Fitch Downgrades Overland Park Development Corp., KS to ‘BB’

RATING RATIONALE:

–The downgrade to ‘BB’ from ‘BBB+’ reflects the inadequacy of citywide hotel tax revenues to fully support debt service.
–Fitch gives little weight in its rating to the pledge of net operating revenue from a single site convention center hotel. As such, the lack of sufficient coverage from the citywide hotel tax precludes an investment grade rating.
–Hotel tax revenues plus net operating revenues covered 2010 debt service roughly 1.0 time.
–There is a fully cash funded debt service reserve.
–Non-appropriation risk of hotel tax revenues is low given the adverse rating impact such action would have on the city of Overland Park’s (the city) current ‘AAA’ general obligation bond rating.
–Fitch believes the city’s deep and diverse economy supports sustainable long-term hotel demand despite recent weaknesses.

KEY RATING DRIVERS:

–Recovery and growth of the hotel tax in proportion to escalating debt service.
–The rate of depletion of the debt service reserve if both pledged revenue sources continue performing below initial projections.

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