august 16, 2004 801 mount vernon squarepennquarter.dcconvention.com/findisclosure/volume2.pdf ·...

Conventions, Sports & Leisure International 3021 Harbor Lane, Suite 210 • Minneapolis, MN 55447 • Telephone 763.553.9700 • Facsimile 763.553.9709

August 16, 2004 Mr. Jeffrey L. Humber, Jr. Chairman, Washington Convention Center Authority 801 Mount Vernon Square Washington D.C. 20001 Dear Mr. Humber: The attached document, entitled Analysis of Potential Financing Alternatives and Cash Flow Impacts for Various WCC Expansion/Headquarters Hotel Development Scenarios represents Volume II of our overall analysis of WCC expansion and hotel development issues. This Volume II report serves as a companion document to the Volume I - Washington Convention Center Expansion Feasibility Study and Headquarters Hotel Feasibility Study presented under a separate cover. The purpose of the Volume II analysis presented herein is to assess the potential impacts on the Washington convention Center Authority (“WCCA”) as a result of various convention center and hotel financing options, and to assess associated impacts on WCCA cash flows. All findings and recommendations presented as a part of this study reflect the analysis of primary and secondary information, including information provided by the WCCA and the Washington Convention and Tourism Corporation. Information provided by third parities has not been audited or verified unless otherwise noted and is assumed to be correct. We sincerely appreciate the assistance and cooperation we have been provided in the completion of this report and would be pleased to be of further assistance in the interpretation and application of our findings. Very truly yours,

CSL International

Analysis of Potential Financing Alternatives and Cash Flow Impacts for Various WCC Expansion/Headquarters Hotel Development Scenarios Volume II Page 1

Volume II - Analysis of Potential Financing Alternatives and Cash Flow Impacts for

Various WCC Expansion/Headquarters Hotel Development Scenarios

Executive Summary

The purpose of this Volume II report is to provide the Washington Convention Center Authority (“WCCA”) with various assessments, both general industry and project specific, related to the development of a headquarters hotel in the District. This report is prepared for the use of the WCCA in evaluating potential public/private financing scenarios, assessing potential risk to WCCA revenues as they may be pledged in any described financing options and the impact of these on the projected cash position of the WCCA.

Key Hotel Financing Issues

Optimism in Investment Trends

• Hotel investors have been aggressive in pursuing existing properties for acquisition.

• Replacement costs of hotels have generally been above hotel market values for at least the past three years.

• Equity investors seek to realize yields principally through acquiring existing assets and generating favorable returns through renovation and repositioning.

• The lodging industry has attracted capital due to lower investment returns on other forms of real estate.

• The returns on office, industrial and multi-family housing have generally been below historical averages.

• Institutional and private investors are looking to the lodging industry to outperform other sectors.

CONCLUSION: Changing market conditions have created increased private and capital market interest in lodging real estate investments. Financing for New Hotel Development

• New construction tends to follow the bottoming of market cycles. • A lag occurs between a market bottom and new construction starts given the time

necessary to complete pre-construction related activities including financing. • The vast majority of expected construction starts over the next 2 to 3 years will be

for smaller projects with fewer amenities located in secondary and tertiary markets.


• These projects are typically less than 200 keys, are usually ”stick” construction, that is lumber versus concrete and steel, have construction schedules that often do not exceed 12 months, and often have financial pro forma’s that achieve positive cash flow in less than 6 months of operation.

• Development costs for these projects, excluding land, are generally in the range of $65,000 to $85,000 per key (room).

CONCLUSION: Although financing for new hotel development is becoming more available, it is generally for smaller hotels, with limited facilities and amenities, at far lower costs per room than large, full service hotels. Financing for Large Scale Hotel Development

• The funding options associated with a headquarters hotel are one of three:

1) with private sector financing of both debt and equity; 2) a hybrid of private sector debt and equity and public sector subsidies

which can take many forms; and, 3) with public capital markets financing.

• The capital structure and market for financing large-scale hotel developments is quite different than that for other types of hotel development product.

• We found no 100 percent private-sector financing transactions for large-scale convention center hotels developed in any primary or secondary markets from 1998 to present.

• Of those large-scale convention center hotels that are reported to be under active and serious consideration, all that we have researched are planning to be financed through some form of bond financing.

• More than 20 recent convention center and conference center hotel projects were reviewed. These hotels included properties constructed and operating as well as properties that are under construction, in pre-construction and/or pre-finance stages.

CONCLUSION: Few large-scale hotel developments are currently being accomplished as public-private transactions. There have been no recent large-scale hotel financings done on a 100 percent private basis. Examining Private Financing Yields

• Recent, up-to-date survey data on investment criteria was secured to assess investment criteria used by hotel real estate investors.

• Data suggested that yields of 19 percent or more were necessary to attract private equity.

• Certain return on investment analysis has been prepared utilizing the PKF operations pro forma.

• Sensitivity analyses were performed utilizing project specific assumptions.


• Other data utilized as a part of the return on investment analysis included project specific cost data prepared by Turner Construction, and land acquisition cost data prepared by Jair Lynch Companies LLC.

• The analysis conducted for this report suggested that only single digit equity yields could be generated on the project.

CONCLUSION: The equity yields that private and institutional investors demand are far higher than the yields that large-scale convention hotels are able to support. Supporting/Complimenting a Private Financing

• Incentives, tax abatements, guarantees, loans and other public financing mechanisms could be created in a hybrid public-private deal.

• The “blended” net cost of capital of such a package would be far higher than the low cost of capital available in a project revenue tax-exempt bond financing for the headquarters hotel.

