The following paper is reprinted with permission of the authors and Nevada Contractor Magazine. Our thanks to Jeff Kimmel and Tom Stone for their efforts in Las Vegas and for providing us with this informative article.
Ticket to Ride: The Las Vegas Monorail Takes Off
In the wake of the Department of Business and Industry Director, Sydney Wickliffe's positive findings in July related to the financing for the Las Vegas Monorail, the Las Vegas Monorail project is going forward and is expected to receive its long awaited notice to proceed in September. This exciting first leg of an urban transit system for Las Vegas is by far the most scrutinized project in the State's history having withstood the State and County dissection in more than three years of public hearings and costly independent examinations. Having now passed the bar, this is the story and the plain truth about the Las Vegas monorail.
In spite of Clark County's overwhelming need for improved mobility, as it stands today, there are no fixed guideway, automated monorail or light rail urban transit systems in the County, nor is there any tax money available to build one. These sophisticated, state-of-the-art driverless urban transit systems are expensive to build, and taxpayers usually do not want to raise their taxes to build them.
In view of this dilemma, Las Vegas resorts, led by Park Place Entertainment and MGM Mirage, are building an elevated, fixed guideway monorail system for public transportation in the heart of the most congested, most expensive segment of the County. And, they are doing it without using any tax money of any kind, now or ever. To accomplish this, the sponsoring resorts are investing a total of $30 million in capital to this project, and the Las Vegas Monorail Team, led by Bombardier and Granite Construction, are investing an additional $18.5 million, for a total private sector cash investment of $48.5 million.
Based upon the resort's franchise agreement with the County, the monorail system will meet or exceed all of the Clark County Regional Transportation Commissionís ("RTC") 1997 Major Investment Study specifications for an urban transit system, and will be compatible with the proposed future RTC system.
The plain truth about the Las Vegas Monorail:
No Tax Money Required To Build or Operate the Las Vegas
The monorail's operating revenues (fare box, advertising, etc.) are the sole source of capital pledged to repay the bonds issued for the project. There are no public guarantees, mortgages or other pledges provided to repay the bonds. Similar revenue bonds are sold for toll road projects and other major public works undertakings throughout the world.
The Las Vegas Monorail is projected to attract ridership of over 19 million passengers in the first year of operation. Based on an initial $2.50 fare, the system will generate revenues more than sufficient to pay operation, maintenance and debt service costs. The State and its financial advisors were persuaded that these projections are on track. Prepared by the internationally respected passenger and revenue-forecasting unit of URS Greiner Inc. this company's studies have been accepted by the investment community for decades, and routinely serve as an ìInvestment Gradeî foundation for project revenue-based financing of toll roads (and of this monorail project). Projections of URS Greiner have been the basis for over $24 Billion worth of transportation infrastructure financing. As an extraordinary measure to provide the State and bondholders additional comfort in the reliability of the revenue projections, the URS Greiner study withstood a separate and independent peer review by the equally respected firm of Wilbur Smith. Wilbur Smith's studies have been the basis of selling more than $20 Billion in project revenue bonds on Wall Street.
As a final check, the three year, multi-million dollar Major Investment Study performed by the RTC projected the Las Vegas Monorail corridor will have considerably more ridership than was projected by the URS Greiner study.
Non-Profit Corporation Monorail Ownership
The monorail system will be owned and operated by a non-profit corporation created under State of Nevada law that requires the Governor to appoint the members of the board of directors. This organization will contract for the operation and maintenance of the monorail system under a fixed price, guaranteed contract with Bombardier, the monorail manufacturer and one of the world's leading private operations and maintenance contractors of public transportation systems.
The revenues generated by the project can only be used for project related purposes such as repayment of the bonds, lowering fares or improving or extending the monorail system. The sponsoring Resorts can not receive any monorail revenues.
The Monorail Will Reduce Traffic In Las Vegas
The Monorail Will Help To Ease Air Pollution In Clark County
Las Vegas is Unique
In 1999, Las Vegas hosted 33.8 million visitors, an increase of 10.5% from 1998 in just one year. Most of these visitors stay in one of the more than 100,000 hotel rooms located along a four-mile stretch of Las Vegas Blvd. known as the Resort Corridor (roughly between Tropicana and Sahara Boulevards). Once a visitor arrives in the Resort Corridor and the principal focus of their attention is turned to the Resorts and the entertainment, they become a "captive" audience. Due to the city's 24-hour nature and in keeping with its consistently dense but ever changing population, the demand for transport in and around this corridor is remarkably constant. The Las Vegas customers also have shown an ability and willingness to pay for transportation, be it buses, taxis, rental cars or otherwise. Even the wide extremes of temperatures drive the customer's demand for comfortable, efficient transportation.
The M-VI Monorail Is Right For Las Vegas
The system's initial passenger capacity of 3,200 passengers per hour per direction (pphpd) was matched to the passenger ridership projections of the independent ridership study. While the initial system configuration for the monorail is not sized to carry all of the passengers from peak Convention Center demands. (A decision that is consistent with sound urban transportation planning for systems of this size and magnitude per the RTC's fixed guideway plan). Nonetheless, from the first day it opens, the monorail system can provide a special event capacity of 5,000 passengers per hour per direction (pphpd) or 10,000 per hour in both directions. Such special event capacity over a 2.5-hour period could carry as many as 25,000 passengers to and from the Convention Center, thereby making a significant contribution. In addition, monorail capacity can be increased over time as the Resort Corridor continues to grow simply by adding more monorail vehicles.
As was emphasized in the 1997 RTC Major Investment Study, the monorail system for Las Vegas will be one important element of many that will, when in place, help to ease area traffic and air pollution. The monorail will serve as a new, efficient and convenient way to access and leave the Convention Center at peak times without being part of the traffic it rides above, thereby complementing the existing at-grade transport systems now in place: cars, taxis, buses and shuttles.
The Las Vegas Monorail is one of those rare projects where there is a complete convergence of public and private sector interests. Everyone will benefit when the Las Vegas Monorail is built:
About the Authors
Jeffery B. Kimmel, Esq. has been an active member of the California State Bar for 20 years. He served as General Counsel, Vice President and Transit System Director for VSL Corporation, the only company to build multiple people mover systems in Clark County (including the Mirage-Treasure Island shuttle and the Primadonna-Whiskey Pete's shuttle over I-15 at Stateline). In 1993 Mr. Kimmel led the VSL/Bombardier team that was selected to build the one-mile monorail system that connects MGM Mirage and Bally's. In 1994 Mr. Kimmel became President of Liaise Corporation that provides strategic and financial planning, and project implementation services to the transportation industry. In this role, Mr. Kimmel has assembled and directed the Las Vegas Monorail Team consisting of Bombardier Transit, Granite Construction, Carter Burgess Engineers and Gensler Architects for the Las Vegas Monorail project.
Thomas J. Stone, Ph. D., P.E. is widely recognized as one of the nation's leading transportation planners and engineers. Dr. Stone's 33 year career has included the complete range of responsibility, from initial planning studies through construction of major rapid transit systems and highway projects throughout the world. Dr. Stone's experience includes serving on the faculty of the University of Utah in the Civil Engineering department, where he developed a graduate program in urban mass transit. He is an expert in travel demand modeling, project financing, and transit technology. He served as Principal with the firm of Carter-Burgess, Inc., the lead engineers for the monorail project, and is a registered professional engineer in Nevada and several other states.