Innovative Financing of Transportation “Megaprojects” Center For Urban Infrastructure Transportation Financing Conference March 7, 2003 Barney A. Allison, Esq. Nossaman Guthner Knox & Elliott LLP Center For Urban Infrastructure Transportation Financing Conference March 7, 2003 Barney A. Allison, Esq. Nossaman Guthner Knox & Elliott LLP

2 2 A Case Study: Las Vegas Monorail  Project Overview  Alignment  Innovative Elements  Farebox Revenue Bonds  Subordinated TIFIA Loan  FTA Grant Anticipation Notes

3 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 world’s 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 4 Desert Inn Rd Sands Avenue Flamingo Rd Tropicana Rd Spring Mtn Rd Convention Ctr Dr GolfClub Las Vegas Blvd. Koval Ln. McCarran International Airport Alignment—Phase I Flamingo Hilton Caesar's Palace The Mirage Treasure Island Circus/Circus Luxor Las Vegas Convention Center Monte Carlo Bally's Paris Bellagio Venetian Desert Inn Las Vegas Hilton New York, New York Sahara Harrah’s Imperial Palace Convention Center Station Aladdin Excalibur Tropicana MGM Grand Existing Alignment Projected Alignment

5 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 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 7   $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” Subordinated TIFIA Loan

8 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