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The monorail rolls out of the Flamingo station on Jan. 20, 2010. Las Vegas Monorail filed for Chapter 11 bankruptcy protection in January.
By Kyle B. Hansen (contact) 
Wednesday, Aug. 18, 2010 | 11:34 a.m.
Sun Archives
- Monorail knew of insolvency for years, files show (2-27-2010)
- Las Vegas Monorail officials thinking beyond crushing debt (2-22-2010)
- Las Vegas Monorail could seek partnership with Chinese (2-17-2010)
- Monorail spending expected to be scrutinized at bankruptcy hearing (2-17-2010)
- Las Vegas Monorail bonds downgraded after bankruptcy filing (2-5-2010)
- Las Vegas Monorail argues against bankruptcy as municipality (2-3-2010)
- After all the promises, will taxpayers be stuck with the monorail’s bills? (1-22-2010)
- Judge sets hearing date in Las Vegas Monorail bankruptcy case (1-19-2010)
- Las Vegas Monorail files for bankruptcy protection (1-13-2010)
The Las Vegas Monorail filed a reorganization plan Tuesday as part of its ongoing bankruptcy proceedings.
The plan would reduce the debt of the nonprofit company that runs the monorail on the east side the Strip by nearly $630 million.
In papers filed in U.S. Bankruptcy Court, the monorail proposes eliminating most of its $648 million debt, leaving the company with debt of just $18.5 million.
The monorail has never been able to meet the ridership levels projected before the system was built, and its problems became worse due to the current recession, court documents say.
“While the Monorail’s financial problems existed from the beginning of its operations given the significantly lower than projected ridership and farebox and advertising revenues, the problems were exacerbated due to declining tourism and the consequent decrease in hotel and Convention Center bookings, and the number of riders on the Monorail has not met projections formed prior to the economic collapse,” the court filing says.
However, the company maintains that it generates enough revenue to pay its operational costs, but not enough to continue payments on its massive start-up debt or capital improvements that will be required as the system ages.
A reorganized company would be projected through the year 2019 to be able to pay its operational expenses, make payments on the $18.5 million in debt and be able to save some money for future capital improvements.
The monorail said in the filing that its alternative to eliminating most of the debt is “literally ceasing service no later than 2019.”
If the plan is approved, the monorail would keep its current executives and board of directors, court documents say.
The monorail’s debt is split into three tiers. The $149 million in debt held by the second tier and the $48 million held by the third tier would be eliminated in the plan. The first tier debt of $450 million would be reduced to $18.5 million.
The monorail’s plan still must be approved by the bankruptcy court and be voted on by its bondholders, a process that is expected to take two or three months.
The monorail initially filed for Chapter 11 bankruptcy protection in January.
The 3.9-mile system runs on an elevated track linking casinos and the Las Vegas Convention Center east of the Strip and is the only privately owned public transportation system in the United States.
The monorail carried 6,005,024 passengers in 2009, with total revenue for the system at $27,643,026 for the year. That is down from a peak passenger count of 7,917,613 in 2007, when the system had revenue of $36,584,689.
Two choices for the monorail: 1.let it go broke 2.Link it to the airport and a park-n-ride and easily accessible to the Strip.
i second that
Yeah...maybe its also time to reduce all those six figure "executive" salaries as well.
Money losing operations such as this should not be paying bloated salaries. It's a few miles of monorail...do they need an executive staff and board members? I would really love to follow some of these executives around from 9-5 and really see just what their day consists of.
More bloated salaries need to go. If the operation was making money and all was well, I guess you might find a way to justify some of their paychecks. Shed debt, shed salaries. it's a no brainer.
It is hard to imagine a bigger failure. This bankruptcy proposal would only seem to postpone the closure for a few years. Keeping the existing executive also does seem bizarre.
Trying for the next few months to sell the Monorail in a bankruptcy auction might make sense. Otherwise, close it down next month. But this proposed bankruptcy plan is worse than useless.
It reeks of hopelessness.
TomD, how much do their executives make? Do you happen to have their General Ledger in front of you? Have you reviewed their financials for the past five years?
We appreciate your attempt at being relavent. Thanks for trying!
Back East, some no longer used elevated train tracks have been turned into gardens and pedestrian walkways. Maybe some pedicabs -- that would create a lot of jobs and avoid that trek down the Strip where the street is just a few feet wide at points. Just thinking out loud.
the only way it will survive is by linking to the airport.
It *MAY* survive if it just links to Fremont, but you'd probably end up just bringing more homeless to the strip.
