Facebook
Fark
Digg
Reddit
Stumble
A Las Vegas Monorail train pulls out of the Sprint Station near the Las Vegas Convention Center November 26, 2007.
Wednesday, Feb. 17, 2010 | 8:35 p.m.
Curtis Myles, president and CEO of the insolvent Las Vegas Monorail, expensed a $7,000 trip to China last year.
Sun Archives
- 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)
Related Document
Beyond the Sun
Las Vegas Monorail President and CEO Curtis Myles spent several hours on the witness stand in U.S. Bankruptcy Court on Wednesday defending the transit operator’s decision to seek reorganization of its massive debt.
But in a revealing interview after the day-long hearing before U.S. Bankruptcy Judge Bruce Markell, Myles discussed his strategy going forward should the judge grant the monorail’s request to proceed under Chapter 11 of the bankruptcy code.
Markell took under advisement arguments from the monorail, its major creditor and a bank that disputes the way the transit operator has transacted its financial affairs since last fall. Markell said he expects to issue his rulings as early as next week.
After the hearing, Myles brushed aside rumors that the monorail would attempt to sell its assets to the Regional Transportation Commission, where he served as assistant general manager before taking his current position in 2005.
Instead, he disclosed a multi-prong strategy that includes applying for Federal Transit Administration funds and pursuing a partnership with Chinese investors and government agencies, all for the purpose of expanding the monorail to McCarran International Airport.
To apply for the federal funds, though, Myles said the monorail likely would have to be sponsored by Clark County or another government agency in Nevada.
The China connection began with a five-day trip he took to Beijing in June with representatives of the proposed DesertXpress high-speed train project that would link Las Vegas with Southern California.
Myles said the Chinese officials he met included senior executives with a state-owned bank and a state-owned railway company.
“There are still doors open with these individuals,” Myles said. “My understanding is that they are performing their due diligence. The idea is that there would be a seamless system connecting the existing monorail with the airport.
“The Chinese are looking to franchise their rail system expertise around the world.”
At least this is how Myles said he hopes things turn out. But that’s not a sure thing, given that the major creditor, Ambac Assurance Corp. of Wisconsin, has argued that the monorail doesn’t even qualify as a Chapter 11 debtor.
Ambac insured more than $450 million of the $649 million in bonds that were issued by the state in 2000 to build the transit system.
Ambac attorneys told Markell that the only appropriate bankruptcy for the monorail would be under Chapter 9. For that to happen, the monorail would have to be treated as a municipality or other local government agency.
Ambac attorney William Smith of Chicago told Markell that when the Nevada Department of Business and Industry issued the industrial development bonds in 2000, the monorail had to be declared “an instrumentality of the state” to make the bonds tax-exempt. The tax-exemption allowed the monorail to borrow at lower interest rates than available under conventional financing.
The reason Nevada was forced to declare the monorail an instrumentality of the state is that in 2000, Nevada was allowed by the Internal Revenue Service to issue only $200 million in tax-exempt private activity bonds, Smith said.
It was because the monorail bonds exceeded that cap that the transit operator was presented to the IRS as an instrumentality of the state, Smith said.
“I think the judge understood that the standards used to determine an instrumentality of the state for tax purposes is also what is used by other courts” to determine eligibility under Chapter 9, Smith told the Sun.
Ambac lawyers sought to bolster their argument by pointing to the control the governor of Nevada has over the monorail’s budget and approval of members of its board.
Myles countered that the monorail acts as a private nonprofit corporation — and therefore is an eligible Chapter 11 debtor — because it must maintain a business license and a franchise agreement with Clark County and has no taxing authority. Monorail attorneys also said their client is not even eligible to file under Chapter 9.
Legal experts have told the Sun that creditors such as Ambac would have more control over the potential sale of assets under Chapter 9 than under Chapter
11.
Myles also defended his $331,000 salary and the $5,000-a-month stipends paid to the monorail’s five board members. His salary in particular, he said, is about equal to what the heads of public transit systems make when benefits packages are considered.
Markell also heard arguments between the monorail and Wells Fargo Bank, which had exclusively managed the transit operator’s accounts until last fall. The bank had began rejecting requests for certain reimbursements — including the $6,700 Myles spent to go to China — arguing that they did not fall under necessary operation and maintenance expenses.
But the monorail, which had begun exploring a restructuring of its debt, opened an account with Bank of America to cover expenses it said Wells Fargo refused to pay.
Wells Fargo, which has been involved since the bonds were issued, stepped up its role as a trustee of the monorail’s funds in 2007 after the monorail defaulted on the bonds.
Markell is being asked to decide whether the bank’s trustee role was violated by the monorail and whether any sanctions are appropriate.
The monorail filed for bankruptcy last month, revealing at the time that it owed $500 million to $1 billion.
Although monorail officials say it makes enough money to pay for ongoing maintenance and operations, it does not earn enough from ridership fares and advertising to pay off the bonds.
The four-mile transit route that runs east of the Las Vegas Strip has carried more than 40 million passengers, but its ridership has fallen far short of initial projections.
Miles told Markell that in recent years, the percentage of tourists who use the monorail has dropped from 20 percent to 16 percent because the transit operator has been spending less money on marketing and because fewer people are flying into Las Vegas.
Traditionally, 80 percent of the monorail’s riders are individuals who fly into town.
Although the Nevada Department of Business and Industry issued the tax-exempt industrial development bonds, it has maintained that taxpayers are in no way liable for bond debt that the monorail is unable to repay.
Under Chapter 11 reorganization, it is possible that Ambac could lose a substantial amount of money. The insurer has reported that it could lose as much as $1.1 billion if the monorail does not retire any more of its debt.
The Chinese are just looking for another flat surface to apply lead based paint to.
