Fitch Rates Kansas City IDA (MO) $30MM Downtown Arena Bonds 'AA'.

CHICAGO -- Fitch has assigned an underlying rating of 'AA' to the Kansas City Industrial Development Authority, Missouri's (KCIDA) $30,000,000 variable-rate demand tax-exempt revenue bonds, series 2006E (Kansas City Downtown Arena Project). Fitch also affirms the 'AA' rating on approximately $401 million of outstanding KCIDA debt and affirms the 'AAA' rating on $236.6 million of outstanding City of Kansas City, Missouri general obligation debt. The Rating Outlook is Stable for both KCIDA and the City of Kansas City.

In addition, Fitch expects to assign a long-term rating to the 2006E bonds, based on municipal bond insurance; and a short-term rating, based on a standby bond purchase agreement with Dexia Credit Local.

The bonds, which will price through a syndicate led by Oppenheimer & Co., Inc., are expected to price on June 14 and close June 15. Springsted, Inc. and TKG & Associates are serving as co-financial advisors. The bonds will finance an 18,000 seat multipurpose indoor arena in the south loop area of downtown Kansas City. Under the Kansas City Arena development agreement, the city will develop the arena project with Anschutz Kansas City Arena, LLC, an affiliate of Anschutz Entertainment Group.

The bonds are special limited obligations of KCIDA, paid solely from pledged revenues. Business license fees on both hotel/motel rooms and rental cars secure the bonds. Although the pledged revenues are expected to be sufficient for debt service, the City Council of Kansas City may appropriate general city revenues to meet any debt service deficiency. Before the end of each fiscal year, the city will budget and appropriate (according to the Financing Agreement) sufficient funds to meet debt service. The trustee will give credit for other available revenues.

The KCIDA's 'AA' rating on the downtown arena project bonds is based on the strength of pledged license fees, as well as available general municipal revenues from the City of Kansas City, which are subject to annual appropriation. As an industrial development corporation, KCIDA promotes economic growth by issuing revenue bonds secured by pledged revenues; it does not have any taxing power.

Kansas City's 'AAA' general obligation rating is based on the city's diverse economic and tax revenue structure, generally strong but recently weaker financial performance, moderately high debt levels and excellent financial control systems. The city has achieved its financial strength through diligent management practices as it endeavored to respond to neighborhood public infrastructure needs and downtown revitalization. Increased internal funding of capital projects has limited the growth of tax-supported debt, which nevertheless has increased in recent years. Labor relations are strong and future personnel costs are expected to be within normal budget constraints. Although a weaker economy has forced the city administration to utilize reserves and significantly reduce budgetary spending and personnel levels, Fitch expects that economic gains and strong cost control will improve financial results in fiscal 2006. Continued financial deterioration or increased economic stress would lead to a lowering of the city's general obligation rating.

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