CONCLUSION: The cost of these incentives to private developers tends to be quite high as compared to other forms of finance available to the public sector. Changing Trends in Ownership of Convention Center Hotels

• Public-private hotel developments appear to be waning. • The number of convention center hotel projects that have stalled under the public

subsidy/private developer model appears to have increased over the last 36 months.

• Research suggests that these projects have stalled primarily due to two reasons: 1) the inability of the respective private development entities to raise

required levels of debt and equity financing, and; 2) greater awareness of municipal finance instruments that allow such

projects to be financed and constructed with: (a) less municipally generated capital than is required under a

traditional public/private structure; (b) a lower cost of capital than a traditional public/private

structure thereby creating an opportunity for a more successful venture;

(c) a higher level of control relative to the use of available hotel rooms for convention and association meetings, and;

(d) access to the distributable income that the hotel generates.

CONCLUSION: Fewer public-private hotel deals are getting done because the public sector has come to realize that by controlling financing and ownership, it can more effectively control and manage the hotel asset as well as generate the economic benefits that can occur with a large-scale hotel.


Hotel Financing with Project Revenue Tax-Exempt Bonds

• For a public sector agency or authority, tax-exempt bonds are usually a better and cheaper option than making substantial financial contributions to a developer.

• One of the principal advantages of this type of funding is that it comes from the tax-exempt markets. These markets have different risk and yield characteristics than traditional real estate debt and equity markets.

• Tax-exempt markets offer more favorable terms and conditions than the private sector debt and equity markets.

CONCLUSION: Project revenue tax-exempt financing, only available to public sector ownership entities, offers a lower cost of capital and more favorable terms and conditions than private sector debt and equity markets.


Volume II - Analysis of Potential Financing Alternatives and Cash Flow Impacts

for Various WCC Expansion/Headquarter Hotel Development Scenarios The purpose of this Volume II report is to assess potential alternatives for financing various WCCA expansion/headquarters hotel development options, and the resulting potential impacts on WCCA cash flows. This analysis is based on assumptions that are subject to change. These changes could impact the findings contained herein. The presentation contained herein is designed to provide the reader with a clear understanding of the important characteristics and implications of various funding alternatives. A more detailed document highlighting a broad crossection of associated hotel funding issues, including detailed cash flow specific to a D.C. headquarters hotel under a recommended financing structure, is presented as an appendix to this Volume II report. Cash flow models for alternative financing scenarios are also presented in the appendix. Overview of Primary Findings The analysis presented herein addresses important financing issues related to six distinct development options. Four specific financing alternatives are addressed for each of the six options. A full financing model has been developed for several of the options, with different calculations for each of a variety of assumptions. It is important that through this level of detail the set of basic study findings emerge in a clear and concise manner. We have therefore pulled forward these findings to assist the reader in taking from this study the full impact of key financing issues. These are presented as follows: • If a headquarters hotel is developed, the net operating income and various taxes

generated by the property will be sufficient to fund its project costs, assuming no land costs (Options A and B). This financing would not require a commitment of WCCA dedicated revenues. Additionally, by 2013 the WCCA cumulative cash balances substantially increase over the currently projected $94 million, to approximately $197 million and $159 million for each of the options respectively.

• A financing of an added 75,000 sq. ft. of meeting and ballroom space to complement the existing WCC exhibit space (Option C) can be accomplished within the existing WCCA bonding capacity. However, by 2013 the cumulative cash balance of the WCCA drops by approximately $51 million below the current projection, to $43 million.

• If a headquarters hotel is developed with an added 75,000 sq. ft. of meeting and ballroom space to complement the existing WCCA exhibit space (Option D), the estimated public sector contribution is $181 million. Financing of this contribution is within the current projected WCCA bonding capacity. It is projected that in 2013 the cumulative cash balance reaches $112 million ($18 million more than current projections).


• If a headquarters hotel is developed with WCCA exhibit space and complementing meeting and ballroom space (Options E and F), estimated public sector contributions are projected at between $422 million to $684 million, respectively. The 2013 reduction to the cumulative cash balance drops by approximately $125 million and $144 million for each of the two options, respectively. This result in negative cash balances to the WCCA.

• Refinancing of existing WCCA debt is not necessary for a hotel financing. In fact, there would likely be a dissavings associated with any refinancing of $10 to $30 million due to current interest rates.

• To minimize operating or development risk to the WCCA, a private financing of the hotel could be pursued. However, this would require a significant up-front commitment of land, cash, loans, tax abatements or some combination thereof in order to provide sufficient financial incentive for the developer. Such commitments would likely be required from both the WCCA and the District.

• If the hotel is financed with tax-exempt bonds, the WCCA or the District could own the property through a public sector ownership entity. Controlling the ownership of the hotel property offers several advantages including more effective room block management, control of capital programs and related service, quality and physical maintenance issues.

• The structure of a tax-exempt hotel financing allows for distributions of excess revenue, after debt service, and the return of site-specific taxes back to the ownership entity. This return should also be considered a distribution. These monies, which would amount to more than $11 million in the second year of operation and be more than $18 million in the 5th year of operation, would be controlled by the ownership entity and could used for any lawful purpose. Under the control of the WCCA, these revenues could be used to help fund WCC expansion options whose cost may be in excess of existing WCCA debt capacity, support marketing efforts, and generally continue to maintain the needs of the convention industry for the District.

