City of Kansas City, Missouri KC Live Bond Restructuring CITY COUNCIL PRESENTATION April 25, 2007

Page 1 Goals and Objectives  Rebalance City’s debt portfolio – focus on KC Live and Sprint Center debt  Current transactions focus on KC Live debt  Sprint Center Arena debt subject of future transactions  Reduce interest rate risk on City tax-supported debt by converting floating rate bonds to fixed  Reduce City’s annual appropriation pledge risk

Page 2 Current Market Conditions  Opportune time to execute restructuring  Long-term tax-exempt rates continue to trade at historically low levels  Convergence of short-term and long-term tax-exempt rates

Page 3 KC Live Restructuring  City appropriation remains pledged to KC Live debt  Targeted debt mix:  40% conventional fixed rate  45% synthetic fixed rate (interest rate swaps)  15% unhedged variable  Pro-rata principal amortization—Restructured debt maintains constant mix in each year going forward  Amended and Restated Indenture & New Reoffering Statement

Page 4 KC Live—Amended & Restated Indenture  Allow different Series of Bonds to be in different interest rate modes  e.g. convert Series 2005A to Fixed Rate (to maturity)  Provide for interest rate swaps  Regular payments on parity with Bonds  Termination payments Subordinate to Bonds

Page 5 KC Live Debt KC Live Project – Before Restructuring Structure – Interest Rate ModeSeriesDated Date First Maturity (December1) Final Maturity (December 1) Tax Status Par Amount Outstanding Variable – Weekly Floater2005A3/30/ Tax-Exempt115,015,000 Variable – Weekly Floater2005B3/30/ Tax-Exempt64,985,000 Variable – Weekly Floater2006A7/20/ Tax-Exempt69,500,000 Variable – Weekly Floater2006B7/20/ Tax-Exempt45,500,000 Total295,000,000 KC Live Project - After Restructuring Structure – Interest Rate ModeSeriesDated Date First Maturity (December1) Final Maturity (December 1) Tax Status Par Amount Outstanding Fixed Rate (Conversion)2005A3/30/ Tax-Exempt112,535,000* Synthetic Fixed (fixed-payor swap) 2005B3/30/ Tax-Exempt64,985,000 Synthetic Fixed (fixed-payor swap) 2006A7/20/ Tax-Exempt69,500,000 Variable – Weekly Floater2006B7/20/ Tax-Exempt45,500,000 Total292,520,000 * preliminary, subject to change.

Page 6 Plan of Finance  Fixed Rate: Convert $115 million Series 2005A to Fixed Rate (to maturity)  Eliminate interest rate risk  Synthetic fixed rate: $134 million interest rate swaps to hedge Series 2005B and Series 2006A  Reduce interest rate risk  Variable rate: $45 million Series 2006B left as unhedged variable  Prepayment flexibility Counterparty KCMO 2005A 2006B Designed to closely match

Page 7 Interest Rate Swaps  Risks and Mitigation Strategies  Appendix  Discussions between City Finance Staff and Financial Advisor  Considered within context of City’s Draft Swap Policy  Swap agreement  Terms and conditions consistent with City’s Draft Swap Policy  Termination Risk Standard termination provisions for credit-related events City owns optional termination right/Counterparty does not have optional rights City does not post collateral/Counterparties may have to post collateral Termination Amount payable by City –Bond proceeds –Revenues and City appropriation subordinate to payment of debt service on Bonds Monthly mark-to-market valuations

Page 8 KC Live Restructuring Results* * preliminary, subject to change.

Page 9 KC Live Restructuring Results* * preliminary, subject to change.

Page 10 KC Live Restructuring – More Resilient Cashflows in Rising Interest Rate Environment Assumed Total Interest Cost Average Annual Debt Service Coverage Over Bond Term Outstanding – 100% variable4% tax-exempt 108.2% RestructuredFixed: 4.5% Synthetic: 3.7% 4% tax-exempt 104.9% Restructured – Sensitivity plus 100 bps on Floating Rate Debt Fixed: 4.5% Synthetic: 3.7% 5% tax-exempt 103.5% Restructured – Sensitivity plus 200 bps on Floating Rate Debt Fixed: 4.5% Synthetic: 3.7% 6% tax-exempt 102.2%

Page 11 City Tax-Supported Portfolio Fixed Rate Debt $860.3 million 56% Variable Rate Debt $564.1 million 37% Synthetic Fixed Rate Debt $101.5 million 7% _______________________________________ Total Tax Supported Debt $1.526 billion 100% Fixed Rate Debt $972.8 million 64% Variable Rate Debt $314.6 million 21% Synthetic Fixed Rate Debt $236.0 million 15% _______________________________________ Total Tax Supported Debt $1.523 billion 100% Current Portfolio Portfolio After KC Live Restructuring Assumes current structure of Sprint Center debt outstanding.

Page 12 Schedule  Friday, April 27 th  Confirm ratings  Receive consent to Amended & Restated Indenture  Friday, May 4 th  IDA Approval  Week of May 7 th  Post / Mail Preliminary Offering Document  Week of May 14 th  Establish fixed rates for Series 2005A conversion  May 30 th  Closing - Swap Schedule still under development. -

Page 13 Appendix Swap Risks and Mitigation Strategies

Page 14 RiskDescriptionMitigation Strategies AmortizationMaturity schedule of underlying bonds differs from scheduled notional amount as specified in the agreement  Notional amounts should mirror amortization of hedged bonds CreditCredit rating of the Counterparty or the Authority is downgraded during the term of the agreement  Same mitigation strategy as “Counterparty Risk”  Authority not required to post collateral Market LiquidityFinancial product does not have a significant number of providers or counterparties which could affect the efficient pricing and eventual liquidity value in the event of a termination  Careful analysis and evaluation of the financial products used CounterpartyCounterparty is not able to meet its obligations under the swap agreement  Enter into contracts with highly rated counterparties  Require counterparty to collateralize in event of downgrade  Swap insurance  Require certain credit events to trigger termination Swap Risks

Page 15 Swap Risks (continued) RiskDescriptionMitigation Strategies BasisCounterparty payment does not offset the debt service payment on the underlying bonds  Examine historical trading differential of comparable securities to the proposed swap index  Ensure bank facility securing underlying bonds is highly rated Tax (special form of Basis Risk) Tax law changes make the value of tax- exemption less than when the swaps are executed (i.e. the cost of borrowing increases)—increases the shortfall between what is received from swap counterparty and what is paid to bondholders.  Consider BMA-based swaps or cost of funds swaps. LiquidityAuthority cannot secure cost-effective renewal of a letter of credit or liquidity facility or suffers a failed auction.  Auction rate securities do not require LOC or liquidity facility. TerminationSwap is terminated prior to maturity and Authority owes a make-whole payment to counterparty that could be substantial.  Do not allow Counterparty to terminate the agreement unless Authority triggers a “default”  Make Authority termination payment subordinate to all bond payments  Negotiate terms allowing for payment over a reasonable period of time AccountingPeriodic market value of the agreement may have a materially adverse effect on the Authority’s financial statements  Discussions with internal and external accountants  Clear description of why a swap is executed in Notes to Financial Statements  Dialogue with rating agencies

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