State weighs use of monorail bonds in Vegas

Tuesday, Oct. 12, 1999 | 10:34 a.m.

Charles Horsey III, acting director of the Department of Business and Industry, says his agency has hired a financial adviser to determine whether the state can issue the revenue bonds under terms of state laws and the federal tax code.

Horsey has been working with Bob Broadbent, the former McCarran International Airport aviation director, on the financing plan. Broadbent is chairman of the MGM Grand-Bally's Monorail Limited Liability Co.

In previous announcements, the company said it wanted to construct a privately financed $350 million monorail between the MGM and Sahara and the Las Vegas Convention Center.

Broadbent said the costs of the project have been increased to meet bond contingency requirements.

"We think we can sell the bonds," he said. "We think we will put enough people on the monorail trains at $2 a piece to pay them off."

He said hotels would contribute to project costs and no tax money would be used.

The four-mile monorail system, including several trains of four cars, would not operate before the middle of 2003.

Under a law change Broadbent lobbied through the state Legislature in 1997, the state bond program can be used as a conduit to finance the monorail project.

Horsey emphasized the monorail financing proposal is under development. But he said his agency hopes to have a plan ready for consideration by the Nevada Board of Finance sometime this winter. Gov. Kenny Guinn is chairman of that board.

"Unless the financial advisers tell us it is financially viable, bonds will not be issued," said Horsey. "To date we have not been convinced. It is a little risky. A lot of issues must be resolved."

Broadbent said a similar financing plan was used in California to construct toll roads. Tolls are used to pay off the bonds.