Oh, there’s blackjack and poker and the roulette wheel.
A fortune won and lost on ev’ry deal.
All you need’s a strong heart and a nerve of steel.
— Elvis Presley, “Viva Las Vegas”
The Las Vegas Convention and Visitors Authority is on the verge of placing one of the biggest bets in its history.
It’s the futures bet of all futures bets.
The 14-member board will gather Wednesday to consider its $358.2 million budget for the 2020 fiscal year — and separately to finalize a $48.7 million contract with Hawthorne, California-based The Boring Company, a spinoff of Elon Musk’s SpaceX venture.
The Boring contract is for the design and construction of an underground people-mover transit system for the Las Vegas Convention Center campus.
The deal would include developing:
— Less than a mile of twin vehicular tunnels.
— A pedestrian tunnel that would link the Platinum lot with the South Hall and eliminate manned crosswalks on Swenson Street.
— Three underground stations: one east of the South Hall, beneath the Platinum parking lot; another at the convergence of the North and Central halls beneath an area currently used as a ride-hailing pickup point; and the third at the west end of the new exhibit hall under construction.
— Elevators and escalators to access the stations.
— All of the back-of-the-house features for lighting, power, video surveillance, ventilation and life safety, cellphone and Wi-Fi systems, intercom and public address systems and a control room.
Under a schedule provided by Boring — TBC as it is referred to — design and securing regulatory approvals would occur through August, with construction starting in September. TBC plans to have its first tunnel completed by the end of February and the second by the end of April. The project would be completed by November 2020 and available for use a month later, just in time for CES 2021.
The system would use vehicles on Tesla chassis with capacities of up to 16 passengers each. The vehicles would be operated in autonomous mode and offer point-to-point service. That means a passenger boarding at the Platinum lot could ride directly to the new exhibit hall without stopping.
In TBC’s earlier presentations, the company said that if the Convention Center system proved capable, there would be no reason why the company couldn’t build a citywide system of tunnels to solve Las Vegas’ growing transportation problem.
But here’s the gamble: The Boring Company has never built the system it describes anywhere. There is a test track in Hawthorne, but that’s it. No commercial use; no track record of customer satisfaction.
Las Vegas would be the proving ground.
For TBC, that’s great. Company officials want to show what their tunneling machines — which apparently can eat anything in their path — can do.
Reticence toward the TBC plan comes from an unlikely source. Las Vegas Mayor Carolyn Goodman, a board member whose husband, Oscar, has been known to place a big wager or two, is concerned that if TBC could not deliver what it promises, it would be a huge setback for the city’s convention business, primed for emergence with a $1.4 billion expansion and renovation underway.
If TBC knocked it out of the park, Las Vegas could get a futuristic transit system — a huge plus with the Las Vegas Monorail foundering and the prospect for light rail nowhere in sight.
Las Vegas Convention and Visitors Authority President and CEO Steve Hill has noted that underground construction minimizes disruptions on the surface. Hill has smartly included a number of contract safeguards to minimize risk.
The subterranean transit system could become a tourist attraction itself with thousands worldwide likely to want a look at the new creation.
TBC will have to get permission from Clark County to burrow under Swenson Street, Desert Inn Road, Paradise Road and Convention Center Drive, according to a map outlining the route. The LVCVA would put its own confidence on display with the route tunneling beneath the convention center’s Central Hall.
Still, it’s a big gamble. On Wednesday, we will find out whether the LVCVA has the nerves of steel to roll the dice.
Terms to mitigate risk
In the Las Vegas Convention and Visitors Authority’s contract with The Boring Company, four conditions have been included to mitigate risk:
— Performance and payment bond. TBC will be required to procure a performance bond and a payment bond, each equal to 50 percent of the contact value.
— Payment recovery bond. A requirement in the event TBC fails to complete the project. It would repay the LVCVA for all payments made to TBC during the course of the contract.
— Decommissioning payment. Included in the payment recovery bond document, it requires an additional payment of $1.6 million for the cost of “closing and securing” the unfinished project in the event TBC fails to complete it.
— Letter of credit. The LVCVA is requiring a provision for $4.5 million of liquidated damages for the inability of the project to provide system capacity during full-facility trade shows. Damages are assessed at $300,000 per event for 15 events extending through 1½ years of system operation.