Nevada lawmakers wise to pump the brakes on so-called Innovation Zones

When lawmakers refer an item to an interim committee or order a task force study on it, that’s sometimes simply a matter of procrastination or avoidance of a tough decision.

But Monday’s announcement that Gov. Steve Sisolak and Nevada legislative leaders had agreed to create a special joint committee to examine Sisolak’s proposed Innovation Zones was a prudent step.

These zones are a dangerous idea: They would allow technology businesses to create communities in which the companies would be independent, free-standing governmental bodies with the same authority as a county in Nevada. Lawmakers acted correctly in not attempting to push Innovation Zones through the process in the final weeks of the 2021 legislative session, but instead giving themselves time to thoroughly vet it.

Meanwhile, the joint committee approach opens the door to a broader discussion about how to meet the state’s economic needs short of inviting corporate city-states to exist.

Sisolak says the joint committee approach will give officials time to answer questions and explain the benefits of Innovation Zones, but information that has emerged about the concept since he introduced it is disquieting.

The concept was sparked by plans by the cryptocurrency company Blockchains LLC to create an independent “smart city” in Storey County east of Reno. There, Blockchains CEO Jeffrey Berns has purchased 67,000 acres on which the company intends to establish a community complete with homes, schools, industrial and commercial development, etc. It’s a vision from a science fiction book, or perhaps a science fiction dystopia: Residents of the community would use the company’s digital currency to buy goods and services, and Blockchains’ digital ledger would be used for official recordkeeping.

When Sisolak unveiled the idea early this year, lawmakers on both sides of the aisle expressed well-justified skepticism about it. Some questioned how the Blockchains community could be viewed as anything but a 21st-century version of the Industrial Revolution-era company towns that exploited workers and established a form of forced labor. Concerns also have arisen about the company’s intent to obtain water for the community from northern Washoe County. The water impact would be significant given that plans call for construction of 15,000 homes and 33 million square feet of commercial and industrial space.

Other turbulence has come from Storey County officials, who, as you might imagine, are less than thrilled about giving up a sizable chunk of its land to a private company. As envisioned, Innovation Zones would also transfer taxing authority from counties to companies. The county has passed a resolution opposing the concept.

Sisolak offered the idea as a way to diversify Nevada’s economy and lessen our reliance on the tourism industry, which in and of itself is a commendable goal. As we learned yet again during the coronavirus pandemic, we pay for our lack of economic diversification through high levels of joblessness and financial hardship for families every time there’s a downturn in the economy. And while the state has made some progress toward diversification, notably through the economic development efforts that attracted Tesla and other companies to Northern Nevada, we still have a long way to go.

But there are numerous ways of making Nevada more attractive to businesses than allowing private entities to establish their own cities. Those include creating a world-class primary, secondary and higher education system combined with a high-quality health care system. Investments in strong lifestyle features — fine arts, outdoor recreation, etc. — also will help. So will improvements in infrastructure and a 21st-century transportation system. Enhancements like those would attract businesses of all sizes, and would also benefit all Nevadans directly by improving their quality of life.

That’s how best to make our state stand out to businesses looking for places to start up or expand. It also offers greater payoffs than tax abatements or, far worse, Innovation Zones.

The joint committee approach will give lawmakers ample time to dissect the concept and bring major stakeholders to the table, including environmental groups, economic development officials, county leaders, etc., for a wide-ranging discussion. They should take it as a chance to explore how to make Nevada better for everyone, which in turn will make us stand out as fertile ground for businesses.