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Tech Companies Could Soon Have Their Own Cities to Run

So called "innovation zones" — or tech company-owned territories that operate like local governments — could soon be a new alternative to traditional government structure in Nevada, thanks to a proposal from Gov. Steve Sisolak.

A digital rendering of a busy smart city.
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In a roundtable discussion last Friday, Nevada Gov. Steve Sisolak discussed plans to introduce a legislative proposal that would allow tech companies to form local governments, similar to that of cities or counties. 

Known as “innovation zones,” these self-governing communities would aim to bring technologies such as blockchain, autonomous systems, Internet of Things (IoT), robotics, artificial intelligence, renewables and biometrics to the state. 

However, not everyone has welcomed the governor’s proposal with open arms. 

Storey County Commissioners passed a resolution yesterday 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. 

“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,” Blockchains lobbyist Pete Ernaut told FOX5 Las Vegas. “We understand their initial reaction to such a unique idea, and look forward to finding a path forward that works for everyone.”

Sisolak voiced a similar message of collaboration during the roundtable discussion.

“Innovation zones are unique and bold ideas that I understand would not be received immediately with open arms,” he said. “But it is my hope that we can have open, honest and productive conversations about how this could work, not simply write it off before the legislation’s goals, mechanics and consequences can be discussed and debated through the traditional legislative process.”

Sisolak said the requirements for initiating an innovation zone include an immediate investment of $250 million in land and infrastructure, a commitment to invest at least $1 billion over 10 years to develop a smart city and ownership of a large parcel of undeveloped land outside existing towns or cities that would serve as the site of the zone. 

Once a company is approved, three supervisors independent of the applicant would be appointed to review and help create the new “political subdivision.”

“There’s no incentives or abatements,” Jeremy Aguero, a principal analyst at Applied Analysis, said during the roundtable discussion. “Every business that’s located within the innovation zone will pay every tax that any other county in Nevada would pay.”

Any revenue that would otherwise be paid, Aguero said, would go to the state to provide general government services statewide or support K-12 education.

“I’m not afraid of the hard questions, and I’m not afraid to listen to those who believe the concept this proposes is flawed,” Sisolak said. “I just ask that all involved understand that the end goal is a massive economic development investment in Nevada.” 

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.