• If the WCCA pursues a course of development that involves WCCA expansion space in addition to the hotel (i.e. added meeting, ballroom and/or exhibit space), a higher level of public sector contributions would likely have to be pledged in order to fund the added space. Debt service guarantees would also likely be required. As noted in previous reports to the WCCA, funding options that involve added exhibit space in addition to a hotel would exhaust all WCCA dedicated revenues and require that added revenue streams (i.e. tax increases or reallocations) be secured.

As this full report is read, the support for these key findings will emerge. The full report should be read in order to gain a sense of the level of detail that has been prepared in analyzing various financing alternatives.


Summary of Development Options for WCC Expansion and Headquarters Hotel Development Our consulting team has also developed a report entitled Convention Center Expansion & Headquarters Hotel Feasibility Study for the Washington Convention Center. In that study, six potential development options focusing on exhibit, meeting, ballroom and hotel space were analyzed. These options are summarized as follows.

• Option A – Construct a hotel with the minimum target room count of 1,220 rooms, with 100,000 net leasable square feet of related meeting/banquet space at the old Convention Center site. The site would also allow for the full 1,500-room count.

• Option B – Construct a 1,220-room hotel with 100,000 net leasable square feet of related meeting/banquet space at the 9th Street site.

• Option C – Construct 75,000 net leasable square feet of WCC-controlled meeting/ballroom space at the 9th Street site, without a 1,220-room headquarters hotel.

• Option D – Construct 75,000 net leasable square feet of WCC-controlled meeting/ballroom space at the 9th Street site, in conjunction with a 1,220-room headquarters hotel (with its own 100,000 square feet of meeting/ballroom space).

• Option E – Construct a 250,000 net leasable square foot exhibit hall with its own support meeting/banquet space of 100,000 net leasable square feet at the old Convention Center site, plus a 1,220-room hotel with 100,000 net leasable square feet of related meeting/banquet space.

• Option F – Construct a large exhibit hall (250,000 square feet) at the 9th Street site with 100,000 net leasable square feet of related meeting/banquet space and a 1,220-room headquarters hotel with up to 100,000 net leasable square feet of related meeting/banquet space.

Key Goals and Assumptions In developing a financing model, we have assumed three fundamental conditions:

• Successful continued operation of the convention center is essential to the success of a hotel and expansion.

• The WCCA dedicated taxes should not be put at risk when funding the hotel if at all possible.

• Any capital structure developed should support WCCA business growth and objectives, as best as possible, and be considered highly marketable.


It should be noted that this analysis includes a presentation of scenarios that involve District control of a new hotel development. Under several of these, there is also a component of meeting/ballroom/exhibit space that is controlled by the WCCA. Hotel development key findings and financing scenarios are designed to mitigate WCCA’s financial risk associated with the project. The analysis attached to this report include the following:

• Private financing for a headquarters hotel may be difficult to complete without a package of public incentive, tax abatements, loans, pledges, guarantees and other financing mechanisms. Even with these incentives, private financing can be challenging and time consuming.

• Major headquarters hotels that have been financed privately since at least 1998 have involved significant public sector financial incentives.

• Available capital for new hotel development has improved recently, however, not to the extent that major headquarters hotels can be funded on a fully private basis.

• Virtually all major headquarters hotels being considered today are expected to be funded with some bond financing. Benefits of project revenue tax-exempt financing include, but are not limited to, the following:

does not impact bonding capacity or credit rating, is non-recourse to the issuing entity, affords access to public capital markets at a lower cost of capital than other

forms of finance, affords control over planning, design, quality & service levels, and other

ownership issues, affords control of the guest room inventory upon opening, and generates distributable income for the issuing authority that can be used for

any lawful purpose whatsoever. Assumptions Used in Financial Model In developing a financial model for each scenario, we assumed the following:

• A four percent growth rate in dedicated tax revenues after 2008. District projections are utilized up until 2008.

• Operating subsidies to fund new space will approximate current costs per-square-foot of sellable space, adjusted for some minor site and efficiency issues.

• It is assumed that any costs not covered by hotel operating revenues will be financed by the public sector. The implications of this are discussed herein.

• Debt service for costs not covered by hotel revenues, where applicable, is calculated as a constant percentage of total costs as interest rates change daily and modeling assumptions will be impacted by the particular structure of the transaction. More detailed analysis focusing on specific rates, terms, structures, etc. can be developed at a later date once WCCA development priorities are set.


• We have assumed that $10 million, annually, will be allocated to the Stabilization/Redemption Fund, beginning in 2010, for permissible purposes including the redemption of the Authority’s outstanding bonds.

• Excess revenues not required to service debt will be distributed to the hotel ownership entity on an annual basis.

• Excess site-specific taxes, if not required to service debt, will revert to the hotel ownership entity on an annual basis.

• A sale of the hotel will occur at the first occurrence when the principal, interest, and premium, if any, on outstanding bonds are less than the combination of hotel net operating income, capitalized at 10%, plus amounts in all reserve accounts that can be used to pay off outstanding bonds. The pro forma suggest this could occur at the end of the 7th operating year. At the time of the sale, hotel disposition proceeds net of outstanding bonds would be distributed to the hotel ownership entity.

• The additional bonding capacity of the WCCA is approximately $200 to $250 million. This capacity will be affected by interest rates, financing structures, and WCCA funding priorities.

Each development option is reviewed below, incorporating these assumptions as appropriate. We have also included WCCA cash flow summary tables for each option as presented at the end of this report. We have reviewed financing of project development under several scenarios:

• WCCA ownership of a headquarters hotel;

• District ownership of a headquarters hotel;

• WCCA hotel ownership assuming existing debt is refinanced; and

• Private hotel financing.

