(These ideas are explicated in this sloppy manifesto)

Saturday, February 11, 2006
Nowhere Train: Next stop, Nowheresville...

From the Las Vegas Review-Journal:
The Las Vegas Monorail had its worst ridership month ever in January, sinking the troubled $650 million rapid transit line's bond rating further into "junk" status Friday.

Ridership slid to just 18,187 daily riders last month -- roughly half of what it was in July -- while Fitch Rating, a credit rating firm, dropped the monorail's rating to "BB," two notches into "junk" territory.

That poor showing imperils plans to extend the monorail to McCarran International Airport, which would rely on a multimillion-dollar bond sale to cover the cost.

Without a new bond sale, monorail officials say there's no other realistic way to pay for an extension. And with a "junk" rating, new bonds would be a tough sell.

"The short answer is, we have to have access to the bond market to finance our system. To access that market, we need to improve those ratings," Ingrid Reisman, a spokeswoman for the Las Vegas Monorail Co., said Friday.

"We need to continue to do what we're doing and continue to implement the plan we've put in place," Reisman said.

Previously, the monorail's worst ridership month was January 2005, when 22,313 people used the 4.4-mile system each day. The monorail's bond rating has been deemed "junk" since last March. In its report, Fitch Rating noted that revenues of the existing system -- which are used to pay off bonds that helped cover the original segment's construction cost -- are half what was promised when those bonds were first sold. Operating costs are 20 percent higher.

The monorail has been falling as much as $70,000 a day short of matching the roughly $159,000 needed daily to cover operating costs and debt service, while averaging fewer than 30,000 daily riders last year.

The system is believed to have lost around $20 million last year, which was covered by cash reserves.

Fitch said its downgrade "reflect(s) an increasingly constrained financial environment where significantly lower than anticipated fare revenue is not expected to be sufficient to pay debt service, even with the recent aggressive fare increase, requiring regular draws on internal liquidity to meet obligations."

The monorail increased its base one-way fare last month to $5, from $3.
Ironically, the Nowhere Train actually does much better financially than the Trolleys being built all through the land. It only loses about two dollars per dollar of fare income, where Trolley systems lose as much as twenty dollars on the dollar. The difference is, by being quasi-private, the Las Vegas Monorail has to provide an honest accounting of its results. It will be interersting to see if Sin City can learn from this experience as it ponders its own proposed Trolley line.