Monorail gets key approval

Friday, Nov. 14, 2003 | 11:24 a.m.

The region came a step closer to a monorail system that would stretch from the south end of the Strip to downtown Las Vegas.

The Regional Transportation Commission on Thursday approved with a 6-0 vote a revised "project implementation agreement" for extending the monorail's first, four-mile phase by more than two miles. RTC General Manager Jacob Snow said the approval was important to receive funding from two major sources for the $450 million extension: private investors and the federal government.

"We are at a critical time in this project," Snow told the RTC board.

The RTC board approved an earlier version of the agreement earlier this year, but staff has worked for months to balance the sometimes competing needs of the company that would issue about $96 million in bonds and the federal government, which RTC planners hope would contribute more than $300 million more in grants and loans.

Snow told the board that bringing the federal government and private company together isn't easy. The federal government, like local governments, wants a guarantee that it can walk out of the project if things go awry -- a clause in the project plan called a "termination for convenience."

But such a clause makes potential investors uneasy and could drive up the interest costs for the Las Vegas Monorail Co., the private entity planning to issue bonds for the project.

So the RTC staff crafted a proposal that calls on the public agency to cover costs for the project if it failed, a prospect that might reassure potential bond holders but made board member and Las Vegas City Councilman Larry Brown uneasy.

Brown said he is concerned that Transit Systems Development, the Las Vegas company with the contract to design, build and maintain the monorail, could walk away from the effort, leaving taxpayers to pick up the check.

Snow and Assistant RTC General Manager Curtis Myles said that would not happen.

"This change would not allow the private sector to walk away from this contract," Snow said. "We're confident that the agreement we have protects the public's interest and the board's interest as much as possible."

Myles said only an extraordinary decision by the RTC board would expose taxpayers to risk.

"In order for the taxpayers to assume that debt, the board would have to terminate for convenience," he said. "I can't see a situation where that would happen."

The issue did not arise on the first phase of the monorail construction, which is now underway and expected to conclude in January. The first passengers are expected to ride the sleek new system on Jan. 20.

Unlike the second phase, the first, $650 million phase was completely covered by private financing through bonds, many purchased by the casino-resorts along the Strip which connect to the monorail system.

Snow said the agreement and plans for the second phase need to be in place now in order to win federal support for the project extension. The federal funding the RTC hopes to win for the project includes $160 million in a Federal Transit Administration grant and federal loans for another $140 million.

Bonds for the project should go on the market next summer, Myles said. Construction on the extension effort is expected to begin in 2005 and should begin operation in 2007, according to RTC planners.