come with a bi-annual 120-day session,” Giles said. “It became clear in recent weeks that a proposal of this magnitude was not going to fit into this particular session.”

As a result, the joint special committee, made up of two members from the Senate; two members of the Assembly appointed by the majority leader and the speaker; one member from the Assembly; and one member from the Senate appointed by minority leaders would meet after the 2021 session to conduct a study of innovation zones within the state.

“The committee as proposed won’t be limited on issues it would like to discuss, but SCR11 does ask the committee explicitly to study the potential community and economic benefits of innovation zones,” Giles said.

These concepts include economic development and job creation, workforce development, affordable housing, water and natural resources in the environment, the impact on surrounding counties and other forms of local government, state and local revenues and the distribution of taxes that could come through an innovation zone.

As for when the analysis will be completed, the proposal states that all recommendations by the committee must be submitted by Dec. 31.

From the analysis, Giles said, the joint special committee could make three possible recommendations. The first recommendation is that no further action is necessary on innovation zones. The second recommendation is to submit a bill draft as a pre-filed bill for the 2023 session, and the third recommendation is to present the measure in an upcoming special session.

However, a couple of state lawmakers had several concerns about the study, leading them to ask questions about the proposal during the Senate committee hearing.

“We aren’t here today to debate whether we want or don’t want innovation zones. We are only here to debate and talk about the committee and if we think this committee is the right way to go and if we like the components of the committee within the bill,” said Sen. Roberta Lange.

Lange’s primary concerns regarding the study were its short timeline and where the staff support for the committee would come from.

“The first thing I want to talk about is the timeline. I think it’s extremely short,” Lange said. “It would better serve the committee to have the results by the end of the first quarter in 2022. I guess I am asking you to consider that because I think if you want to get the best information, it shouldn’t be rushed.”

As for where support for the committee would come from, Michael Stewart, research director of the Legislative Counsel Bureau’s Research Division, said that the division would provide staff support for the “one-shot interim study.”

Another concern regarding the study was how will authorities and services of existing governmental agencies be protected?

“The original bill language had seemed to indicate that the innovation zone would subsume any other governmental entity inside it, and so how will authorities and services of existing governmental agencies be protected?” Sen. Carrie Buck asked.

Giles did not have an answer to the question.

“It’s a very good question. We don’t have final bill language yet, which details the protections that would occur for the surrounding local governments and impact local counties,” he said.

He continued his statement by saying “this is exactly why the governor is asking this to be moved to a joint special committee in the interim so that that particular topic can be discussed at length.”

Overall, the goal moving forward, Giles said, is to have the committee start meeting as soon as possible if the proposal is passed and signed by the governor. From there, the committee would be required to meet at least once a month in the interim.
Katya Maruri is a staff writer for Government Technology. She has a bachelor’s degree in journalism and a master’s degree in global strategic communications from Florida International University, and more than five years of experience in the print and digital news industry.
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