The analysis of each specific hotel and/or WCC space development option is presented herein. The presentation of the option on each chart that includes a refinancing of existing WCCA debt is not necessarily presented as a suggested option. It is presented to detail the additional costs, restrictions on WCCA revenues, and required obligations of the WCCA if such a structure were to be put in place. Option A – Headquarters Hotel at Old Convention Center Site Option A consists of a hotel with the minimum target room count of 1,220 rooms, with 100,000 net leasable square feet of related meeting/banquet space at the old Convention Center site. The site would also allow for the full 1,500-room count.


Option A – Headquarters Hotel at Old Convention Center Site

Option A

WCCA Ownership

Hotel Only

District Ownership

Hotel Only

WCCA

Ownership Hotel w/

Refunding

Private Financing

1 Project Cost $352M $352M $352M $352M

2 Refunding of WCCA Debt?

No No Yes No

3 Public Sector equity contribution

$0 (assuming no land costs)



Possibly $0 (assuming no land

costs)

4 Impact on WCCA Ability to Issue Additional Debt

None None None Limited or None

5 Required Public Sector/WCCA Pledge

(year 2008)

Site Specific Taxes and PILOT* only; no

WCCA revenue pledge

Site Specific Taxes and PILOT* only; no

WCCA revenue pledge

100% of WCCA Dedicated Taxes

None

6 WCCA Guarantee of Debt

No No Yes No

7 Retention of Tax Increment (7 yr cum)

$0 $0 $0 $0

8 Retention of Site Specific Taxes (7 yr

cum)

$83.9M to WCCA $0 to District

$83.9M to District $0 to WCCA

$48.8M to WCCA

$0 to WCCA

9 Ongoing Distributions (7 yr cum)

$54.5 to WCCA $0 to District

$54.5 to District $0 to WCCA

$0 $0 to WCCA

10 Distributions upon sale (year end 7)

$19.8 M to WCCA $0 to District

$19.8 M to District $0 to WCCA

$22 M to WCCA $0 to District

$0 to WCCA

11

Pro’s

• No pledge of WCCA revenues

• WCCA retains excess revenue

• WCCA controls room block

• No pledge of WCCA taxes

• No significant advantages

• No pledge of WCCA revenues

12

Con’s

• No significant disadvantages

• Lack of room block control for WCCA

• No distribution of net revenue for WCCA

• Lack of control over hotel operations/ service levels

• Required pledge of WCCA revenues

• WCCA debt guarantees

• $10 to $30 million dissavings with refinancing

• Less room block control

• No distribution of net revenue


* Payment in Lieu of Taxes – Allocation of real estate taxes that do not exist in a tax-exempt deal that would normally be assessed in a privately developed project.


Key findings for Option A include the following:

• The revenues from the hotel will finance at least $352 million in project cost with no requirement of WCCA pledges or guarantees. The cost of construction per room, minus project costs unrelated to actual construction such as reserves, finance costs and pre-opening expenses, would be $271,000. The detailed cash flow for this scenario is included at the end of the Appendix. However, if a private financing option is chosen, simply providing land will not likely be sufficient to secure financing. Some form of cash contribution or participation will likely be required due to the fact that lenders generally subordinate the contribution of land from a third party such as the District to the risk inherent in their own debt investment as well as the risk associated with an equity contribution.

• Refinancing of existing WCCA debt is not necessary for hotel financing, and in fact there will likely be a dissavings of $10 to $30 million due to current interest rates.

• Private financing may provide less control of hotel room block, and provides the public sector with no financial “upside”. However, this option would serve to minimize any perceived downside that the WCCA may experience from hotel ownership.

• If the hotel is financed with tax-exempt debt, the issuing entity would receive distributions if excess revenue existed. In addition, it could receive distributions in the form of a return of site-specific taxes that were not required to satisfy debt. Combined, these monies are projected to be significant. It would be to the advantage of the public sector ownership entity to maintain control of the financing to receive these distributions.

WCCA Ownership Under WCCA or District ownership scenarios, with no refinancing of existing debt, a pledge equal to 75 percent of the project’s site-specific taxes is required. In addition, a Payment in Lieu of Taxes (PILOT) would be pledged. This PILOT would equal the real estate taxes that would normally be paid in a private financing that are generally not required to be paid by a tax-exempt financing entity. The typical public sector entity that owns a hotel would not be required to pay real estate taxes. As such, these taxes can constitute an imputed payment and be used to provide additional support to the bond transaction. Public Sector Ownership (WCCA or District) The previously proposed District ownership financing plan had a cash flow model that incorporated tax increment financing (“TIF”) as part of the structure. Under that plan, the tax increment is retained by the District if not used to pay debt service. For the public sector ownership options, we have structured the financing such that the excess revenues


