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twitterLAS VEGAS MONORAIL:
Next stop: Taxpayer bailout?
Private company can’t repay construction debt, says it’s seeking government money
Tiffany Brown
A passenger takes a trip on the Las Vegas Monorail on Monday. Ridership has failed to reach the optimistic projections made before the project was approved in 2000. Ticket sales cover the operation and maintenance of the monorail, but not the repayment of construction costs.
Tuesday, June 23, 2009 | 2 a.m.
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Related Story
- Agency downgrades debts of Las Vegas monorail (6-22-2009)
Sun Archives
- Rail loses money, executives rake it in (3-18-2009)
- Bill introduced to make monorail salaries public (3-10-2009)
- Company gets extension to operate monorail (1-19-2009)
- Monorail to celebrate first birthday with little fanfare (7-15-05)
- Monorail needs major fixes (9-15-04)
- Monorail finally ready
- Monorail debut postponed again (3-2-04)
- LV looks at private monorail system (9-4-98)
Beyond the Sun
Carson City — The Las Vegas Monorail was sold as a privately funded solution to traffic woes on the Strip — a transit line built without tax dollars.
Despite the promises of nine years ago, monorail officials now acknowledge they have quietly begun seeking public dollars in a bid to keep the financially troubled train running.
“We’re looking at all potential funding sources,” said Ingrid Reisman, a vice president of the Las Vegas Monorail. “We wouldn’t be doing our due diligence if we weren’t.
“Is there any determination what those solutions could be? No.”
Reisman said the monorail is looking at federal loans through the Transportation Infrastructure Finance and Innovation Act. Other sources with knowledge of the discussions said monorail officials are also looking at room tax money to help repay debt.
It’s a major shift for the project, which has fallen short of ridership and revenue estimates.
Monorail backers have fended off criticism by noting the 3.9-mile rail line, which runs from the MGM Grand to the Sahara, wasn’t a financial burden on the public. (Nearly every other public transit system in the country is funded with taxpayer dollars.)
To fund its construction the state issued tax-exempt bonds, which were purchased by private entities.
Reisman said the effort to seek public dollars is “a recognition that the system is definitely providing a service,” adding, “It is carrying a significant number of passengers, reducing vehicle miles. There is a significant air-quality benefit.”
“We’re also in a financial situation,” she said.
Bill Shranko, director of operations for the cab company Yellow Checker Star, which opposed the project from the beginning, said he isn’t surprised the monorail is looking for taxpayer help.
“We predicted this all along,” he said. “I’d be shocked if any government body goes one additional mile with the monorail.”
On July 1 the monorail will for the first time miss a biennial bond payment. That means control of the rail line could transfer to New York-based Ambac, the company that insured the construction bonds.
Fitch Ratings on Monday downgraded $450 million in bonds for the Las Vegas Monorail project to “C” from “CC,” which means the credit rating agency believes a default “appears imminent or inevitable.”
The project has $200 million in other debt, which can be repaid only after the $450 million “first tier” is repaid.
Monorail officials and board members said ticket receipts currently cover the cost of operation and maintenance, but not the repayment of construction costs. Because operations costs continue to be covered, monorail officials said it’s unlikely the rail line will shut down.
Bob Beers
Bob Beers, a former state senator who was quietly appointed to the monorail’s board of directors by Gov. Jim Gibbons last month, said an outside restructuring officer was brought in at Ambac’s request to look at the organization.
“They’ve literally eliminated millions of dollars from expenses,” Beers said. As long as the monorail’s box office receipts cover expenses, he said, “they’d be nuts” to shut it down.
Lee Haney, executive vice president of Rogich Communications Group, which represents Ambac, said there are no immediate plans to shut down the rail line. Haney referred questions about possible taxpayer assistance to the monorail company.
There was intense debate over the monorail when it came before the Clark County Commission for approval in August 2000. (The Clark County Commission in December extended the monorail’s lease to 99 years.)
The project has failed to meet ambitious ridership projections used to sell it to public officials and investors. But critics, including Shranko, say there were warnings — including detailed studies — that showed ridership would never reach those levels.
“To be kind, it would be a misrepresentation,” Shranko said. “A complete and total misrepresentation for a project doomed to failure from the start.”
As it has struggled, officials have questioned its spending. After being threatened this year with legislation that would have made the company disclose compensation, the Las Vegas Monorail disclosed executives’ salaries for 2007. The company reported that President and Chief Executive Curtis Myles was paid $339,000 that year, Chief Financial Officer Ross Johnson was paid $152,250 and company directors were paid $60,000. The directors voted this year to cut their own salaries to $30,000.
