Blockchains zone will be biggest thing in NV since legalized gambling, lobbyist says

By: - August 13, 2021 6:00 am

Nope. (Image Credit: EYRC Architects + Tom Wiscombe Architecture)

The team behind Blockchain LLC’s audacious plan to transform an undeveloped part of Storey County into a tech utopia made their first public pitch to lawmakers Thursday, saying their “innovation zone” would be the most significant driver of economic development in Nevada since the legalization of gambling.

“It’s that big,” said Pete Ernaut, a partner at the high-powered R&R Partners, which is lobbying for the project. “It’s that meaningful. It’s that transformative. And quite frankly it scares the daylights out of people.”

Innovation zones have been described by proponents as “a unique form of local government on private land.” The drafted legislation is designed to support the tech company Blockchains LLC’s plan to establish a 35,000-person “smart city” on 67,000-acres of land it purchased in 2018. Painted Rock Smart City would be overseen by a board of supervisors, which would initially be appointed by the tech company itself and have many of the powers of county governments.

The most prominent supporter of the proposal is first-term Democratic Gov. Steve Sisolak, who made the concept the centerpiece of his State of the State in January.

Pete Ernaut is very excited
Pete Ernaut, of the lobbying firm R&R Partners, pitching the Blockchains concept to a legislative study panel Thursday. (Legislative Council Bureau video screenshot)

Ernaut on Thursday called innovation zones the “single most important idea that we’ve dealt with in our careers” and later said the draft legislation represented “six to nine months of hard work with some of … the most experienced public policy people in the state.”

The well-connected team working on the proposal — and the backing of Sisolak himself — wasn’t enough to get any draft legislation passed by the 2021 Legislature. The innovation zone bill was never even formally introduced, with the governor eventually relenting and saying the concept needed more vetting than a 120-day session would allow.

Now, Blockchains LLC is getting a second chance to make their case.

The innovation zone concept will be explored by the Special Joint Committee to Conduct a Study Concerning Innovation Zones, a six-member interim legislative body, which held its first meeting Thursday. It is expected to meet at least once a month for the rest of this calendar year and must submit recommendations to Sisolak by Dec. 31.

Those recommendations could include abandoning the idea, punting it to the 2023 Legislative Session to deal with, or proposing it for a special legislative session.

“If this is truly transformative, if this truly positions Nevada as the global leader in the most important emerging technology of our time, somebody has to say yes,” said Ernaut. “Somebody has to say, ‘We support this. We permit this. We’re going to allow this to be built.’”

Lee Weiss, an executive at Blockchains, said their innovation zone project will require significant outside investment, which would be “likely impossible” to attract without proof of significant buy-in from the State of Nevada.

Thursday’s meeting did not go into specifics about what Painted Rock Smart City would look like or how it would operate. However, one representative from the company did say the company would be built on “hundreds of thousands, if not millions of sensors that are constantly collecting data” that could be used for nimble decision making. Also mentioned was the possibility of allowing only autonomous vehicles in the city and giving residents the ability to store and trade their own solar-powered energy.

Assemblywoman Teresa Benitez-Thompson, who will serve as the innovation zone study committee chair, said the first meeting was designed to get the idea out there to the public.

“There have been … lots of conversations happening, lots of dialogue happening, but none of it brought to this level where we’re able to look at everything comprehensively.”

Serving on the committee with Benitez-Thompson are Sen. Mo Denis, who will serve as vice chair, state Sens. Roberta Lange and James Settelmeyer, and Assemblymen Philip O’Neil and Howard Watts.

Among the topics expected to be explored by the committee over the next four or five months is economic and workforce development, affordable housing, natural resources, and tax distribution.

But one central question looms above it all.

Why does it need its own government?

When the idea first emerged, many were quick to dismiss the concept as nothing more than “a company town.”

Presenters on Thursday pushed back against that characterization. Ernaut said the government would be kept at “arm’s length” from Blockchains and emphasized that the smart city would have to abide by existing state laws. Jeremy Aguero of Applied Analysis, another high-profile consulting firm brought in to back the project, said that people and businesses within the innovation zone would have to pay or collect every tax that currently exists.

Ernaut told the lawmakers that the smart city would need a level of flexibility and autonomy that isn’t possible within existing government structures. He argued that Storey County and its commissioners had enough on their plate. Tackling the uncharted territory of a city run on blockchain technology would be overly cumbersome and cost prohibitive.

He used the example of tax collection, saying that a smart community could use blockchain technology to collect and store taxes in real time, while an existing county would have to retrofit their current system or run two systems simultaneously.

“In either case, the county has expended substantial resources solely because of that incompatibility,” he said.

State Sen. Mo Denis acknowledged that conflict but noted that compatibility issues might still arise between the proposed quasi-county and others, such as the state.

Assemblymen Watts and O’Neil separately asked why the planned project could not be achieved within Storey County as it exists today. Numerous representatives from Storey said during the legislative session and during the public comment period of Thursday’s meeting that they were supportive of the smart city project but believed it could be implemented without establishing a new form of local government.

Ernaut said Blockchains had considered other routes, such as being a special district or city, but found “operational conflicts or governance conflicts” within each of them. The closest example of what’s being proposed now is the Reedy Creek Improvement District, the jurisdiction setup for Walt Disney World Resort in Florida.

Ernaut said the need for the proposed structure would become clearer once the committee walked through the specific bill draft language, which presumably will happen at a future committee meeting.

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April Corbin Girnus
April Corbin Girnus

April Corbin Girnus is an award-winning journalist with a decade of media experience. She has been a beat writer at Las Vegas Sun, a staff writer at LEO Weekly, web editor of Las Vegas Weekly and a blogger documenting North American bike share systems’ efforts to increase ridership in underserved communities. An occasional adjunct journalism professor, April steadfastly rejects the notion that journalism is a worthless major. Amid the Great Recession, she earned a B.A. in journalism from the University of Nevada Las Vegas, where she served as editor-in-chief of the student newspaper. She later earned an M.A. in media studies and a graduate certificate in media management from The New School for Public Engagement. A stickler about municipal boundary lines, April enjoys teaching people about unincorporated Clark County. She grew up in Sunrise Manor and currently resides in Paradise with her husband, three children and one mutt.