from the hotel plus the site-specific taxes would be retained by the public sector ownership entity if not required to pay debt service. In addition, when the hotel is sold, the net proceeds also would be paid too the public sector ownership entity. The actual allocation of excess revenue distributions, the retention of site-specific taxes and the distribution of disposition proceeds could be a point of discussion, going forward, as to how the WCCA and the District could participate together in the economic benefit the hotel generates. WCCA Ownership with outstanding WCCA debt refunding If a refinancing of WCCA debt were to also occur in combination with a hotel financing, distributions are more limited due to the intensive use of revenues within the capital structure. Risks to the WCCA In a Hotel Financing/ WCCA Debt Refunding Structure Risks to WCCA revenues, due to debt service guarantees, are much higher in a combined hotel financing/refunding. Access to WCCA revenues would only occur after required payments and funding issues related to the hotel. If hotel operating revenues were down, and a shortfall to debt service existed, pledged WCCA revenues would be used to pay debt service. This would serve to deplete WCCA revenues. This likely would impact the ability of the WCCA to operate effectively given that, if headquarters hotel revenues were down, market wide hotel revenues also would be down. A decline in the dedicated taxes, combined with lower hotel revenues, would draw down reserve funds used to cover the Authority’s operating deficit. It would take time to replenish these reserve accounts. It is our opinion that this is a rather potent rationale for not recommending a hotel financing structure that includes a refunding of WCCA debt. WCCA Ownership – Impact on WCCA Cash Flows We also have assessed the impact of a headquarters hotel only financing on WCCA cash flows (as presented under Option A – Operating Cash Flow Impact at the end of this report). This analysis reflects the fact that there are no operating cost impacts to the WCCA. There would be an increase in dedicated tax revenues associated with the hotel, estimated at $1.4 million annually. Projections indicate that, assuming WCCA ownership and the related benefits of the ongoing receipt of distributions by the WCCA of hotel excess revenues and retention of site specific taxes, the hotel would generate net cash flow to the WCCA on an annual basis for every year from the first year of operations. These estimates are included in the chart presented below which highlights the net cash flows to the WCCA for the period spanning fiscal years 2005 through 2013.


Exhibit I – Impact on WCCA Cash FlowsDevelopment Option A - HQ Hotel at Old CC Site

(in th

ousa

nds)

- $9,624

-$1,286

$2,534

$21,642$20,005

$24,146

$28,479$32,425

$17,276

-$20,000

-$10,000

$0

$10,000

$20,000

$30,000

$40,000

FY 2005 F Y 2006 FY 2007 FY 2008 FY 2009 FY 2010 F Y 2011 FY 2012 FY 2013

Option A Ne t Cash F lows Current WCCA Projections - No Changes

Negative cash flow in 2005 and 2006, if they materia lize, would be funded from reserves which would have to be replenished to at least a minimum balance in late r years.

The line overlaid on the chart indicates that currently projected WCCA net annual cash flows assuming no development takes place. As noted above, there is a significant improvement to the cash flow due primarily to the assumed allocation of net hotel operating revenues and site-specific taxes to the WCCA. The ending cash balance under this scenario reaches $197 million versus the currently projected $94 million in year 2013. In effect, the hotel not only addresses a marketing need, but creates significant cash flow for the controlling entity. Cash flow tables are presented at the end of this report. The ownership and capital structure proposed would allow distributions to be used for any lawful purpose. These uses could include, but would not necessarily be limited to, upgrading to the convention center, expansion of the convention center, upgrades to the headquarters hotel, or distributions to the WCCA or the District for escrow for future, currently undefined projects or to be expended in a manner as decided by the distributee. Option B – Headquarters Hotel at the 9th Street Site Option B consists of a 1,220-room hotel with 100,000 net leasable square feet of related meeting/banquet space at the 9th Street site. The cost of construction per room, minus project costs unrelated to actual construction such as reserves, finance costs and pre-opening expenses, would be $288,000. The project costs for this option are somewhat higher than for Option A due to two factors. First, the construction costs are somewhat higher due to site configuration issues.


Secondly, there are costs to acquire several parcels of land needed to complete the site for development. Combined, these costs approximate $82.5 million. A summary of key financing characteristics for this option is presented below.

Option B – Headquarters Hotel at the 9th Street Site

Option B

WCCA Ownership

Hotel Only

District Ownership

Hotel Only

WCCA

Ownership Hotel

w/Refunding

Private

Financing

1 Project Cost $435M $435M $435M $435M


No No Yes No


$82M $82M $82M $82M


Potential impact depending on how

contribution is financed





Potentially a portion of debt capacity used

5 Required Public Sector/ WCCA Pledge

(year 2008)

Site Specific Taxes and PILOT only; no WCCA

revenue pledge

Site Specific Taxes and PILOT only

100% of WCCA Dedicated Taxes

Potential pledge


Potentially No Yes Potentially


$0 $0 $0 $0


cum)



$48.8M to WCCA

$0 to WCCA




$0 $0 to WCCA





$0 to WCCA

11

Pro’s






12

Con’s

• May require issuance of bonds to fund $82 million


• No distribution of net revenue to WCCA




• $10 to $30 million dissavings





Key findings of Option B include, but are not limited to, the following:

• $82 million in additional costs would be difficult to support given the capital structure employed. These amounts would have to be funded from other public sector sources. Its possible that less conservative underwriting criteria could be utilized, if at all possible, in an attempt to expand the bond offering to cover these costs.

• Under WCCA ownership, the WCCA would have to pledge a higher portion of its

annual revenue for a larger bond issue.

• Under WCCA ownership, the WCCA would likely have to provide some type of debt service guarantee.

• The quality of a WCCA revenue pledge and the WCCA’s ability to support a debt

service guarantee by institutional bond buyers would likely be lower than expected. This is due to the highly correlated nature of WCCA revenue streams. That is to say, that headquarters hotel revenue and WCCA revenues streams go up and down in a somewhat parallel manner. When there is a hotel industry or broader local market economic downturn, combined WCCA revenue streams would likely suffer to a higher degree than any single revenue stream.