Beers, the monorail board member, called the project “unfairly maligned.”
“At the end of the day, a group of people, hired experts, who — knowingly or unknowingly, we’ll never know — made up fanciful projections, were wrong,” he said. “Have any taxpayers been harmed? No.”
Beers, though, said he saw a time coming when public bodies would have to make a decision about the monorail’s future.
“We’re probably going to have a conflict of interest between the lenders and the taxpayers,” Beers said. “The lenders would like for this thing to be treated like any other public transportation project in America and become an ongoing expense to taxpayers. I’m not yet convinced that would be what taxpayers would want.”
Discussion: 38 comments so far…
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Bringing Bob Beers into this mess is like bringing Howdy Doody into Junior High School math class. He is clueless, the system is doomed, and no amount of BS is going to save it. Nobody rides it, and that's the fact, Jack. Bye, bye Mono, what a stupid idea...
The one decision that has hurt the monorail was to not extend it to the airport.
Ask the cap campanyies why they opposed the logical beginning instead of the MGM. If that extension is built, it would be a huge inpact on ridership.
No tourist wants to walk to the station, wait, then pay $5 a person to go a few miles up and down the street when a cab would be faster and cheaper.
Extending it to the airport would make all the difference in ridership. It would probably even be profitable.
Well, I don't believe ANY cab is cheaper to drive the same route as the Monorail. $5?? Guess you haven't taken a cab lately.
Again, the alleged "planners" of this system missed the boat when they didn't extend it to the airport. Even locals would use it then - valet/park at a Strip hotel and then get on the Monorail to the airport. Sure beats the expensive prices to park at the airport.
Maybe they should consider using some of that bailout money the State received to help extend it to the airport.
The Monorail could never make a profit because it was never a destination train.
It should have been from the airport to Fermont.
And it should have been integrate with fare system of the buses
This thing should have been built down the middle of the strip, connecting with the elevated walkways, all the way from the airport to downtown via the convention center and UNLV from the get-go. Connecting to a satellite employee parking lot wouldn't be a bad idea either as there are over 50,000 employee cars going to/from the Strip at every shift change. Maybe the Feds can give us some stimulus money to re-build it correctly.
I've taken plenty of cabs lately, just rarely alone. Cabs are the same price for 4 friends as they are for a single person. Taking a cab between any of the places the monorail services will cost less than $10.
Currently the only place the monorail connects to that draws a lot of ridership is the convention center. Connecting to the airport is a no-brainer. How did these jokers get funding with such a poor plan?
Remember the monoral was the idea of Bob Broadbent former Airport Director and his friends. It was set up as a charity, paid no taxes, had no public accountablility and paid its directors large salarys. When the ridership was down ticket prices were increased and suprise surprise the ridership continued to fall. The worst thing is the taxpayers are on the hook if the company defaults on the loans. This is another boondogle were the good old boys and their pals made a lot of money and tax payers are left holding the bag. Reporter George Knapp has done extensive reporting on this story...
Vegasd8...said it all.
Next stop.....Dismantle Station
...because there is enuf money for that :(
Are there any TAXPAYERS left?
the cat bus / double decker ( duece ) system is great!
you can get a 3 day pass for i think like $20.00 and you can take the bus from any hotel on the strip down to the south transport terminal then over to the airport.
the lesson we learned from the monorail is the EXACT same thing that will happen if we build a high speed train that terminates in victorville.
if it doesn't make a few stops deep into the los angeles area, nobody will ride it.
projects like this are designed to make money for the companies that build them, get votes for the politicians that say "i brought jobs to las vegas", and the newspapers that have a "user guide to the monorail" special section so they can make money selling ads.
The monorail is in place. The money is spent and the rail is functional. Connecting to the airport would not just make it more convenient to visitors it would cut down on traffic on the strip by a lot.
All the cabs lined up taking people back and forth would be eliminated and if the first thing a visitor does it ride it to the hotel, they would think of it first when ready to move from club to club. Many visitors don't even realize it exists being out the back of the hotels.
The monorail is part of Las Vegas' future. I envision going from the airport to Freemont St. and then some.
Charge $2 bucks per pax...Fire 65% of the needless "staff" - this system can me run on a budget of $250k per year. Make the Casinos linked to the system subsidize it based on a simple electronic count of passenger/casino visitor volume.
If Harry Reid cannot make this system work"god help us with the Victorville Bullet Express.
