Nevada tech company asks to withdraw 'Innovation Zones' plan

CARSON CITY, Nev. — A company that asked Nevada to let it form its own local government on its vast land holdings in the desert no longer plans to build the experimental smart city that they said could transform Nevada into a global hub for emerging technology.

Blockchains, a Nevada-based technology company, had for months lobbied state lawmakers to create new, semi-autonomous jurisdictions called "Innovation Zones," where companies developing new technologies could experiment without oversight from rural county officials. They proposed the zones to be governed by three county commission-like board members — two of whom would at first be nominated by the company. They could create their own court systems, impose taxes and make zoning decisions.

The company said on Thursday that it was scrapping its plans and no longer would participate in the study committee that the state Legislature organized to consider the idea.

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"The company is grateful for the time and energy put forth by the Innovation Zone Joint Special Committee Chair and members," its spokeswoman Michelle Basch said in a statement. "Blockchains is excited to keep its headquarters in Nevada as it continues to develop its blockchain-based digital platform, build out the advanced technology business park on its land, and grow its relationships with like-minded companies and institutions in the United States and around the world."

While supported by some of Nevada's most influential lobbyists and Gov. Steve Sisolak, "Innovation Zones" provoked opposition from environmentalists, local residents, county officials and people skeptical of the growing power of technology companies. Sisolak, who praised the idea in his January State of the State address, elected to scale the proposal back to a study rather than introduce it for consideration in the statehouse earlier this year.

Storey County had called Blockchains' proposal "separatist governing control," but has long maintained it has been willing to work with the company on any development proposal. In a letter sent to Sisolak last week, Blockchains' CEO offered a different account and said county officials had rejected the company’s plan outright in 2018.

In the letter, which the governor's office provided the Associated Press, Berns said he was disappointed that the proposal never gained enough traction. He said it would be impossible to lure investors or commit to building their city without support from the state and was upset the governor didn't do more to support the plan after his initial comments backing the effort.

"Economic diversification continues to be a priority for me. I'm disappointed that Jeff (Berns) and Blockchains chose to go in a different direction," Sisolak said on Thursday.

Berns told the Associated Press in February that it needed some form of self-governance to experiment with new applications of blockchain technology and promised, in exchange, he could make Nevada a global leader as it grows in prevalence. Blockchain is a digital ledger that can record nearly any transaction and is best known for facilitating cryptocurrency exchanges.

Though the company said it no longer plans to build its smart city, lawmakers said they hoped it would work with local officials through traditional channels.

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"They’ve withdrawn their need for legislative intervention," said Assemblyman PK O’Neill, who sits on the committee. "I thought they had some very interesting proposals that I’d like to see them work more with Storey County on."

Senate Minority Leader James Settelmeyer, a Republican whose represents the region where the company had wanted to build its blockchain-centric city, said the company had sent a letter to the committee and governor to withdraw the proposal earlier this week. He said he assumed it would be up to the chair of the Innovation Zone Joint Special Committee, Assemblywoman Teresa Benitez-Thompson, whether to disband the study.

Benitez-Thompson did not immediately respond to request for comment.

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Sam Metz is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.