Impact on Distributions From a cash flow perspective, the opportunity to receive a distribution of excess hotel revenues and to retain site-specific taxes, as were discussed in Option A, apply here as well. However, the extent of distributions would likely be lower depending on how the additional project and site acquisition costs were financed. Refunding Issues Similarly, the findings related to the issue of refinancing existing WCCA debt, as discussed in Option A, are unchanged. That is:

• A refunding is not required to finance option B. • Risks to WCCA revenues, due to debt service guarantees, are much higher in a

combined hotel financing/refunding.

• Access to WCCA revenues would only occur after required payment and funding issues related to the hotel.


• If hotel operating revenues were down, and a shortfall to debt service existed, pledged WCCA revenues would be used to pay debt service. This would serve to deplete WCCA revenues.

• Reduced WCCA revenues due to a decline in the hotel market, combined with

reduced headquarters hotel revenues, could deplete the WCCA revenue funds, which could take many years to replenish, or could trigger the Surtax Provision.

A summary of WCCA cash flows is presented in Exhibit II, with a cash flow table (Option B – Operating Cash flow Impact) presented at the end of this report.

Exhibit II – Impact on WCCA Cash FlowsDevelopment Option B - HQ Hotel at 9th Street Site

(in

thou

sand

s)

-$9,624

-$1,286

$2,534

$15,394 $13,758$17,899

$22,232$26,178

$11,029

-$20,000

-$10,000

$0

$10,000

$20,000

$30,000

$40,000

FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013

Option B Net Cash Flows Current WCCA Projections - No Changes

Negative cash flow in 2005 and 2006, if they materialize, would be funded from reserves which would have to be replenished to at least a minimum balance in later years.

Impact to WCCA Cash Flows As noted in the previous exhibit, there is a positive impact on annual cash flows associated with this option, with net cash flows exceeding current projections in every year after hotel opening in 2008. The ending cumulative cash balance under this scenario reaches $159 million versus the current WCCA projections of $94 million in year 2013.


Option C – 75,000 Square Feet of Meeting/Ballroom Space at the 9th Street Site Option C consists of constructing 75,000 net leasable square feet of WCC-controlled meeting/ballroom space at the 9th Street site, without a 1,220-room headquarters hotel. The full costs of the project, $108.8 million, would have to be paid by the WCCA.

Impact on WCCA Cash Flows We have assessed the cash flow impacts of this option on the WCCA. The analysis indicates that the project generates slightly under $1.0 million in annual added tax revenues in 2008 to the WCCA. The added net operating costs are estimated at $1.1 million in 2008.

The resulting impacts on WCCA cash flow are summarized in Exhibit III, with a cash flow table (Option C – Operating Cash flow Impact) presented at the end of this report.

Exhibit III – Impact on WCCA Cash FlowsDevelopment Option C - Added WCC-Controlled Meeting/Ballroom Space

(in

thou

sand

s)

-$9,624

-$1,286

$2,534

-$12

-$6,887

-$3,594

$1

$3,729

-$2,360

-$15,000

-$10,000

-$5,000

$0

$5,000

$10,000

$15,000

$20,000


Option C Net Cash Flows Current WCCA Projections - No Changes


Key findings for Option C include, but are not necessarily limited to, the following:

• Debt service associated with this option is projected at $8.2 million annually. • There is a negative impact on WCCA cash flows. The average annual decrease in

cash flow approximates $5.6 million.


• There are no hotel revenues to offset added project debt, resulting in greater

negative cash totals.

• As outlined in the cash flow tables at the end of this report, the ending cumulative cash balance for the WCCA in 2013 drops to $43 million from current WCCA projections of $94 million.

• The planned $10 million contribution to the Stabilization Fund would not likely

occur under this scenario in order to prevent negative cash flows after 2009. Option D – Headquarters Hotel Development and 75,000 Square Feet of WCC Meeting/Ballroom Space at the 9th Street Site Option D consists of constructing 75,000 of net leasable square feet of WCCA controlled meeting/ballroom space at the 9th Street site, in conjunction with a 1,220-room headquarters hotel that would contain 100,000 square feet of meeting/ballroom space. Key financing characteristics for this option are summarized on the following page.


Option D – Headquarters Hotel Development and 75,000 Square Feet of WCC Meeting/Ballroom Space at the 9th Street Site

Option D

WCCA Ownership

Hotel Only

District Ownership

Hotel Only

WCCA Ownership Hotel w/Refunding

Private Financing

1 Project Cost $533M $533M $533M Approx. $435M plus $98M for

costs above base hotel


No No Yes No


$181M Costs for WCC Meeting/Ballroom

Space

$181M $181M


Most of Debt Capacity Used

If WCCA funds shortfall, most of debt

capacity used

If WCCA funds shortfall, most of

debt capacity used

If WCCA funds shortfall, most of

debt capacity used


(year 2008)

Site Specific Taxes and PILOT only; no WCCA

revenue pledge

Site Specific Taxes and PILOT only. WCCA

revenue pledge on non-hotel portion

100% of WCCA Revenues

Potential pledge


No Yes Yes No


$0 $0 $0 $0 to WCCA


cum)



$48.8M to WCCA

$0 to WCCA




$0 $0




$22M to WCCA $0 to District

$0

11

Pro’s



• WCC secures added meeting/ballroom space



12

Con’s

• Requires commitment of WCCA dedicated revenues







• $10 to $30 M dissavings






The specific impact of these items on WCCA cash flow is summarized in Exhibit IV, with a cash flow table (Option D – Operating Cash flow Impact) presented at the end of this report.

