The Las Vegas Monorail project has not had an easy past. Over seven years ago, The Las Vegas Monorail Co. filed for Chapter 11 bankruptcy, wiping out 98 percent of bondholder’s money. However, as of this month, the LV Monorail is planning to return to the municipal-bond market and has listed almost $20 million in unrated federally tax-exempt revenue bonds, which will mature in 2049, on the Bloomberg sale calendar.
Last Friday, a spokeswoman for the LV Monorail, Ingrid Reisman, wrote in an e-mail that the company had put a “new loan facility in place that allowed it to meet all of its obligations under the 2012 Series A and Series B Las Vegas Monorail bonds.” Those bonds had been exchanged with holders of $650 in revenue bonds, sold in 2000 to finance the expansion of the monorail after its takeover.
$10 million of series A bonds carried a coupon of 5.50 percent and matured this past Monday. $3 million in series B bonds will mature come 2055, with a 5.50 percent coupon; however, holders agreed to their redemption on July 5th.
A Brief History of the Monorail
The monorail opened in the Las Vegas valley back in 1995. It was privately financed and ran less than a mile between the back of Bally’s and the back of MGM Grand. The monorail was free and carried about 13,000 passengers daily. A few short years later, in 1997, the owners set up a nonprofit, public benefit corporation and acquired the franchise. In 2000, a Nevada state agency sold $650 million in tax-exempt bonds to finance the acquisition and expansion of the monorail in Las Vegas. These bonds were meant to be secured by charging a fare to ride the monorail as well as advertising revenue.
Currently, the monorail runs for about four miles and stops at six casinos as well as the city’s convention center. There were plans to expand service beyond the strip, all the way to the airport, however that has yet to be implemented. In a year 2000 consultant’s report by URS Greiner Woodward Clyde, it was predicted that 19.5 million people would use the monorail by 2004, and 23.6 million by the year 2035.
These predictions proved entirely inaccurate. In fact, in 2008, the company needed to use its reserves to pay off debt, and in 2010, they filed for bankruptcy. They exited bankruptcy in 2012 after the honorable Judge Bruch A. Markell rejected a plan to reduce the bonded debt to $40.4 million, and it was revised to $13 million. To use the precise words of Judge Markell in his description of the monorail, a “glaring example of nonsense on stilts.”
The Monorail Today
After recently securing a new loan to pay off $10 million in bonds and interest, the Las Vegas Monorail plans to continue operation and expansion throughout the Valley. Although its financial future may or may not be stable, riding the monorail still beats the heat of walking on foot in a grueling Las Vegas summer.