A group of three Newport Beach-based businessmen have been tapped to design and oversee construction of a $650 million, 4-mile monorail planned for Las Vegas.
The project got a big boost last week after the sale of bonds to finance construction was completed by Salomon Smith Barney on behalf of a Nevada-backed development corporation, Las Vegas Monorail Corp.
“The deal is done. The project is a go,” said Tom Stone, one of the three Newport Beach businessmen behind the project.
The project calls for an elevated track starting near the MGM Grand and running a block east of and parallel to the Strip. The seven stops will be at major hotels and visitor spots such as Paris, the Flamingo Hilton, the Convention Center and the end-point, the Sahara Hotel.
Stone said the casinos like the locations of the monorail stops “because you have to walk through the resorts to get to the station.”
Stone and partners Francois Badeau and Jeffery B. Kimmel operate a five-person consulting firm, Liaise Corp. The monorail has long been a pet project of Badeau and Stone, who originally put together a similar project in the early 1990s,along with McDonnell Douglas,to link the John Wayne Airport to the Irvine Spectrum.
That project fell apart when McDonnell Douglas pulled out and the recession struck.
The Las Vegas project came about as part of the partners’ search for other cities in which to build a train system. In 1993, they hooked up with Kimmel, who had led the team that built a small monorail between the Las Vegas hotels of MGM and Bally’s. All three partners have ties to rail and construction companies.
“They were the glue that put it together,” said Scott Langsner, senior vice president, secretary and treasurer of the MGM Mirage, a hotel gaming and entertainment corporation.
The threesome organized a project team, bringing in Bombardier Inc., which builds monorail cars, and Granite Construction Co., which built the toll road along the Riverside (91) Freeway. Also on the team are Carter-Burgess, an engineering and construction management team, Gensler, an architectural firm, and Salomon Smith Barney.
MGM Mirage’s Langsner said the key component is that the monorail links the hotels to the Convention Center, which is being expanded to more than 3 million square feet. Because traffic is so bad and taxis can be scarce, Langsner said, many people end up stranded at the convention center.
“This monorail will allow the conventioneers to go from hotel to hotel,” he said.
Langsner said he asked Liaise to put together a package that he could present to county and state officials to sell them on the monorail.
Liaise put together what its officials call a “super turnkey” financing plan so that the project doesn’t rely on taxpayers. Even if revenue projections fall short, backers contend, Nevada residents won’t be on the hook.
“They really are anti-tax” in Nevada, Stone said.
Salomon Smith Barney was the senior manager for a three-tier bond offering totaling nearly $650 million to finance the project. The bonds sold out within hours earlier this month.
According to the Bond Buyer newspaper, the first tier of bonds was $451 million of insured bonds backed by Ambac Assurance Corp. The second tier of $149 million was unrated and a third tier of $48.5 million will be privately placed with major hotels and construction companies involved in the project. The yields for the first tier were around 5.75% while the second tier was 7.5%.
Most of the bonds are tax-exempt. The Nevada Department of Business and Industry issued the bonds and turned the proceeds over to the Las Vegas Monorail Corp., a nonprofit entity that is financing, building and operating the project.
The monorail cars are an upgraded version of the Mark VI cars that Bombardier delivered to Disney World Resort in the late 1980s. This rail system will be driverless and have cars that are bigger than those at Disney World.
Backers said that revenue from the fare box and advertising are expected to pay for the system and the underlying bonds.
The fare to ride the monorail is projected to be $2.50, which seems on the high side for a four-mile ride compared to bus and other mass transit services. But the company officials said they conducted studies that indicated Las Vegas riders would pay this price.
Liaise officials said they expect to see the project completed in three years. n