With this move, at least it will be kept alive. Of course with the hopes of it eventually linking the airport and downtown. It's fairly worthless as in, hence the financial problems.
Acountmakr
The payroll has been published before and can be found on-line. Salaries not justified and were based on salaries of those who run transportation systems like Metrolink etc. I think the CEO makes around $350K
vegasrr, these execs shouldn't be making more than $100k until they start making a profit. No reason for it.
Besides, they are also getting paid off from the Taxi cab companies so they don't expand to the airport.
So their actually gross earnings are probably close to a mil. each I bet.
Who are the debt holders, And why can't the debt holders take it into receivership and run it.It seems to me they have more invested in it. Yes the monorail did not meet expectations its because the expectations they told the debt holders were fallacious, (Constructively Arranged).
I agree with previous posts. Link it to the airport and downtown. Anyone know why that wasn't done in the first place?
Because maybe the debt holders are the same guys who run the taxi cab companies. lol!
"Besides, they are also getting paid off from the Taxi cab companies so they don't expand to the airport."
sevenhills, do you have proof to back that up or is this just more of your opinions?
Would love to see the facts and proof if you have it.
Link it to the airport.
Just imagine the increased traffic on Paradise Rd and the Strip if the monorail went bye-bye. Actually, lengthening it to the airport and providing a baggage transport service to/from the hotels would make it so much easier to get around the Strip area. It could go to the terminus of the Rail system when built too. Oh sorry, this might make too much sense.
BTW, total grid-lock negatively affects taxi trips too. They should wake up.
Okay, link it to the airport...so who pays for that or does just saying that make it happen?
I believe to build something, you usually need some money either through already acquired capital or by borrowing. Perhaps the bond owners will pony up another $750m? Or perhaps not?
tigermike - If I were on the board, I'd lobby all the casinos that the monorail touches(actually mainly MGM/Sands) and tell them that hey, this monorail can bring you X amount more business because it will travel directly from the airport to YOUR casinos, make a deal with them where they can include as part of their hotel packages.
They'd pay for most of the expansion, and once you get some of them on board, investors will line up to cover the rest.
Or the city can help pay for it, oops, I forgot, they just added more buses to the conjestion, nevermind...
vegasless: The expansion to unlv/airport has been approved (by the city I'm assuming). The Taxi authorities in town (which are mainly owned by one company) are the last of the old school mob running a billion dollar business. If the airport had a monorail connection, that business would probably be split in half. Its a no brainer. If it was that easy to prove things would have changed, just nobody has the balls to step up.
Monorail map: http://www.vegastodayandtomorrow.com/mon...
@accountmkr,
Try going thru the Sun archives right next to the freaking article and read all about the high salaries & the trips overseas before making assinine responses. The high salaried executives at this cash bleeding (or should I say hemorrhaging) entity is WELL DOCUMENTED.
It was probably the taxi companies that blocked the monorail from going to the airport. They sure as hell won't let it happen now in this economy.
boftx - Exactly correct.
Yes, we want to keep the same incompetent personel in charge so as to guarantee continued failure. That's the ticket on this tram, just like in our government. We can't do without professional politicans otherwise how could we get it stuck up our _ _ _ _ _ all the time!!!!
2 words why it won't happen soon....taxi....lobby
Won't happen because passengers still get dropped off 1/4 mile behind the casinos. Who wants to haul their luggage that far in extreme weather.
Also, that's only the casinos on the east side of the strip. Even if the monorail went downtown or to the airport who would take it if they were staying on the west side of the strip???? You would exit the monorail and still have to utilize a cab to get to your casino.
sevenhills,
The Monorail is not in the city, the city has nothing to do with it.
The extension to the airport was part of the original plans.
Problem was then and is now, there is NO MONEY to build it with.
The Casinos that it is attached to all chipped in Millions to help build what is there already.
Just what was built cost over Seven Hundred Million Dollars. No chump change in any market. The airport connection will cost more then that.
Part 1 of 2:
I find it ironic that Monorail announces the filing of its proposed Chapter 11 Plan, stiffing bondholders out of $650 Million, at the same time the U.S. Securities & Exchange Commission settles a securities fraud case against the State of New Jersey. (Please, no Tony Soprano jokes). See:
http://sec.gov/news/press/2010/2010-152....
Robert Khuzami, Director of the SEC's Enforcement Division said:
"The State of New Jersey didn't give its municipal investors a fair shake, withholding and misrepresenting pertinent information about its financial situation."
