Gov. Steve Sisolak deserves credit for brushing aside efforts by the Las Vegas Monorail Co. to involve the state in plans to expand the rail system.
Monorail officials have for two years been trying to raise capital to build out the line to Mandalay Bay and to add a stop at the MSG Sphere. But assurances about eager private investors have so far proven to be idle talk.
That’s not surprising, given the project’s history. The company filed for bankruptcy in 2010 and stiffed previous investors on almost $650 million. Ridership and revenue for the system — which runs east of the Strip from SLS Las Vegas to the MGM — remain below projections.
Two years ago, monorail officials asked the Clark County Commission to extend them a 30-year line of credit tied to room tax revenue so they could secure financing for the expansion. The next stop was Carson City, where they hoped to piggyback on the state to issue up to $200 million in tax-exempt bonds.
State officials did their due diligence, however, and sought documents pertaining to the rail line’s financial health. The findings reveal why the monorail struggles to raise money in the private marketplace.
A study published in June, the Review-Journal’s Michael Scott Davidson reported, “shows the monorail ridership revenue has fallen every year since 2016.” In addition, ticket sales over the past two years have created a $2.1 million budget hole and were “$8.7 million less than was forecast in a ridership study published in April 2016.”
Curtis Myles, president and CEO of the monorail, says new, “more accurate” numbers project the number of riders will increase this year and grow by more than 14 percent by 2025.
Sure. As is the case for virtually every mass transit project ever built, wildly optimistic ridership and revenue projections for the monorail have no basis in reality and are casually manipulated to gain political and public support. Witness the monorail’s original claim that extending the line one mile to Mandalay Bay would double ticket revenue and boost ridership by 40 percent. A skeptical USC transportation expert quipped this would make the new terminal “probably the most productive transit stop I’ve ever heard of.”
Monorail officials are fishing, looking to take on additional debt to pay off existing loans. There’s danger in that approach. A study of Massachusetts nonprofits noted that “long-term debt has been yielding mixed results” and that many organizations do little to examine the risks involved.
Armed with more details on the monorail’s finances, Gov. Sisolak recently declined to sign a certificate allowing the rail line to issue tax- exempt bonds on the state’s behalf. Good. He did the right thing.