So it's a grand total of 4 miles long. And losing millions. So he went to China with that other bunch of dreamers, the Desert Express train people. The ones that want to build high speed trains-to Victorville?
"Welcome to Victorville, where we have a tour of the recently torn down new houses that nobody wants. Take a look at the expansive views of the Mojave Desert. And don't forget, we're close to Barstow, meth lab capital of the upper desert".
The Chinese aren't stupid. We are. Shut down the Monorail, fire all the people involved, and move on. Nobody, but nobody wants to have anything to do with the Monorail. Period...
The Chinese trip is just a smoke screen for a junket.
Instead get rid of all management through bankruptcy which can eliminate the golden parachutes then the Board to be removed. Have LVCC put money into it and no longer the buses for conventioneers.
Need to extend to airport with a stop at Thomas & Mack.
If they run this thing to the airport(as anyone with half a brain would), it will do very well.
If not-well, you see what happens. As it is, it's a complete joke.
"His salary in particular, he said, is about equal to what the heads of public transit systems make when benefits packages are considered."
Yea right......he is comparing the monorail to like the Boston Transit system.
It is more like comparing to Disneyland train that goes around and around.
Extending the train to the airport is dumb, too.
People are going to drag their bags to it, then from the back of the casino all the way to frontdesk and the same when coming back to the airport.
Yea...Disneyland monorail and they want it be a giant weight on the backs of the taxpayers, too.
This is priceless - I can't stop laughing!
The Train to Nowhere
I wonder how the monorails are doing in Ogdenville, North Haverbrook, and Brockway! (Simpsons)
Mr. Myles earned $346,777 in 2008 working for a nonprofit that operates 4 miles of track dropping people off at the back door of casinos!?!?
From their website.......
"In 2000, the nonprofit Las Vegas Monorail Company (LVMC) was formed and it acquired the original Monorail system. It is governed by its board of directors, appointed by the governor of Nevada, and led by President and CEO Curtis L. Myles III. Myles oversees the management of the Monorail day-to-day operations in addition to expansion plans."
What is this man overseeing? You purchase your ticket from a machine and the trains are driverless!!!!!
Partnerships with the Saudis at City Center, Partnerships with the Chinese on the Monorail..What are we becoming? a third world city or something?
So if someone travels to Las Vegas and wants to take the extended Monorail from the Airport to the strip, their Odds are 50% its going to go to your hotel(on the East side). A good bet?
The Chinese are extremely corrupt.
We should be worry about Las Vegas politicans and businessman getting corrupted by them.
Hey wait a minute...Las Vegas is probably already corrupt.
Oh well...never mind.
The monorail should go to the airport....but first Markell & the rest of the so-called management should be fired, with their replacements paid no more than half what they're currently being paid (it'd be interesting to know how much Disneyland pays it's monorail management -- I'll bet it's a lot less).
I wouldn't lug my bags on and off the monorail from the airport to my hotel, and I doubt enough people would to make the monorail extension ever profitable. The only way it might work is if the monorail fare included hernia insurance.
Right now the monorail runs from nowhere to nowhere. With an extension it will run from the airport to nowhere. No one will ride it. No one wants to lug their bags 5 blocks in the sun to and from their hotel. forget the airport. Connecting it downtown might increase ridership but even that's a long shot. I say tear it down.
This is why Las Vegas does not need a government run light-rail system.
I give you the Springfield Monorail (song) http://www.youtube.com/watch?v=AEZjzsnPh...
That's it!! I'm moving to Shelbyville!
The communist country, China, is slowly buying this country and Las Vegas. That should tell us what a mess we are making out of our country. Less and less manufacturing here and all we do is move money around that we are borrowing from China. The monorail is a loser and there is no real good answer to salvaging the mess the people who built it with no good planning.
The monorail should be restructured beginning with this clown running it. Unfortunately, he is not the total problem and unless it gets extended to the airport and covers every terminal, it will never make money. Even with the present route, ridership will increase because it goes to some areas where people want to go. The other problem is the taxi lobby who will fight hard to stop any expansion to the airport and decrease the size of their cash cow. If the Chinese want to fund it, then let them. Hell it's our debt. We're stuck right now and we may well try to shine the sneaker.
As a person who actually has been a lawyer for banks owned and run by ethnic Chinese people, I have to comment that their bank officers are far from stupid.
While government dominated banks in China do make bank loans to companies who will buy exported Chinese goods, and sometimes those loans go bad because the borrowers are basically crooks, the Chinese banks are swift to get rid of the bad borrowers.
My belief is that the "dishonorable conduct" by Monorail's management would not go unnoticed by Chinese banks and their American lawyers. In addition, I believe the Chinese bank officers are smart enough to see the inherent problems in the route of the Monorail through the Strip Corridor, even if it is connected to McCarran.
As a result, the only rational reason a Chinese bank might re-finance and expand the Monorail would be to create, in effect, a "model home" for Chinese made railcars which compete with the current system's provider, French Canadian Bombardier. The "model home" for the Chinese railcars would be to try to sell them to other cities for normal commuter train applications, not necessarily Monorails.
If that was the case, the practical question will be how much money the Chinese are willing to put up to pay off at least part of the debt to the Monorail bondholders. Even under a Chapter 11 Plan, the first lien bondholders can probably veto a sale for too little money.
As to whether a Chinese buyer of the Monorail would continue to employ the well-compensated current management employees, I say "Fat chance". The Chinese are not stupid people. Current management would be replaced by Chinese or Chinese Americans who could be trusted to do a good job and not hijack the Brinks trucks carrying the fares. That's how the Chinese operate, as opposed to Nevada's crazy public and quasi-public employees.
the chinese are going to own america anyway.
we keep printing money for liberal causes to the point it's worth hardly anything.
Another empty training running back and forth.