Exhibit IV – Impact on WCCA Cash FlowsDevelopment Option D - Added WCC-Controlled

Meeting/Ballroom Space Plus HQ Hotel at 9th Street Site

(in th

ousa

nds)

-$9,624

-$1,286

$2,534

$7,552$5,900

$10,025

$14,341

$18,269

$3,202

-$20,000

-$10,000

$0

$10,000

$20,000

$30,000


Option D Net Cash Flows Current WCCA Projections - No Changes


Key findings for Option D include, but are not necessarily limited to, the following:

• $352 million in project costs can be funded through hotel revenues. • The remaining $181 million in costs would have to be funded from other public

sector sources. • The WCCA would have to pledge a higher portion of its revenues and likely

provide a debt service guarantee to fund and ensure payment. • The increase in dedicated tax revenue under this Option is estimated at $2.2

million, with an increase in WCCA net operating costs of $1.1 million. Impact on WCCA Cash Flows As indicated above, there is a positive impact on WCCA cash flows, however the added debt associated with the 75,000 square feet of meeting/ballroom space reduces the cash gain noted in Options A and B (hotel only). The ending cash balance for the WCCA in 2013 increases to $112 million from current WCCA projections of $94 million.


Option E – Headquarters Hotel Development and 250,000 Square Feet of WCC Exhibit Space at the Old Convention Center Site Option E consists of constructing 250,000 of net leasable square foot exhibit hall with its own support meeting/banquet space of 100,000 net leasable square feet at the old Convention Center site, plus a 1,220-room hotel with 100,000 net leasable square feet of related meeting/banquet space. A summary of key financing characteristics for this option is presented below.

Option E – Headquarters Hotel Development and 250,000 Square Feet of WCC Exhibit Space at the Old Convention Center Site

Option E

WCCA Ownership

Hotel Only

District Ownership

Hotel Only

WCCA

Ownership Hotel

w/Refunding

Private Financing

1 Project Cost $774M $774M $774M Approx. $352M plus $442M for costs above

base hotel 2 Refunding of WCCA

Debt? No No Yes No


$422M Costs for WCC Exhibit/Meeting/Ballroom

Space

$422M $422M


Insufficient WCCA Debt Capacity for this Option


Insufficient WCCA Debt Capacity for this

Option


5

Required Public Sector/ WCCA

Pledge (year 2008)

Site Specific Taxes and PILOT only; WCCA revenue pledge on non-hotel portion



100% of WCCA Revenues

Potential pledge


Yes Yes Yes Potentially


$0 $0 $0 $0

8 Retention t of Site Specific Taxes (7 yr

cum)



$48.8M to District $0

9 Ongoing Distributions

(7 yr cum)



$0 $0

10 Distributions upon sale

(year end 7)




$0

11

Pro’s



• WCCA secures exhibit/meeting/ ballroom space




12

Con’s


• Increase of taxes, or other allocation of public funds required beyond WCCA resources

• All excess revenue absorbed by new debt















The negative impact of these conditions on WCCA annual cash flow is summarized below, with a cash flow table (Option E – Operating Cash flow Impact) presented at the end of this report. .

Exhibit V – Impact on WCCA Cash FlowsDevelopment Option E - WCC-ControlledExhibit Space Plus HQ Hotel - Old CC Site

(in th

ousa

nds)

-$9,624

-$1,286

$2,534

-$15,934-$17,796

-$13,889

-$9,799

-$6,107

-$20,083-$25,000

-$20,000

-$15,000

-$10,000

-$5,000

$0

$5,000

$10,000

$15,000

$20,000


Option E Net Cash Flows Current WCCA Projections - No Changes

Negative cash flow in 2005 and 2006, if they materia lize, would be funded from reserves which would have to be replenished to at least a minimum balance in late r years.

Key findings for Option E include, but are not necessarily limited to, the following:

• $352 million in project cost could be supported through hotel revenues. • $422 million in costs would have to be funded from other public sector sources

including a full use of site-specific taxes and excess revenues.


• WCCA would likely have to pledge more of their dedicated taxes and guarantee a higher level of hotel debt service.

Impact on WCCA Cash Flows As noted in the previous exhibit, the cash flow is negative in the years 2008 through 2011 due to the added debt service and operating costs. It should be noted that in 2008, the beginning cash balance is currently projected by the WCCA at approximately $53 million. With the losses associated with this option, the ending cash balance in 2013 is negative $31 million. The impact on cash flows would likely require that the hotel tax rate or the amount of current collections dedicated to the WCCA to be increased in order to ensure sufficient reserves, as called for in the bond indentures. Option F – Headquarters Hotel Development and 250,000 Square Feet of WCC Exhibit Space at the 9th Street Site Option F consists of constructing a large exhibit hall (250,000 square feet) at the 9th Street site with 100,000 net leasable square feet of related meeting/banquet space and a 1,220-room headquarters hotel with up to 100,000 net leasable square feet of related meeting/banquet space. Under this option, the characteristics of project development and financial impact to the WCCA are similar to those for Option E. A summary of key financing characteristics is presented on the following page.


