Monorail project at crossroads: Finance board to hear arguments

Adrienne Packer

Wednesday, June 7, 2000 | 11:20 a.m.

Seven years ago Bob Maxey lobbed a dart toward his office wall where he had pinned a sheet of paper listing the names of his administrators at the newest Las Vegas Strip megaresort, the MGM Grand.

Scott Langsner's name was speared.

What that meant was Langsner, the MGM Grand's senior vice president, was the man appointed to carry out former MGM chairman Maxey's vision: Build a 1-mile monorail system within a year and a half on a $25 million budget.

"I went home to my wife and said, 'Do you know anything about monorails because I don't,' " Langsner said.

After tapping into as many monorail experts he could find, Langsner spent $5 million on a couple of beat-up old monorail cars from Disney World and helped develop the system that has linked the MGM Grand to Bally's since 1995.

Five years later Langsner has yet to shed monorails from his list of duties. On Thursday he and the MGM Grand-Bally's LLC, a group assembled to oversee monorail development, face the most vital point in their latest effort to stretch the system another 3 miles to the Sahara hotel-casino.

The state Department of Business and Industry will listen to supporters and opponents of the monorail's request for a $650 million tax-free bond.

Langsner now knows a ton about monorail models, manufacturing companies and rail designs. He knows the reasons for success and failures of systems from Tokyo to Seattle to Jacksonville, Fla.

"The failure of most systems is they have to serve all the people all the time," Langsner said. "You have to start with a system that will cover itself and cover a busy area."

Monorail proponents use the Citizen Area Transit bus system as a prime example. If CAT only ran its Las Vegas Strip route, it would operate at a profit. But the public system must run low-ridership routes while continuing to pay for gas and maintenance.

The new segment of the monorail will travel north on the Strip from Bally's to the Flamingo-Hilton, Harrah's and Imperial Palace. It then cuts east on Sands Avenue and north on Paradise Road to the Las Vegas Convention Center, Las Vegas Hilton and finally to the Sahara.

According to the monorail group, more than 64,000 hotel rooms will be within walking distance of the system's seven stations.

Since the MGM Grand bought former Mirage Resorts chairman Steve Wynn's properties west of the Strip, there has been speculation that MGM would pull out of the monorail project because it serves only the east side.

But attorney Greg Jensen, who represents the monorail group, said for the first time that the system might be brought across to Treasure Island on the east where pylons are already in place.

Jensen said if the monorail is constructed on the west, it would link Treasure Island to the Fashion Show Mall then head north to the Frontier and Stardust hotel-casinos before crossing back over the Strip.

Langsner did not comment on the possibility, but assured critics Kirk Kerkorian, the majority shareholder of MGM Grand Inc., never considered backing out of the monorail project.

"He likes this," Langsner said. "We haven't begun concentrating on the west side because it's so new to us. My goal is to get this built and not get sidetracked."

Whether the project should be sidetracked, or even completely derailed, depends upon who is asked.

Vocal opponents of the project argue that ridership studies commissioned by the monorail group are overly optimistic and that if it falls short by 35 percent, the system will go bankrupt.

They also have called the monorail a self-serving project that will reap millions for two casino companies and a close-knit group of Las Vegas businessmen.

California-based transportation consultant Jon Twichell has questioned the relationship between lead monorail consultant Bob Broadbent and his business partners who stand to gain from project.

When Broadbent was hired in 1997, he brought along his son-in-law Cam Walker and Walker's brother Todd. The monorail group recently put together a nonprofit corporation and appointed John Haycock chairman. Haycock is the brother-in-law of Jensen.

"The thing about it is what is a clear conflict of interest in the other 49 states is normal operating procedure in Nevada," Twichell said. "If Nevada wants to be looked at as something other than this dusty banana republic, they need to get past that."

For months Twichell, Venetian attorneys and Illinois-based consultant Wendell Cox have produced reports that question the viability of a privately funded monorail system.

But perhaps the most intriguing report was delivered to the Clark County Commission on Tuesday.

The legal opinion written by Patton Bonds of Washington, D.C., suggests the monorail might not be eligible for tax-exempt bonds because the project primarily benefits private property owned by the MGM Grand and Park Place.

Tax-free bonds are reserved for public projects, the report says. Patton Bonds also recommended the state seek an advanced ruling on the bonds from the IRS. The IRS recently formed a task force to investigate tax-free bonds issues.

"There is no way once this gets past the border of the state that his qualifies for anything but a conflict of interest and private dealings," Twichell said. "It will never stand up to the scrutiny of the feds."

Despite assurances from Gov. Kenny Guinn that the state will have no moral or legal obligations related to the bonds, Twichell fears if the project fails or the IRS taxes the bonds, a pile of lawsuits will land in the state capital.

Broadbent, who MGM officials said was hired because he is one of the most well-respected businessmen in Southern Nevada, said the outside critics simply don't understand the dynamics of Las Vegas.

"There are few places in the country where you can build a system like this," Broadbent said, referring to a project in which private companies are putting up the seed money.

His partner Walker said they are accustomed to the criticism and emphasized that most of it has come from consultants outside of Nevada who might not understand the uniqueness of the Las Vegas Strip.

"We have so much public support, but there can be one speed bump, and you bounce so hard when you hit it," Walker said.

For the first time, both sides will formally address the state during Thursday's 12:30 p.m. meeting. And according to Bruce Woodbury, chairman of the Clark County Commission, which ultimately will make the final decision: "It should be a good fireworks show."