Tourist are ready to spend. We are looking for convenience, unpressured, uncomplicated and say WOW how systematic, because that is what we are paying for. Having said that if monorail has no link to point of interest, like airport,gigantic outlet and convention centers, it will not be feasible. Their patrons are tourist and everyday employees of these establishments. Park and ride is needed between populated areas to strip. If the proposed Desert Express has connecting point from one of the Monorail Stations, it will give passengers choices/alternatives. Most of us will use monorails because we leave our cars from our origin. Thank you.
None of my tax money for the worthless Monorail
where does it from and too?? very few tourists will use it...
it should be right down the middle of the strip
Have you ever got to Vegas on a Friday night and stood in line for a cab as it winds back and forth and back in forth for about 45 minutes and you keep seeing the same people as they meet you in the adjacent line? Its like cattle in line for feeding.
I guarantee people would pay a premium to avoid that and take the Monorail.
I stood in line once and decided that was enough and have rented cars since. Depending on where one is staying its about as cheap to rent a car on a weekend rate than to pay $30-40 each way from Fremont St, Green Valley or South Point areas.
Its ridiculous to even mention the word planning in Las Vegas. If there was planning there wouldn't be half the congestion that there is.
Planning in Vegas equates to whatever Harrah's & MGM and local politicians want.
I have yet to find any resident of Las Vegas that goes to the strip unless they "have to". Like for employment. They avoid it like the plague.
The rest of the world is catching on. There are much better places than the strip to be in the Las Vegas valley.
First thing is the Monorail is a success as it does cover its operating cost. Just not its full debt of construction costs.
That means that once bailed out if might not need yearly subsidies as the CAT system does.
Bail it out and allow the money that is above and beyond its operating go to a bank fund to help launch the expansion to the airport and downtown.
Imagine the day where you don't have 500 cabs sitting outside the airport with their engines running sending off smog and causing other traffic nightmares.
The Sun needs to investigate the local players who brought a lose-lose monorail to life and prevent them from doing the same with the Boulder City Bypass. These fellows treat the public trough like their own hog-slop diner and correctly figure people are indifferent to their actions. Their intent then, as always, is to get fat on the front end and bail out before they have to make good on their promises that the project - in this case, the monorail - will be profitable, then they blame the losses on those who came later. Nice trick: create a loser, suck up the easy money, dance off to the next orgy of corruption before the rubes see you left them a bankrupt illusion - and claim the whole time it's for the public good. Hey, and these are the Republicans doing this - you know, the 'hide the assets in a trust and then cut taxes and spend like drunken fools' crowd who have nearly destroyed this country. Here's a question: why is Bruce Woodbury so eager to be the face of the monorail's attempt at saving itself from its preordained failure? Why is he so desperately attempting to shield Cam Walker, the monorail's instigator? Maybe it's so they can repeat the scam bond sales that funded the monorail, but this time on a bypass that will get Bruce, Cam and their cronies -- unfortunately, all of them Mormon - richer off public monies than anyone in Vegas has yet dreamed of. One sure thing about these guys: their gluttony has no bounds. It just goes to prove the old adage: absolute power corrupts absolutely. But who has the cojones to stop them?
Close Las Vegas Boulevard and make it a pedestrian mall.
That would cut congestion down 100%.
"Ambac Financial Group, Inc. Announces First Quarter Net Loss of $392.2 Million"
These are the guys who get the monorail when it stops making payments.
:-)
But I bet they save a couple of million a year by firing the overpaid headquarters staff of the rail's non-profit company.
Govt spending created many jobs in the Great Depression. With hundreds of billions now pouring in to everything, this economy may be turning around within months -- found a cool site; Balkingpoints ; incredible satellite view of earth
"Govt spending created many jobs in the Great Depression. With hundreds of billions now pouring in to everything, this economy may be turning around within months -- found a cool site; Balkingpoints ; incredible satellite view of earth"
Don't you have ANYTHING else to do with your life or have anything else to say relating to the story at hand besides pushing that "balkingpoints" website?????
The only "concession" should be to have signs in baggage claim pointing to Zero level of the parking garage in the airport and allow the Monorail to have their own shuttle to take them to MGM stop. Then based on that ridership, they can get PRIVATE financing to complete the Monorail from MGM to the airport. I do think they need a stop at Thomas and Mack.
Prior proper planning prevents piss-poor performance. Truly "a bridge to nowhere" in the heart of Vegas.
while its fun to play make believe there are a couple of things that are being overlooked.