Just take that sentence, substitute Nevada for New Jersey, and you have the exact description of what the Nevada Division of Business & Industry (as bond issuer), its bond counsel, its bond underwriter, and the underwriter's bond counsel did to the buyers of the Monorail bonds:
(1) Misrepresented that the bonds were issued by a Nevada state government agency;
(2) Misrepresented that the bonds were tax exempt and for a public purpose;
(3) Skewed ridership, cash flow and net income projections so that they were high enough to pay for the construction of the monorail, purchase of the trail cars, etc. (Tony Soprano joke: Under sweetheart contracts)
(4) Intentionally created defective indenture documents, to "secure the bonds" by having the lien of the indenture be on "air" only (i.e. on city/county franchises but not on the rail line, the train cars or the cash flow).
During the Bush Administration the SEC was very lax in prosecuting municipal securities fraud, other than in the Orange County, California bankruptcy case.
Even though this prosecution of New Jersey is just a "slap on the wrist", in the case of prosecution of a securities fraud case against those who put together the Monorail bond deal, it is a target rich environment in terms of the not-a-public-agency's bond counsel, tax counsel, bond underwriter and bond underwriter's lawyer.
As a matter of "justice" it is important that the SEC prosecute those individuals and companies, in job the categories listed above, involved in the Monorail securities fraud. Interestingly enough, all but one of those companies and people are officed in California. And yes, in California I've seen them commit the same sort of securities fraud the SEC punished New Jersey for today.
Part 2 of 2:
When the $650 Million in municipal bonds issued by the State of Nevada are rendered unenforceable by the bankruptcy court approving Monorail's Chapter 11 Plan, word will go out, through the municipal bond brokerage community, that it is not "safe" for them to sell Nevada state, county, city and special purpose entity bonds to their customers.
That will be very costly for Nevada's state and local entities, in terms of increased interest rates and bond transaction "points" (original issue discount and underwriter's fee), for future Nevada state and local bond issuances.
In order for Nevada and its state and local entities to have any future credibility in the municipal bond market as a result of this Monorail bond fiasco, it is essential that the SEC prosecute the Monorail bond underwriter, its lawyers, and the private lawyers for the Nevada state agency who issued an opinion that the bonds were issued by a "public agency" and thereby tax exempt.
Nevada elected officials should support that SEC prosecution, to preserve Nevada's affordable access to municipal bond markets.
Nevada elected officials supporting such a securities fraud prosecution arising out of the Monorail case, like the one in New Jersey, would occur with no real political risk, because all of the key bad actors are Californians, and as to the one Nevada elected official who signed the key bond document, he's dead and his name is being kept a secret by the press.
There is no political risk in Nevada elected officials in trying to salvage Nevada's reputation in the municipal bond community by encouraging the SEC to prosecute the Monorail bond fraud in the same way the SEC prosecuted the New Jersey bond fraud described in that SEC press release:
"The State of [Nevada] didn't give its municipal investors a fair shake, withholding and misrepresenting pertinent information about its financial situation."
Again, the story of the SEC's prosecution of New Jersey for municipal securities fraud is described in the SEC's press release at:
http://sec.gov/news/press/2010/2010-152....
@ Casinokid:
The reason the bond holders cannot take "ownership" of the Monorail system through a Chapter 11 Plan, run it and put its revenue in their pockets is because the lawyers who represented Monorail, the State of Nevada, the bond underwriter (aka broker) and the bond trustee, stuck it to the bond holders when they wrote the "mortgage" on Monorail's assets.
That "mortgage" called an indenture only puts a lien on Monorail's franchise rights issued by the County. There is no lien on the towers, tracks, stations, train cars, other equipment or cash flow, according to the bankruptcy judge, who carefully read the bond documents.
The perpetrators of this bond fraud really pulled a fast one somewhat unprecedented in municipal bond history.
Only in the Banana Republic of Nevada !!!! ):
If you're buying municipal bonds, stick with bonds from the honorable midwestern states like Minnesota and Iowa.
The monorail was conceived by a thief by the name of Bob Broadbent. Politically connected, he pushed the "White Elephant" through. It was doomed to failure from the beginning even though its bonds were insured by Ambac Assurance Corp. of Wisconsin. In 2006, a plan called for expanding the monorail to the west side of the Strip and the airport at a cost of $1.3 billion. For any of you wanting to see the monorail extended to McCarran, put up your money and buy the bonds when they are offered. Fat chance that will happen. As for the cab companies paying anyone off, that's a joke. They couldn't care less about the monorail. After all, it replaced the FREE monorail between MGM Grand & Bally's. Now that was competition!
casinokid
I do beleive Wellsfargo is the debt holders.
