Innovative Financing of Transportation Megaprojects

1
Innovative Financing of Transportation
Megaprojects

• Center For Urban Infrastructure
• Transportation Financing Conference
• March 7, 2003
• Barney A. Allison, Esq.
• Nossaman Guthner Knox Elliott LLP

2
A Case Study Las Vegas Monorail

• Project Overview
• Alignment
• Innovative Elements
• Farebox Revenue Bonds
• Subordinated TIFIA Loan
• FTA Grant Anticipation Notes

3
Project Overview

• Driverless, state-of-the-art urban transit grade
  system on Las Vegas Strip
• Current 1-mile, two station system to be expanded
  to 4 mile system for Phase I and 2.3 mile, four
  station extension for Phase II
• Servicing 8 major resort properties, 27,000 hotel
  rooms and worlds largest convention center
• Phase I expected in-service date is 2003 Phase
  II expected to begin construction by the end of
  2003
• Can serve as backbone for future regional fixed
  guideway and bus systems

4
AlignmentPhase I
Sahara
Las Vegas Hilton
Circus/Circus
Las Vegas Blvd.
Las Vegas Convention Center
Convention Ctr Dr
Desert Inn Rd
Desert Inn
Convention Center Station
Golf Club
Spring Mtn Rd
Treasure Island
Venetian
The Mirage
Sands Avenue
Harrahs Imperial Palace
Caesar's Palace
Flamingo Hilton
Flamingo Rd
Bally's Paris
Bellagio
Koval Ln.
Aladdin
Monte Carlo
MGM Grand
New York, New York
Tropicana Rd
Excalibur
Tropicana
McCarranInternational Airport
Luxor
5
Innovative Elements

• Exclusive Private Franchise
• Design-Build-Equip Contract
• 15 year Private Operations and Maintenance
  Contract
• Tax Exempt, Non-Recourse Financing through
  Non-Profit Corporation
• Farebox Revenue Bonds secured by Net Pledge
• Advertising and other Ancillary Revenues
• Contractor Subdebt
• Adjacent Property Owner Subdebt, ROW
  contributions and Construction
• Subordinated TIFIA Loan and FTA Grant
  Anticipation Notes Financing for Phase II

6
Farebox Revenue Bonds

• 600,650,000 Series 2000 Revenue Bonds sold in
  September, 2000 for Phase I
• Anticipate another 83.5 million in revenue bonds
  needed for Phase II
• Standalone, net project revenue pledge
• Investment grade ridership and revenue study
• Innovative fare collection techniques
• Advertising revenues
• 15-year operation and maintenance agreement
  includes capital replacement and security costs
  fixed cost contract parent guaranty

7
Subordinated TIFIA Loan

• 105.5 million TIFIA Loan for Phase II
• TIFIA credit assistance available for projects of
  regional significance with total capital costs
  in excess of 100 million TIFIA financing may
  not exceed 33 of eligible project costs
• 2.6 billion available for FY 2003
• Project environmental approvals required prior to
  funding
• Senior debt must be investment grade
• Flexible repayment schedule
• TIFIA repayment subordinate to senior debt unless
  there is an act of bankruptcy

8
FTA Grant Anticipation Notes

• Request for FTA Section 5309 New Starts
  Discretionary grant in the amount of 159.7
  million for Phase II
• FTA project scoring based on financial rating,
  project justification, cost-effectiveness,
  operating efficiencies and environmental benefits
• Execution of Full Funding Grant Agreement
  compliance with FTA requirements
• Pay as you go vs. GANS?
• Reauthorization and Appropriation Risk
• Back-up pledge