Monorail tax break renewed

The Nevada Tax Commission on Monday extended the Las Vegas Monorail's sales tax exemption, a move that could save the struggling rapid transit line millions of dollars should it gather the financing needed to build an extension to McCarran International Airport.

The monorail has been recognized by the state as a charitable organization since its inception and the commission voted unanimously to extend the sales tax exemption for the next five years.

Curtis Myles, president and chief executive of the Las Vegas Monorail Co., told the commission that the company saves about $90,000 annually in sales taxes because of the exemption.

Myles added that when the $650 million, four-mile rail system was being constructed, the company saved upwards of $7 million in sales taxes.

The monorail is hoping to extend the rail system to McCarran in order to boost ridership. The project is expected to cost more than $500 million.

Monday's renewal would save millions in sales taxes for the monorail if financing for the McCarran extension is secured.

Since opening to the public on July 15, 2004, the privately funded rail system on the east side of the Strip has failed to turn a profit.

Curtis told the commission the monorail falls about $30 million short annually of being able to pay for the daily operation of the rail system and pay off the bond debt service it used to construct the system. The company has been dipping into reserve funds to pay off its debt, funds that bond analysts say will dry up in about two years.

Curtis said the monorail wants to refinance its debt when it builds the extension to McCarran.

Though the monorail does not fall under the common perception of a charitable organization, such as a homeless shelter, it does meet the requirements under Nevada law.

Nevada Revised Statutes say an organization is created for charitable purposes if "the sole or primary purpose of the organization is to ... provide services that are otherwise required to be provided by a local government, this State or the Federal Government."

The state has recognized that since the monorail provides transportation in the busiest corridor in Nevada, the Strip, it is providing a needed service not provided by a government entity.

In many U.S. metropolitan areas, such as New York City and Washington D.C., rail systems are operated by government entities.

Monorail spokeswoman Ingrid Reisman said in a prepared statement, "We are pleased with today's vote. The outcome was expected as the Las Vegas Monorail Company has not changed its purpose or basic operation since 2003, when its sales tax exemption status was reviewed and unanimously approved of by this Tax Commission."