Listening to Curtis Myles discuss how the Las Vegas Monorail came to be is sort of like listening to recently admitted juicer Mark McGwire's testimony about steroid use five years ago before the U.S. Senate.
He doesn't really care to talk about the past. It's the future that matters.
Like hard-core baseball fans, monorail bondholders are very interested in discussing the past, specifically the creation of the monorail and the company that operates it.
Monorails and steroids are completely unrelated, of course, unless you consider how juiced up the fare box projections were in 2000 when the state of Nevada issued monorail officials $650 million in tax-exempt bonds to build the 3.9-mile rail system.
Sorely overestimated ridership numbers coupled with the beating the poor economy is putting on this town is why monorail officials filed for bankruptcy earlier this year. Board members believe that reorganizing the debt will allow them to ultimately extend the monorail to McCarran International Airport.
"We have it now and we need to take the thing from what it is to what you'd want it to be," Monorail President Myles said of turning around the fledgling project. "We have a system that services our business district. What do we want to do collectively as a community? What do we want to do with it?"
Well, if you'd like to ask Summerlin resident Dick Mudgett that question, he'd say for starters, run the company more efficiently. Why should Myles or anyone else care what Mudgett says? Well, he's a bondholder who spent a lot of money investing in this train. (We'll get to the "What the heck was he thinking?" question later).
Myles and Mudgett have one thing in common and that is they both believed in the monorail, at least at one point. But they differ in their opinion of how the company is run.
Mudgett questions who decided that Myles should be paid $331,000 a year to run a 4-mile train. That's more than double Gov. Jim Gibbons' salary. Mudgett acknowledges one is a public official and one works for a private company, but the discrepancy is too great, he said.
"That isn't responsible. That setup is what's killing us," Mudgett said. "A third of a million dollars? Give me a break. It's wiping out the funds of that railroad. The bond holders and stock holders are getting skinned."
What does Myles say?
"I don't say anything. When I took the job I made the decision to leave the public sector and go to the private sector," he said. "Our critics should be clear on how efficiently money is spent in terms of operations."
Mudgett purchased his bonds in November 2008 after three rating agencies gave the bonds Triple-A status. He also learned that they were insured and believed they were backed by the state. Mudgett, who has invested millions in bonds over the years, has strict rules about bonds: "They are rated, state-sponsored and insured. I haven't lost a dime."
He also had faith that the casinos along the monorail route would pitch in and save the train if its finances appeared to be in extremely dire straits.
"I felt casinos weren't going to let that thing one, become an ugly duck and, two, fail," he said.
During recent bankruptcy proceedings, Mudgett learned that the bonds are not state sponsored -- confusing considering that the tax certificate issued in 2000 states: "The borrower is an instrumentality of the State of Nevada."
Like many skeptics, Mudgett doesn't quite understand how the privately run monorail was able to secure tax-exempt bonds if it is not state-endorsed or an "instrumentality," legalese for an arm of the state. Additionally, Mudgett said, the monorail was listed under Nevada state municipal bonds.
Now monorail representatives claim they are not an arm of the state.
The back-and-forth is infuriating to many, especially investors such as Mudgett. Now Mudgett is prepared to take a swing in the court of law against the monorail, a project that for a decade has been called a juice job.
"They're going to find themselves in a very interesting lawsuit that I'll be a part of," Mudgett said. "It's called fraud."
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