Nevada governor wants to allow tech companies to create local governments

Governor Steve Sisolak wants to use "Innovation Zones" to spur the economy.

Steve Marcus / reuters

The Governor of Nevada plans to introduce new legislation that would effectively allow tech companies to form separate local governments within the state. In a draft proposal obtained by the Las Vegas Review-Journal, Governor Steve Sisolak calls for creating what he calls “Innovation Zones.” Were the legislation to pass, companies with substantial amounts of money that operate in verticals like blockchain, artificial intelligence and renewables would have the option to form local governments with the same powers and responsibilities as counties. That means they would be able to collect taxes, as well as operate things like school boards and courts.

Governor Sisolak sees the idea as a way to pump the economy without the need for corporate tax breaks or other similar incentives the government has relied on in the past to attract companies like Tesla. The draft bill suggests the traditional local government model is “inadequate alone to provide the flexibility and resources conducive to making the State a leader in attracting and retaining new forms and types of businesses and fostering economic development in emerging technologies and innovative industries.”

Applications would be handled by the Governor’s Office of Economic Development and only granted to tech companies that own at least 78 square miles of land. Moreover, that land would have to be away from any existing town or city, with no one living there initially. Companies would also be obligated to invest $1 billion in their slice of Nevada. Meanwhile, governance would fall to a three-person board, with the same powers as their country commissioner counterparts. A spokesperson for the governor told the Review-Journal he will share additional details about the idea at an upcoming State of the State address.

Once you get past the tech angle, Governor Sisolak’s Innovation Zones aren’t all that different from the company towns that were a major feature of the American landscape before the 1920s. Historically, many of those were plagued by poor governance, with local residents eventually becoming disenfranchised by what they saw. And it’s not like we haven’t seen modern iterations of the idea already. You only have to look to Alphabet, its Sidewalk Labs subsidiary and the Quayside neighborhood it had planned to build in Toronto, Canada to find a more recent example. That project stalled in part over concerns on how Sidewalk Labs would manage the data it planned to collect through the development.