Las Vegas

That Vegas train

Tim W. Ferguson — Tue, 19 Apr 2022 07:56:23 -0400

The latest hopeful horn toot from Bloomberg (with some notes of skepticism--and they forgot to mention the high gas prices!): https://www.bloomberg.com/news/features/2022-04-18/high-speed-train-from...

Finally, A Vegas Train That Makes Sense

Wendell Cox — Sun, 25 Nov 2012 15:31:17 -0500

Las Vegas Railway Express has signed an agreement with the Union Pacific Railroad to operate a conventional speed train from Fullerton, in Orange County to downtown Las Vegas, according to a story by Michelle Rindells of the Associated Press.

This is not to be confused with the proposed Xpress West (formerly DesertXpress) high-speed rail line which would operate from Victorville to Las Vegas, expecting riders to drive through Los Angeles Basin traffic congestion to get to the station. Further, unlike Xpress West, the Las Vegas Railway Express train would require no financial assistance from taxpayers for its largely leisure travelers. As we indicated previously, our analysis concludes that XpressWest revenues are unlikely to be sufficient to repay a proposed federal loan. This could expose taxpayers to a loss of $5.5 billion or more --- approximately 10 times as great as taxpayer losses in the Solyndra federal loan guarantee debacle.

The Las Vegas Railway Express promoters intend to take the full financial risk, as do most entrepreneurs who start businesses. Moreover, the Las Vegas Railway Express train would operate only when demand is substantial, with all trips between Thursday and Monday. The first trip is tentatively scheduled for New Year's Eve, 2013.

Here's hoping the train is successful and that the owners make at least a competitive return on investment, while providing employees commercially funded (not subsidized) jobs, paying, not consuming taxes and with revenues earned from willing customers, rather than relying on public funding. And just as important, if they fail, taxpayers will not be left holding the bag. That's how things should work.

Could a Las Vegas Train Produce Losses 10 Times More Than Solyndra? (Report Announcement)

Wendell Cox — Thu, 16 Aug 2012 10:38:25 -0400

The Reason Foundation has released our "Xpress West" (formerly "DesertXpress") analysis. This high speed rail train would run from Victorville (90 miles from downtown Los Angeles) to Las Vegas. Promoters predict high ridership and profits. They are seeking a subsidized federal loan of more than $5.5 billion, which is within the discretionary authority of the US Department of Transportation to fund.

Our analysis concludes the following:

1. There is serious question whether there is a market for Las Vegas travel that would require driving one-third of the way and transferring to the train. If there is no such market, as seems likely from the international experience, ridership could be as low as 97 percent below projections. The reality can be known only after the line is running.

The balance of the report is based upon the assumption that there is a market for driving to Victorville and boarding a train to Las Vegas.

2. The ridership and revenue projections (by URS Corporation) are based upon data that is more than 7 years old and predates the Great Financial Crisis. There have been significant downward demand trends in the travel market and Las Vegas tourist market since that time, especially in the share of the market from the Los Angeles Basin. It is inappropriate to use such old data in projecting system performance (Certainly no private company would rely on such old data in a due diligence analysis).

3. Even after adjusting the obsolete data (which our report does), the ridership projections are implausibly high --- at four times the Amtrak Acela ridership between Washington, Baltimore, Philadelphia and New York.

4. Over 24 years (the forecast period in the project document), we project that expenditures will exceed revenues by between $4 billion and $10 billion. This would mean that there would be insufficient revenues to pay the federal loan. This could result in a taxpayer loss approximately 10 times that of the Solyndra federal loan guarantee.

5. The free use by the private Xpress West project of the Interstate 15 median could preclude cost effective expansion of this roadway. Even assuming the implausible Xpress West assumptions about the diversion of drivers to the train, the overwhelming majority of growth in the corridor would be on the highway, not on the train. This includes not only the heavy truck traffic, but also car traffic.

Related: The Las Vegas Monorail

Wendell Cox was also author of "Analysis of the Proposed Las Vegas LLC Monorail," which indicated that ridership and revenue projections were extremely optimistic and that the project was likely to fail financially. Subsequently the project filed bankruptcy and defaulted on bonds. The actual ridership on the Monorail was within the range predicted in "Analysis of the proposed Las Vegas LLC Monorail," and far below the level forecast by project consultant URS Greiner Woodward Clyde.

Also see this letter from other consultants reviewing the project (Thomas A. Rubin, Jon Twichell Associates, Professor Bernard Malamud and Wendell Cox).

The Las Vegas Monorail case is described in the Reason Foundation report.