Just turn the hole thing (OFF).
The future will never come to Las Vegas.
So in other words............f*ck the bondholders and let it stay in business.
The American way!
The terminus to the rail system? Get real! that isn't going to happen in our lifetimes. By the time they get through all the red tape and studies, we'll be down for the dirt nap.
They are waiting for the bondholders to vote?
What bondholder in his right mind would vote for their bond to be deemed worthless.
As usual, the same executives who lived large while the ship was sinking still get to keep their jobs.
I'm not anti executive, or high pay when there's profit being made, but compensation should be based on performance, and in this case, the losses don't equate to good "performance" Cut their pay to $40k a year and thin their ranks as well.
Who is accountable for this monorail? Is it RORY REID? The county commission??? WHO IS RESPONSIBLE, WHO CAN BE HELD ACCOUNTABLE?? I guess it is too big to fail. I wish i could get approval to lower my debt owed on my home.
Responsible government would look at this disaster, and try to solve it's problems by making it a viable transportation option for Las Vegas. We all know that connectivity to Stateline, airport, and downtown is a vital component to this problem. The problem WE the people know this, however the brain dead members of local and state government have FAILED to do anything about this mess, along with every other problem which dogs the city and state. VOTE OUT ALL INCUMBENTS next elections and bring in some fresh leadership!!!!
The monorail to nowhere.
Just another white elephant just like the bullet train to Cali. will be if it gets built..
Light rail/mono rails never work out, they all lose money and need taxpayer support. Don't throw good money after bad...bury the project and cut your loses now.
green617 - Totally totally wrong. Monorail works perfectly if its done right. Look at China/Japan.
closer to home? google Skytrain in Vancouver, BC, Canada. Its almost identical to the monorail, and guess what, it goes directly to the airport. What a fricken concept. Vancouver is roughly the same size as Vegas.
http://en.wikipedia.org/wiki/SkyTrain_(V...)
Real costs of running the monorail if it went to airport/summerlin/north vegas/henderson/etc...
Funding
The cost of operating SkyTrain in 2008, with an estimated 73.5 million boardings, was $82,684,000.[19][20] To cover this, TransLink draws mostly from transit fare and advertising ($359,911,000 in 2008) and tax ($262,298,000 from fuel taxes and $297,812,000 from property taxes in 2008), though it must also pay for bus service, certain roads and bridges, and other infrastructure and services.[19] The capital costs of building the system are shared with other government agencies. Capital expenses were $216,232,000[19] in 2008. For example, the cost of building the Canada Line was shared between TransLink ($335,000,000 or 22 per cent), the federal government (29 per cent), the provincial government (28 per cent), the airport authority (19 per cent), and the City of Vancouver (2 per cent).[21] While TransLink has run surpluses for operating costs since 2001,[22][23] it incurs debt to cover these capital costs. As a whole, TransLink has $1.1 billion in long-term debt, as of 2006, of which $508 million was downloaded from the province during the 1999 transfer of responsibility for SkyTrain.[22][24] As the province retained ownership of the causeway, bridge, and certain services, it retained a portion of SkyTrain's debt as well.[25]
I just hope it's not Judge Zive in charge of the bankruptcy. If he is I'm sure there's a "Stalking Horse" bid somewhere in the works. Close it down.
Well this is typical LV graft and corruption; after they loose, cheat, steal, 600 plus million dollars; with what results;
"If the plan is approved, the monorail would keep its current executives and board of directors, court documents say."
There is no $630 Million debt.
Either the monorail will go through bankruptcy or they will not. If they do, then the so called debt will go away. If they don't, then the best that the debt holders can hope for is to go through a legal process which will transfer the ownership of the monorail to them, and there will be insufficient operating income and/or insufficient salvage proceeds to pay the so called debt.
ergo, there is no $630 million debt.
