A proposal in Nevada would create “Innovation Zones” where companies could form their own local governments:
According to a draft of the proposed legislation, obtained by the Review-Journal but not yet introduced in the Legislature, Innovation Zones would allow tech companies like Blockchains, LLC to effectively form separate local governments in Nevada, governments that would carry the same authority as a county, including the ability to impose taxes, form school districts and justice courts and provide government services, to name a few duties.
Sisolak pitched the concept in his State of the State address as his plan to bring in new companies that are at the forefront of “groundbreaking technologies,” all without the use of tax abatements or other publicly funded incentive packages that had previously helped Nevada bring companies like Tesla to the state.
During his speech last month, Sisolak specifically named Blockchains, LLC as a company that had committed to developing a “smart city” in the area east of Reno that would run entirely on blockchain technology, once the legislation passes…
The draft proposal lays out the requirements for the zone, including the applicant owning 50,000 acres of undeveloped land, all within a single county but separate of any city, town or tax increment area. And the area would have to be uninhabited. The company would also need to have $250 million, and a plan to invest an additional $1 billion over 10 years into the zone.
This would appear to come at the nexus of trends. First, Americans generally like the idea of local government. They believe it to be more nimble and responsive to local needs as local officials can focus more on getting things done than getting bogged down in ideology or numerous competing interests.
Second, tech companies and other big companies like the idea of large campuses. Having a sizable portion of private land where employees can do all sorts of things, including work, is already a feature in some tech headquarters.
Third, governments want to attract businesses, whether headquarters or manufacturing facilities or office parks, that can help bring jobs, tax revenues, and status. This proposal provides different incentives compared to the traditional tax break.
Fourth, businesses like the idea of controlling activities regarding their company. Company towns are not new nor are ideas about creating regulation free zones for business activity. Being able to create local regulations, collect taxes, and more could be attractive to some companies.
Would such a proposal prove successful? It might depend on the definition of success: it could work out well for the business but perhaps not for employees or surrounding communities. And even if it does work, is it broadly transferable to other locations? The conditions in Nevada might be different than many other locations in the United States.