Critics say monorail backers misjudged ad revenue

Thursday, Feb. 24, 2000 | 10:54 a.m.

The proposed Strip monorail could cost up to $370 million more than its advocates have suggested because of rising interest rates and exaggerated potential advertising revenues, according to a new report by monorail critics.

The report, by California-based consultants Jon Twichell and Thomas Rubin, said debt service on the bonds that would finance the project could be $200 million higher than monorail proponents have estimated. The cost of the four-mile project had been estimated around $650 million, with construction costing about $400 million and the rest going for debt service.

The report also suggests that a forecast of $6.7 million per year in advertising revenue is wildly off-base, far above what public transit systems in similar-sized cities earn.

The Bay Area Rapid Transit subway system, with 39 stations and 300,000 daily riders, earns about $2.4 million per year from advertising, the report said.

"The monorail advertising proposal fantasizes it will receive three times BART's revenues, although it will have only one-twelfth the ridership."

The proposal, the report said, would mean the 3.8-mile monorail would generate more than five times as much revenue as the entire Las Vegas bus system, which earns $1.2 million per year from advertising.

The report is being sent this week to two entities that are evaluating the monorail's financing: The state Department of Business and Industry and California-based Public Resources Advisory Group, which is preparing a recommendation for the state.

Although the bonds in question are "sole-recourse" - meaning that they must be paid back with monorail-generated funds - developers are asking the state to issue the bonds as a means of making them tax-exempt. The state has not made a decision on the bonds.

Bob Broadbent, the lead consultant on the monorail project, had not seen the report Wednesday, but dismissed it as the work of an unreliable source.

Twichell has been a longtime critic of the monorail, and he works on behalf of the Desert Inn Homeowners Association, which has said the project will encroach on property rights.

He also works on behalf of officials at The Venetian, whose owner, Sheldon Adelson, has been a high-profile opponent of the rail project.