Construction contracts issued for Vegas monorail

Friday, Sept. 22, 2000 | 11:14 a.m.

SUN STAFF AND WIRE REPORTS

Ground will be broken next month on the $650 million private monorail project east of the Las Vegas Strip.

More than $600 million in bonds were acquired by investors and institutions last week and about $49.5 million will be purchased by construction companies involved in the project and resorts that will have stations along the four-mile monorail route, an analyst said.

The monorail will link the MGM Grand hotel-casino with the Sahara hotel-casino.

MGM Grand-Bally's Monorail LLC, which is coordinating the project, awarded contracts Thursday to Bombardier Transit Corp., Kingston, Ontario, and Granite Construction Inc., Watsonville, N.C., for the project.

Granite Construction will design and build five new stations and about three miles of elevated dual-guideway tracks and incorporate two existing stations at the MGM Grand and Bally's hotel-casinos into the project. The track will extend from the existing mile of guideway that already serves passengers between the MGM Grand and Bally's.

Bombardier will be responsible for electrical and mechanical systems on the driverless monorail line as well as a 36-car fleet of nine four-car trains. The company also was awarded a separate 15-year contract to operate the system.

Bombardier, one of the world's largest transportation companies, developed monorail systems for Disney theme parks.

Although ground will be broken next month, most of the early stages of work will be in engineering and design. Contractors received a notice to proceed Wednesday and completion is planned in January 2004.

Bombardier said its portion of the construction contract is worth $200 million and its five-year operations and maintenance contract is valued at $56 million. Granite said it will be paid $153 million for its portion of the construction work.

The bond placement was handled by Salomon Smith Barney Inc., which priced the bonds. The publication Bond Buyer reported last week that more than 15 institutions acquired bonds, which a Salomon Smith Barney official said was indicative of the strength of marketplace support.

Gregory Carey, managing director and co-head of Salomon Smith Barney's infrastructure group, said the first tier of $451 million of insured bonds was backed by Ambac Assurance Corp. The second tier of $149 million was unrated and the third tier of $48.5 million will be privately placed with hotels and construction companies involved in the project, the Bond Buyer report said.

Interest rates on the notes range from about 5.5 percent to 7.5 percent, monorail official Scott Langsner told the Associated Press.

Monorail proponents say 19 million passengers will pay $2.50 per ride in the first year of operation.

Langsner said initial work won't be noticeable. Mostly, it's engineering plus offsite work on support columns and train cars.

But within a year, he said crews will start putting the precast columns in place. The monorail system should be completed by early 2004.

"What we'll have in 2004 is the most well-known, efficient train system in the entire world," Langsner said.

The issuance of the tax-exempt revenue bonds was approved last month by the Nevada Board of Finance, chaired by Gov. Kenny Guinn, after the panel was told that legal challenges from lawyers for The Venetian megaresort on the Las Vegas Strip had been dropped.

Monorail advocates point out that the bonds wouldn't obligate any state funds or count against the state's limit on bonded indebtedness.

They also said future expansion beyond the Strip, to downtown Las Vegas and even to McCarran International Airport, would have to financed separately.