Part of the problem is that the monorail should have been connected to Fremont Street and eventually to the airport It also should have been tied into the World Market center and the outlet mall.At the Convention Center there needs to be a transfers station taking visitors to the Westside of the strip.Having it transport people to all tourist points in the strip area Plus if they also eventually sent it out north and into Henderson and other areas of the City it would see more commuters coming into work in the strip ares and other parts of the city.This would also help the interstate system and its frustrating congestion Expansion is the only way for this Monorail system to survive This would be good for Las Vegas and its citizens It would create jobs and help stimulate the economy here beging with its construction It was half done to begin with and now that it was half done and is a cash cow/money pit community leaders would be skeptical of its success When I lived in Atlanta they have a rail system called MARTA before Marta expanded to the area of Atlanta I lived in it took anywhere from a hour to an hour and a half to commute to work and then the same back home MARTA came into my area and I started using the system and I reduced my commute to 20 minutes there and about.My cost was about 25 dollars a week to use the system and my fuel cost was about 65 dollars a week so I was saving money and time.Plus I was saving wear and tear on my vehicle.Expanding the monorail system would able for other area of the city to be open for tourist growth and help escalate existing business growth.allowing tourists to go to outer lying malls and casinos If the City expanded the Monorail it would bolster the economy and encourage tourists to come here because it would give them simple and easy means of transportation.
To continue if the monorail system serviced more I would use it more Generally when I go tothe strip I park at the RTC South Strip terminal and use the RTC bus line to venture to the strip I do not have to fight the traffic on the strip and I am more relaxed once I get to my destination and the outcome is a more enjoyable visit/outing.For me to ride the Monorail now I have to get into the traffic find parking and it is not worth it to me I might as well drive to my destination and go from there The monorail system is technically useless and poorly designed in servicing the strip Like I said in my last comment it was a half done project that should have been thought through more and yes there is so called plans for expansion but those plans should have been implimented from the onset of the project If it were to be expanded I would be the first to use the Monorail system just to avoid the traffic issues of the strip and the surrounding area The Monorail in Las Vegas could be a valuable asset to the city as it was in Atlanta New York and other cities in the U.S. It just needs to service the whole Vegas experience to be an asset as to a liability
Build it and they will come. I'm gonna buy two yearly passes for the monorail.
The monorail's only chance of being successful was if it was built down the center of the strip. It wasn't and its failing.
Irving. You suck ;)
Just an idea: Why not rent each car out to a casino and let them advertise during the ride? I bet more people would ride if they knew they might get a coupon or a show.
Why not attach to the airport and charge visitors to use it? Having used this concept in SFO and ORD it would be a godsend to not have to use a cab from the airport to my hotel each month.. It would faster and cheaper...
Nitty - They probably will once they clear the debt, they'll attract new investors and expand. Hopefully.
I just read that Ambac Assurance, the guarantor of the bonds, will be going BK next week. So I assume the Monorail BK will get even more screwed up. Oh well as long as the Mono's executive loafers are making their obscene salaries, they will hang on for dear life.
It's dead, stick a fork in it.
This just another Nevada fustercluck. Bet we taxpayers take it in the shorts....
History Lesson: In the 1980's, there was a proposal to build a monorail from the airport running down the Las Vegas Strip. It didn't come to be because the Lobbyists for the Taxi Companies prevented it from happening. Just think how the Strip would have been if they did build it. Would there be hundreds of taxis waiting in long taxi lines in front of casinos?
http://www.8newsnow.com/global/story.asp...
Link to the executive pay for the monorail.
I have been to LV only three times, but when I have been there - the Monorail is always broken down for part of my trip. Its not fun when you have to walk to the back of a stop only to find its not running. Extending it to the airport is a good idea in theory. But they would need to make it mechanically sufficient so its not broken down so often. And they would need to build check in kiosks near at each stop, should guest be staying at the hotels with stops. Just my thoughts, planning on being back early next year and hope it's running smoothly during our stay. Viva Las Vegas!!!
I am a hapless monorail bond holder. From what I can understand after reading the legal mumbo jumbo and about the schemes to legitimize this venture, the shifting of responsibility to pay the debt, and the total abandonment of people like me by everyone concerned, I feel the State of Nevada should pay me what I am owed, Ambac should pay me what I am owed, and the SEC should be fixed. Reading about the brilliance of this agency and its less than indifferent and ineffective protection against people like Madoff and Broadbent sends chills up my investor's spine.
I don't care whether it gets removed or not. I do care whether or not I get paid.
Las Vegas is a city that depends on revenue dollars from tourists. With all these mega resorts you have to provide transportation so people can go to the airport, conventions, shopping, etc. I seen how crowded the Strip is on a friday night. If they tear down the monorail you will end up with more congestion. Right now the monorail is $5 with a limited number of stops. If it is expanded to the airport and downtown then more people will use it. What would be better? Take the monorail to your hotel or sit in taxi going through traffic to your hotel.