Richard Keyt, Author at KEYTLaw's Blog

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So far Richard Keyt has created 75 blog entries.

Las Vegas Monorail’s Failure May Drive Down Nevada’s Credit

There is a segment of the United States (and Europe too) that loves the railroad and cannot get enough of it. They love light rail, “regular” rail, high speed rail. Sometimes the rail lovers like monorail, which is true of the voters of Nevada ten years ago when they approved a $650 million industrial development revenue bond to fund the construction of a monorail in downtown Las Vegas. I call these people “rail huggers.” They want to spread rail every where like a plague spreads through communities, states and entire countries. Cost to build a rail system is not a factor. It’s irrelevant that these government created, owned and operated rail systems ever produce more than a fraction of operating costs. The rail huggers’ motto is “profits, we don’t need no stinking profits.”

The Las Vegas monorail is the only privately owned public transportation system in the United States. The Las Vegas monorail is 3.9-mile in length and runs on an elevated track. It links casinos and the Las Vegas Convention Center. The Nevada Taxpayers Association warned the Nevada voters before the bond vote ten years ago that the credit rating of Nevada would suffer if the monorail could not generate enough money to pay the debt and if the State of Nevada did not have the funds to pay. Now the Las Vegas Monorail Company has filed for bankruptcy because it owes $500 million to $1 billion and cannot pay the debt. Surprise, surprise, the revenue from the monorail operations is not enough to pay expenses and debt service. NTA President Carole Vilardo said:

“We were concerned because bonds for light rail and monorail projects historically had been too aggressive in their ridership estimates,” she says. “The ridership never lived up to the estimates.”

The Las Vegas Sun says “The Las Vegas Monorail will never generate enough revenue to pay off its debts, according to the company’s own financial estimates. And without financial relief, looming bills to replace trains and other equipment cast doubt on the transit system’s ability to continue operating beyond 2019. . . . Last year, the system generated less than $5 million in net cash flow, woefully short of $34 million needed to service its debt.”

High School Fires All Teachers Because Their Union Refused to Work 25 Minutes More Each Day

A Rhode Island high school asked all teachers to work an additional 25 minutes a day, but because the teachers are union members, the union said no way. Result: The high school fired everyone of the lazy it’s all about the children teachers – over 100 teachers, administrators and assistants. Nevermind that the average salary of a teacher at the high school is $70,000-$78,000 and the median income of the town in which the school is located is $22,000. When asked to give a little more the the kids, the union told the school the equivalent of “you cannot be serious.” In return for paying the teachers such high salaries, the school graduation rate is under fifty percent and fifty percent of the high schoolers are flunking. How dare these callous school administrators think that school is all about educating the children!

Here’s the terrible conditions the school asked the union teachers to accept:

adding 25 minutes to the school day
providing tutoring on a rotating schedule before and after school
eating lunch with students once a week
submitting to more rigorous evaluations
attending weekly after-school planning sessions with other teachers
participating in two weeks of training in the summer

The horror of it! Can you imagine the psychological damage and post traumatic stress a teacher might suffer if forced to eat with the students?

Kid’s ATV Industry Wants Toy Police to Allow Sales of Kid-Sized ATVs to Kids Without Testing for Lead Content

An onerous federal law called the Consumer Product Safety Improvement Act (CPSIA) prevents the sale of products to children unless the products and their component parts each pass an expensive test for lead that proves the products and their components lead content is below the stringent federal lead standard. Many companies that used to produce children’s products or components used in children’s products have gone out of business because they cannot afford to pay for the expensive testing. An industry that has been affected is the kids all terrain vehicle (ATV) industry. The Motorcycle Industry Council Wants Congress to amend the CPSIA to allow kid-sized ATVs to be sold without undergoing the expensive lead content tests. The MIC produced a call to action video asking people to contact their Congressmen/women and Senators and ask them to exempt the sale of ATVs from the CPSIA’s lead content testing requirement. The video gives three reasons for the exemption:

Use of kids ATVs is not dangerous nor does it create a health problem for children. Experts say the amount of lead a child gets from contact with an ATV is less than a child gets from drinking a glass of water.
The CPSIA has the unintended consequence of causing parents to let their kids ride adult ATVs that are more dangerous and not size-appropriate for children because the parents cannot buy kid-size ATVs.
The CPSIA has caused a lot of people in the children’s ATV industry to lose their jobs. MIC estimates that a complete ban on youth models will cause the industry to lose $1 billion a year.

