Tuesday, Nov. 23, 1999 | 11:10 a.m.
Plans for a 4-mile-long monorail system that would link several hotel-casinos along the Las Vegas Strip are overly optimistic and could result in a net loss of $1.5 billion over 30 years, an Illinois consultant's draft study says.
Wendell Cox Consultancy of Belleville, Ill., is preparing the report for the Public Response Advisory Group of Los Angeles -- Nevada's adviser commissioned to look at the financial aspects of the proposed monorail.
The state is considering a request from MGM Grand-Bally's Monorail LLC for a $600 million tax-exempt bond -- the final hurdle for the monorail organization.
Bob Broadbent, lead consultant for the monorail group, dismissed Wendell Cox's study as another example of self-proclaimed experts scrambling to derail the project.
"(Cox) opposes mass-transit projects all over the country. That's what he does," Broadbent said Tuesday. "I suspect we're going to run into this for a long, long time."
Steve Ghiglieri, the state's chief of the office of business finance and planning, said the Public Response Advisory Group was told to study the monorail group's financial plan and look at any other reports submitted.
"If opponents have other studies, we wanted them to incorporate those so they could look at a balanced picture," Ghiglieri said.
Ghiglieri said he initially heard only one report would be submitted to the advisers, but learned Monday that there might be as many as four. How much weight the reports carry is up to the financial advisers, he said.
Cox said today that his group was hired by Mandalay Bay hotel-casino, which has its own monorail system and whose representatives have expressed concerns about the new project that would link the MGM Grand to the Sahara hotel-casino.
"I have studied systems like this around the world," Cox said. "The projects for this are exceedingly optimistic. It's hard for me to find the words to express how exceedingly optimistic they are."
Broadbent said he had yet to see the report and had hoped to meet with Cox before the study was released.
After the Clark County Commission approved the design and traffic analysis for the system on Nov. 3, monorail representatives said they hoped to have the guideway completed by 2003.
The monorail group expects it to carry 54,000 passengers a day in 2003. By 2034, the groups says, the monorail should earn a net profit of $350 million.
But the Cox firm, which said actual ridership of fixed guideway systems falls an average of 70 percent below projections, offers a more gloomy scenario for the monorail group.
The Cox report says a "highly optimistic" projection would be 22,700 riders in 2003 and a net loss of $860 million in 30 years. Its "more probable" projection suggests the monorail group could experience a net loss of $1.5 billion by 2034.
"The LLC Monorail could not survive even the smallest ridership projection error that has been typical of high-volume fixed guideway projects," the report says. "If ridership is as little as 17 percent short, the LLC Monorail would be incapable of meetings its financial obligations."
The consulting firm says the Las Vegas monorail is comparable to the system in Jacksonville, Fla. According to Metro-Dade Transit, the system was projected to carry 10,000 passengers a day, but only ferries about 1,800.
And the fare box projections for Las Vegas are four times that of the New York City Transit Authority -- the country's largest system.
The Cox firm also questions the monorail group's claim that one-third of its ridership will come from tourists who now walk the Strip. The report says visitors would probably walk rather than take a monorail that moves along streets and Paradise Road behind the Strip.
"The Las Vegas Strip is one of the most visually stimulating streetscapes in the world, which is an important reason why walking is the most popular mode of travel among Las Vegas Strip visitors."
The monorail group plans to extend the existing system that links the MGM Grand to Bally's. The new line would head north on the Strip, turn east to Koval Lane, turn north to Sands Avenue, then east to Paradise Road, where it would continue north to the Sahara hotel-casino.
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