FOR IMMEDIATE RELEASE: July 7, 2006
Moody's assigns A2 rating to downtown development bonds
Moody's Investor Services has upgraded its credit rating for $180 million in Series 2005 Kansas City Downtown Redevelopment District bonds from A3 to A2, and has assigned an A2 rating to $115 million in Series 2006 Kansas City Downtown Redevelopment bonds scheduled for sale July 19.
"The closing of the City's bond issue is a significant milestone for the downtown entertainment district because it represents both the culmination of two-and-a-half years of collective work and the 'passing of the baton' to the City's private sector partner -- the Cordish Company," Mayor Kay Barnes said.
The proceeds from the bond sales represent the final planned phase of borrowing to support various infrastructure and site improvements being made in downtown Kansas City for the entertainment district.
"The release of these favorable credit ratings from Moody's is a vote of confidence for the City and the downtown entertainment district. The successful sale of the bonds will complete the City's financial obligations for the district," City Manager Wayne A. Cauthen said.
The bonds are expected to be insured by Ambac and will be additionally supported by a standby bond purchase agreement from Depfa Bank. The bonds ultimately are secured by the City of Kansas City, Mo.
The A2 rating for the bonds reflects the non-essential nature of the financed project; recent legal determinations regarding annual appropriation-supported financings; the relatively weak legal provisions provided for bondholders; the City's commitment to the project, as well as Moody's expectation that the City will continue to demonstrate the management characteristics of a highly rated entity, including continued appropriations for the current project and others. Risk reduction factors cited by Moody's in support of the project include the fact that the project is on track for substantial completion in fall of 2007 and a recent Missouri Supreme Court ruling clarifying the right of Missouri municipalities to finance annual-appropriation supported projects.
Moody's believes that despite the recent effects of the sluggish economy and high but manageable debt burden, Kansas City's increasingly diverse employment base, significant amounts of land available for development, and continued downtown revitalization and redevelopment will lead to long-term growth in the City's property, sales and income tax bases.