Wind Turbine Wars

Wind power is a new pot of gold for the trial lawyers. The litigation over the installation and use of wind turbines has begun in earnest. ABA Journal: “Wind farms are a growing source of clean energy. But some of the neighbors are beginning to complain. ‘They told us that the noise at 900 feet would be no louder than the hum of a refrigerator,’ says Hal Graham. But he says the reality has been far different. “We can’t sleep. We can’t watch TV. This has been a disaster for us and our neighbors.’ . . . an increasingly vocal minority says there is another, more sinister, side to wind power. They acknowledge that, from a distance, the towering sentinels seem to spin lightly and noiselessly in the wind. But closer up, they insist, turbines emit stomach-jarring whooshes and rumbles, and an impossible-to-ignore rhythmic hum that disrupts sleep and causes headaches, nausea and fatigue in some people. Another problem is shadow flicker, caused when the spinning blades chop up sunlight, creating a swooping pattern of shadows that some people say makes them woozy and sick.”

“The growing contentiousness over the health effects of wind turbines already has resulted in some sharp legal fights —with more sure to come—over where turbines should be located and how they should be regulated.”

Doctor’s Student Loan Debt Now $555,000 Was $250,000 After Med School in 2003

The Wall St. Journal had a story on February 13, 2010, about the growing problem of student loan debts and the consequences of defaulting on student loans. The story mentions many people who now have massive student loans, including the medical doctor who graduated from med school in 2003 with a $250,000 loan debt that has ballooned into a $555,000 debt after default, penalties and interest. On so many levels our society encourages borrowing without any consideration of the consequences. Some segments of our economy are based on borrowing. Higher education is one of the worst offenders of the borrow now and pay later philosophy. Without students’ ability to borrow virtually an unlimited amount to pay for higher education, our college and university systems would be forced to adhere to the laws of economics. The government backed student loan system allows higher education to raise the cost of eduction without any consideration of the cost of living or the laws of supply and demand.

From the Wall St. Journal:

Unlike other kinds of debt, student loans can be particularly hard to wriggle out of. Homeowners who can’t make their mortgage payments can hand over the keys to their house to their lender. . . . But ditching a student loan is virtually impossible, especially once a collection agency gets involved. . . .There is an estimated $730 billion in outstanding federal and private student-loan debt . . . and only 40% of that debt is actively being repaid. The rest is in default, or in deferment, which means that payments and interest are halted, or in ‘forbearance,’ which means payments are halted while interest accrues.

If students were not given a blank borrowing check, colleges and universities would enroll far fewer students. Many colleges and universities would go out of business because the number of students who could afford an education would be a much smaller number than today. Consider a case in point. There is a law school in San Diego, California, called California Western School of Law. U.S. News & World Report, the bible of law school rankings, does not even give a rating to Cal Western. Notwithstanding that Cal Western is unranked in U.S. News, the school is charing students $38,400 tuition for the 2009 – 2010 school year. Approximately 305 students enrolled for the 2009 – 2010 school year. Annual tuition times 305 students equals $11,712,000 a year gross revenue. Can you spell C A S H C O W?

Cal Western estimates that the total cost for a single year of law school this year is $60,498. Number one ranked Yale law school’s tuition for 2009 – 2010 is $46,200. Yale estimates that the cost of one year of law school (room, board and tuition) is $67,240 for a single student and $72,340 for married students. Are you kidding?

A Yale law degree for $201,720 and a Cal Western law degree for $181,494!! These numbers do not include the opportunity cost, i.e., do not take into consideration the amount of money not earned by a student during the three years of law school. A student who gives up a $50,000 a year job to go to Cal Western is really paying a cost of $331,494. These numbers are bigger than the average home cost in most areas of the United States and homes can be financed over thirty years. Consider the monthly payments on a $181,494 debt repaid over 10, 20 and 30 years at six percent interest:

$2,005 per month ($24,059/year) paid over 10 years = $240,595
$1,294 per month ($15,528/year) paid over 20 years = $310,514
$1,083 per month ($12,996/year) paid over 30 years = $389,784

According to the website Payscale.com, the average starting salary in 2009 for lawyers was $45,919 – $69,351. Would you give up a $50,000 a year job to incur debt of $181,494 to spend three years in school a get a job the pays $45,919 a year? Unfortunately, too many young people are doing just that. For an interesting and detailed economic analysis of the cost and benefits of a law school education, see “Mamas Don’t Let Your Babies Grow Up To Be…Lawyers” by Herwig J. Schlunk, Assistant Professor of Law at Vanderbilt University School of Law. The abstract for this article states:

This essay treats a legal education as an investment, and asks the question of whether, based on known costs and expected benefits, such investment should be undertaken. The inquiry will necessarily differ from one potential law student to another. But for three posited “typical students” at private law schools, the investment is shown to generally be a bad one.

For more on this article, including some eye-opening tables comparing the economic costs of law schools to three typical types of law students, see the story in the Tax Prof Blog called “Law School Is a Bad Investment.”

All people who are considering borrowing money to go to school should consider the total cost of the education, the earnings they will lose while in school, the realistic expectation of getting a job in the desired field and the realistic starting salary for their desired post education job before incurring massive debt that could be a burden for most of their adult lives. Do not lose sight of the fact that big debt has big and lasting consequences.

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