Friday, January 15, 2010

Las Vegas monorail company files for bankruptcy

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The Las Vegas Monorail Co., though formed as a not-for-profit company, filed Wednesday with federal bankruptcy court due to falling ridership, attributed to the economic recession. The company oversees the roughly 4-mile elevated service connecting hotels on the Las Vegas Strip withthe Convention Center.

Since the overwhelming majority of North American public transit operations rely on some form of government support, the bankruptcy may be a telling indicator of how "private-sector" options, often advanced by those opposed to government support for rail and public transit, may nonetheless be vulnerable to fluctuations in economic conditions.

"The decline in the monorail's operations is tied directly to the decrease in gaming revenues in Nevada, and particularly along the Las Vegas Strip," Chief Executive Curtis Miles said in the courtfiling.

Operations will continue during the bankruptcy process, with no reduction in frequency of service or service hours anticipated. But the filing exposes bond insurer Ambac Financial Group Inc. to as much as $1.16 billion in liability, the filing said. Ambac Assurance Corp. insured $451 million of tax-exempt bonds used to finance Las Vegas Monorail's purchase of the rail line from MGM Grand-Bally's Monorail LLC in 2000, according to the filing.

Las Vegas Monorail’s largest creditor is Bombardier Transportation Inc., according to the court filing. The monorail owes $293,450 to Bombardier, which operates and maintains the trains. Other creditors listed in court documents include NV Energy, Allegiance Direct Bank, and Anthem Blue Cross Blue Shield.