Las Vegas, Birmingham & Salt Lake City Show Continuing Dispersion to Suburbs

Wendell Cox — Sun, 27 Feb 2011 22:56:25 -0500

Census data released in the last week indicates confirms the continuing dispersion of population away from the historical core municipalities (central cities) to the suburbs in the 2000 to 2010 decade. The new figures, for Las Vegas, Birmingham and Salt Lake City indicate that a majority of growth occurred in the suburbs in each metropolitan area and that the dispersion of population to the suburbs was greater in the 2000s in each case than in the 1990s.

Las Vegas: The Las Vegas metropolitan area continued to grow strongly, adding 41 percent to its population between 2000 and 2010. This, however, represents a more than halving of the growth rate from the 1990s (86 percent). The metropolitan area population in 2010 was 1,951,000, up from 1,376,000 in 2000.

The core municipality of Las Vegas of grew 22 percent between 2000 and 2010 (from 478,000 to 584,000). The core city of Las Vegas has an overwhelming suburban urban form, having experienced virtually all of its growth in the modern, car oriented era of suburbanization. During the 2000s, the land area of Las Vegas was expanded from 113 square miles to 131.

The suburbs grew 52 percent between 2000 and 2010. The suburbs attracted 82 percent of the metropolitan population growth, up from 65 percent in the 1990s. The suburbs now account for 70 percent of the Las Vegas metropolitan area population.

Birmingham: The Birmingham metropolitan area experienced a decline in growth rate from 10 percent in the 1990s to seven percent in the 2000s. The population increased from 1,052,000 to 1,128,000.

The historical core municipality of Birmingham declined eight percent, from 243,000 to 212,000. This loss of 13 percent is the largest yet recorded for a historical core municipality in a major metropolitan area. Birmingham’s population peaked at 341,000 in 1960. This loss of more than one-third in population between 1960 and 2010 is despite annexations that doubled the size of the city (from 75 to 150 square miles).

The suburbs gained 13 percent between 2000 and 2010 and captured 140 percent of the metropolitan area’s growth (up from 124 percent in the 1990s). The suburbs now account for 81 percent of the metropolitan population.

Salt Lake City: In the Salt Lake City metropolitan area growth declined to 16 percent in the 2000s from 26 percent in the 1990s. The population rose from 969,000 to 1,124,000.

The historical core municipality of Salt Lake City grew three percent (from 182,000 to 186,000). Salt Lake City reached its population peak at 189,000 in 1960. This modest loss occurred while the land area of the city nearly doubled (from 56 square miles to 109).

The suburbs gained 19 percent between 2000 and 2010. The suburbs attracted 97 percent of the metropolitan population growth, which is up from 89 percent in the 1990s.

Second Thoughts on the Condo Market

Wendell Cox — Tue, 15 Jun 2010 15:21:38 -0400

Mega-builder Larry Murren, whose company (MGM Mirage) opened the "largest privately funded construction project in U.S. history" told WSJ (the Wall Street Journal Magazine) that if he had to do it all over again, he would reconsider the condo-residential component of the project. “We would have built about half of those units” at the new $8.5 billion "City Center" development.

The less than stellar performance condominium sales in the project was reported by the Las Vegas Review Journal, which indicated that only 78 of the project's approximately 675 condominium units have sold. MGM Mirage is not alone in this plight. The Review Journal further notes that Las Vegas has a reports a 250 month or nearly 21 year supply of unsold condominium units. This means that some of today's unsold units could still be on the market for parents in a suburban Las Vegas house to move to when their newborn heads off to college. These numbers qualify Las Vegas for finals of the Condo Bust World Cup, against other strong competitors Miami and Dubai.

Murren credits a mixed-use symposium as the inspiration for City Center. Murren would not be the first developer to have been smitten by over-promotion of condominium market prospects. However the balance of Center City (shopping, entertainment, hotels and casinos) appears to be doing far better than the condominium element.

Second thoughts have been occuring to a number of additional central city condominium developers around the nation as the central city condominium market continues its meltdown. The most recent evidence comes with condo auctions in the cores of Baltimore, St. Petersburg and Boston.

In Baltimore, Pier Homes at Harborview has scheduled an auction of new units with minimum bids discounted from 55% to 75% below list prices. This means that the minimum bid, the Baltimore Sun indicates that only half of the units (completed two years ago) have been sold.

In St. Petersburg, units in the 36-story Signature Place condominium tower were auctioned last month, with average bid prices 50% off the previous list prices. The Boston Globe indicates that "another" condo/loft auction is to occur in that city on June 26, with minimum bid prices up to 60% off list.

The extraordinary risk of the central city condominium market was summarized by Larry Murphy, a Las Vegas real estate analyst: "It takes two to three years to build a high-rise project, and it can't be done in phases like a new-home subdivision. All of the units have to be built at once." He further noted that "Most of the units are sold within the first three months of completion. After that, sales drop off dramatically." These inherent complexities of the condominium market will not be solved by mixed use seminars.