1) the monorail to the airport wouldn't be a great idea given the smallness of the cars. There's just no room to schlep a bag and a carry-on onto the thing. I know why the cars were made so small, and short, but that is what eliminates it as a reasonable option for travelers.
2) most of those cabs that service LAS? they run on alternative fuels such as propane and LPG. A very little research shows these are not the gross polluters some make them out to be (and no I'm not a hack).
plus, the monorail did what it was supposed to do --- make a few select individuals a wad of cash. beyond that not a lot of thot was put into it.
Extending the monorail to the airport may turn out to be a matter of survival for las vegas.
Another great success of the "private sector."
The nice thing about a private sector failure is that the taxpayers dont have to pay for it like they do for the failures of Reid, Pelosi, and Obama(give me a trillion dollars and we will keep unemployment under 8%). If it fails find another private sector group to buy it. I Rent car when in Vegas and save a ton of money on cabs, but ride the monorail when going to the convention center.
Remember, this was a private system that was promised to never cost the taxpayers a dime, let alone a minimum of $650 million. Remember, it is a "success". So much so that when these same "experts" were pushing for light rail in Las Vegas a few years ago they all pointed to the Monorail as a shining example. Get real. The Monorail is a joke because it doesn't go where anyone wants it to go. Light rail will be EXACTLY the same, look at the map on the RTC web site. Put away the fairy tale story books on reduced pollution, traffic congestion, etc. Light Rail would be a dead weight around our necks. I will continue to fight any Light Rail project that doesn't make sense. Now, IF one actually went someplace useful like the airport, etc. then that would be different......
Adding to mar100 and goingbust above:
Broadbent and Friends (BF) took the concept of a Vegas monorail from the RTC, which had brought its monorail project to the point of public meetings for comment. BF saw what they thought was an opportunity to make money, so convinced the County Commission to dump the RTC project, which would have served locals for lower construction costs and formed the backbone for east-west public transportation, which is where the real need is in this valley. Killing the RTC project, the BF monorail just took what it thought would be the lucrative Strip portion.
Hence, the failed Las Vegas Monorail.
The idea, as I recall, was for the company to keep a cash reserve sufficient to tear it all down if it did not become profitable, so that there would be no chance of a public bail out.
It's time now to use that reserve for its intended purpose.
Public money is, of course, used to subsidize public transportation around the world, but the Las Vegas Monorail is not public transportation. Its purpose was never to serve the public. If any reader here has ever used it to get from point A to point B, please speak up. The purpose was to serve BF.
One reason the Strip can't handle the traffic is that the County Commission has granted variance after variance to allow casino developers to push their projects all the way out to the curb. Setback requirements are only for little people.
Even to the point of knowingly forcing tourists to push their baby carriages through the gutter alongside heavy traffic along then Steve Wynn's Treasure Island. After about a year, a narrow sidewalk was finally built alongside, but people still find it necessary there to walk in the street.
One reason why you don't see a pedestrian mall on the Strip is that casino owners don't want free, open space out there. Even downtown, the concept was to turn Fremont street into a private arena under private control and clutter it up with kiosks. Witness New Year's Eve on the Strip: Metro cordons off the center, fills it with squad cars and permits primarily only passageways on either side. The owners are deathly afraid of real public pedestrian activity on Las Vegas Boulevard. Just look at the flies they draw there already.
The monorail today is nothing more than an obstruction down the middle of Paradise Road. It's time to tear it down.
Here's how it all happened:
http://www.youtube.com/watch?v=A3xGtjhZ_...
There's a really, REALLY simple solution to this problem. Extend the LV Monorail to the airport or shut it down now before it starts feeding off the local taxpayer teet.
As many people have already commented, use any "bailout money" to extend the line to the airport so that the monorail is useful to the thousands of tourists that arrive at McCarren every week. Teaching a fisherman how to fish, or a business how to be profitable, is better than just feeding him (it) one day. Otherwise, we'll be reading this same story next year and yet more tax money will be wasted on sustaining something useless.
It's simple common sense that with a connection to the airport ridership will sky-rocket and the LV Monorail will be A REAL BUSINESS with a SOLID BUSINESS PLAN. Not just a lame curiosity to busted tourists.
Re: the gloating Bill Shranko, get out your checkbook. Looks like the rising tide of public sentiment FOR extending the LV Monorail to the airport means you might to have to make some more lavish "campaign" contributions to crooked city council politicos to block extension - YET AGAIN!
Let them declare bankruptsy, but keep it running in and through bankruptsy. The bondholders get hosed, but they should have known better.