LAS VEGAS — In order to meet the challenges of a booming Las Vegas, area issuers are planning several new projects, including $3.8 billion for airport capital improvement and an $800 million project to create a new water intake system for nearby Lake Mead.
Many of the new programs discussed at the National Federation of Municipal Analysts’ meeting here Wednesday arise from meeting the needs of this growing region of the country. Along with population growth, Clark County, which includes Las Vegas, has to deal with it’s a drought-prone region as well as the fact that its economy is based primarily on tourism, creating increased demand on its airport system.
There are 100 projects in the design stages currently in Clark County and market participants are likely to see a significant amount of bond issuance in the near future.
For example, McCarran International Airport is the second busiest in the nation in terms of passenger traffic, and is close to reaching its capacity.
“For every hotel room that is built in this city, we anticipate another 160 passengers a year,” said Randall Walker, director of the county’s Department of Aviation. He noted that several new hotels are being built in the city.
To provide increased capacity, a five-year capital improvement plan is now in place, which will carry a price tag of $3.8 billion. The plan includes the renovation of runways, upgrading baggage screening systems, and the building of another terminal at the facility.
The department is also planning a second airport. Ivanpah Airport, which will be located just south of Las Vegas, could be operational by 2017 with construction beginning in 2010. The department is currently preparing an environmental impact statement. It currently has $2 billion in outstanding municipal debt.
Another major challenge is providing sufficient water supply. Meeting the needs of the area is difficult due to the region’s aridity, and as the area is now in a severe drought, the problems are exacerbated.
“This is the fastest growing community in the U.S. over the past 15 years, and we live in the most arid large city in the country,” said Richard Wimmer, deputy general manager of administration for the Southern Nevada Water Authority.
Clark County now derives about 90% of its water from nearby Lake Mead, which was formed by damming the Colorado River. Unfortunately, the lake has dropped 90 feet in the past eight years due to less snowfall in the western area of Colorado and Utah, where melted snow feeds the river. To address this situation, the SNWA is first planning to begin construction on a third intake pipe that is deeper in the lake, which is projected to cost $800 million.
The second plan, and one that is more controversial, is the SNWA’s plan to bring groundwater from about 300 miles away into the area. This project is estimated to cost $3.4 billion, but is now the subject of litigation over water rights. It is unclear when it will begin.
“This is our most controversial project but it needs to be done to protect against draught,” Wimmer told attendees at the meeting.
One key area that Clark County manager Virginia Valentine focused on was the problem of providing health care to the burgeoning community, especially one in which many people are uninsured.
The University Medical Center, located in Las Vegas, is the county’s only public hospital. The hospital is currently running a $60 million deficit and is now undergoing an evaluation to address problems that created the shortfall.
As Nevada exceeds the national average in uninsured persons and has far fewer participants in Medicaid programs when compared to the national average, demands on the hospital have increased. The evaluation is focusing on developing a new marketing strategy and analyzing all areas of operation to find efficiencies, cut costs and look for additional sources of revenue. Future debt issuance by UMC has not yet been determined.
“We are expected to reach the two million mark for Clark County residents this year, and if our current growth continues we will have three million residents by 2019,” Valentine said. “We need to plan ahead for what we see coming and do it with limited resources.”
