Editorial: Monorail questions still there

Wednesday, July 19, 2000 | 9:40 a.m.

The state Department of Business and Industry has given its blessing to a privately run monorail system proposed for the Las Vegas Strip. But before the project receives a final green light, elected officials should receive an ironclad guarantee that the project's developers -- not state taxpayers -- will be liable if the project fails. The reason for the anxiety is that the state of Nevada will be issuing up to $650 million in tax-free bonds to help fund the monorail endeavor.

So it's not surprising that Gov. Kenny Guinn has stressed that the state won't have to pay off the bonds if the project fails or experiences other financial problems. The Public Resources Advisory Group noted that both Moody's Investor Service and Standard & Poor's Corp. concurred that the state would have neither a moral nor a legal obligation to make debt payments if the monorail system doesn't survive.

Opponents of the project argue that this is a risky proposition -- that estimates of ridership and revenues are too rosy. Indeed, one consultant hired by the Mandalay Bay hotel-casino, which had expressed reservations about the project, noted last November that there could be a net loss of $1.5 billion over 30 years. In addition, a Jacksonville, Fla., monorail system similar to the one proposed for Las Vegas hasn't lived up to its advanced billing: It was supposed to have 10,000 passengers a day but it only is carrying 1,800. The state's financial advisers, the Public Resources Advisory Group, cautioned that if the local economy and tourism encounter problems, a Las Vegas monorail likely would lose riders.

The monorail financing still must be approved separately by both the Clark County Commission and the state Board of Finance, which is made up of the governor, state controller and state treasurer. Controller Kathy Augustine told Sun reporter Cy Ryan that there should be a legislative-type hearing, allowing extensive testimony from all sides. This would be a welcome development.

Some of the opponents also have a legitimate concern that this system only benefits the monorail project's primary backers -- Park Place hotel-casinos and the MGM Grand hotel-casino. If the state is going to issue bonds, however, the monorail project shouldn't just be a boon for a few hotels -- there should be assurances that the public will benefit, too.