Option F – Headquarters Hotel Development and 250,000 Square Feet of WCC Exhibit Space at the 9th Street Site

Option F

WCCA Ownership

Hotel Only

District Ownership

Hotel Only

WCCA Ownership Hotel w/Refunding

Private

Financing

1 Project Cost $1.0B $1.0B $1.0B Approx. $352M plus $684M for costs above base hotel


No No Yes No


$684M Costs for WCC Exhibit/Meeting/Ballroom

Space

$684M $684M





Insufficient WCCA Debt Capacity for

this Option


(year 2008)





100% of WCCA Revenues Potential pledge

6 WCCA Guarantee of Debt Yes Yes Yes Potentially


$0 $0 $0 $0

8 Retention of Site Specific Taxes (7 yr cum)



$48.8M to District $0




$0 $0




$22M to WCCA $0 to District

$0

11

Pro’s



• WCCA secures exhibit/meeting/ ballroom space



12

Con’s



• All excess revenues absorbed by new debt
















Exhibit VI highlights the impacts of this option on WCCA cash flow, with a cash flow table (Option F – Operating Cash flow Impact) presented at the end of this report.

Exhibit VI – Impact on WCCA Cash FlowsDevelopment Option F - WCC-Controlled

Exhibit Space Plus HQ Hotel - 9th Street Site

(in

thou

sand

s)

-$9,624

-$1,286

$2,534

-$34,618-$36,434

-$32,478

-$28,338-$24,593

-$38,812

-$50,000

-$40,000

-$30,000

-$20,000

-$10,000

$0

$10,000

$20,000


Option F Net Cash Flows Current WCCA Projections - No Changes

Negative c ash flow in 2005 and 2006, if they mate riali ze, would be funded fro m res erves whi ch would have to be replenished to at least a mini mum bal ance in lat er ye ars.

Key findings for Option F include, but are not necessarily limited to, the following:

• The significant costs of land acquisition under this option push estimated project costs to approximately $1.0 billion

• Projected hotel revenues can support $352 million in related project costs. • The remaining $684 million in costs would have to be funded from other public

sector sources. • WCCA as well as District pledges and guarantees would likely be required and

represents the most expense and risk to the WCCA. Impact on WCCA Cash Flows WCCA cash flows are significantly negative in the first year of hotel/expansion operations. The annual shortfall ranges from $38.8 million in 2008 to $24.6 million in 2013. The ending cash balance for the WCCA is negative $50 million in 2013. The impact on cash flows would likely require that the hotel tax rate or the amount of current collections dedicated to the WCCA to be increased in order to ensure sufficient reserves, as called for in the bond indentures.

Opt

ion

A -

Ope

ratin

g C

ash

Flow

Impa

ctH

otel

at O

ld C

onve

nito

n C

ente

r Site

FY20

05FY

2006

FY20

07FY

2008

FY20

09FY

2010

FY20

11FY

2012

FY20

13

Non

-Ope

ratin

g R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$74,

700,

000

$77,

688,

000

$80,

795,

520

$84,

027,

341

$87,

388,

434

$90,

883,

972

Incr

emen

tal D

ue to

Exp

ansi

on/H

otel

00

01,

388,

000

1,44

3,52

01,

501,

261

1,56

1,31

11,

623,

764

1,68

8,71

4In

crem

enta

l Net

Hea

dqua

rters

Hot

el R

even

ue0

00

9,85

2,00

011

,808

,000

16,9

83,0

0017

,764

,000

18,4

33,0

0018

,579

,000

Tota

l Non

-Ope

ratin

g R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$85,

940,

000

$90,

939,

520

$99,

279,

781

$103

,352

,652

$107

,445

,198

$111

,151

,686

Cur

rent

Deb

t Ser

vice

($36

,176

,363

)($

36,2

89,7

20)

($36

,294

,220

)($

36,2

94,2

20)

($36

,289

,720

)($

36,2

91,9

70)

($36

,293

,845

)($

36,2

92,4

05)

($36

,292

,750

)O

ther

Non

-Ope

ratin

g Ex

pens

es (1

)($

21,0

71,7

48)

($17

,048

,572

)($

17,3

43,3

63)

($17

,646

,683

)($

18,6

66,3

98)

($29

,044

,894

)($

29,4

38,5

30)

($29

,847

,911

)($

30,2

73,6

68)

Incr

emen

tal N

on-O

pera

ting

Expe

nses

00

00

00

00

0N

et O

pera

ting

Expe

nses

(16,

276,

286)

(15,

447,

676)

(15,

128,

896)

(14,

722,

857)

(14,

341,

704)

(13,

938,

008)

(13,

474,

316)

(12,

825,

520)

(12,

160,

155)

Incr

emen

tal N

et O

pera

ting

Expe

nses

00

00

00

00

0

Tota

l Exp

ense

s($

73,5

24,3

97)

($68

,785

,968

)($

68,7

66,4

79)

($68

,663

,760

)($

69,2

97,8

23)

($79

,274

,872

)($

79,2

06,6

91)

($78

,965

,837

)($

78,7

26,5

73)

Net

Cas

h Fl

ows

($9,

624,

397)

($1,

285,

968)

$2,5

33,5

21$1

7,27

6,24

0$2

1,64

1,69

7$2

0,00

4,90

9$2

4,14

5,96

1$2

8,47

9,36

1$3

2,42

5,11

3

Begi

nnin

g Ba

lanc

e$6

0,91

9,08

1$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$6

9,81

8,47

7$9

1,46

0,17

4$1

11,4

65,0

83$1

35,6

11,0

44$1

64,0

90,4

06Ad

just

ed C

ash

Flow

s at

End

of P

erio

d$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$6

9,81

8,47

7$9

1,46

0,17

4$1

11,4

65,0

83$1

35,6

11,0

44$1

64,0

90,4

06$1

96,5

15,5

19

(1) A

ssum

es a

$10

milli

on a

nnua

l con

tribu

tion

to S

tabi

lizat

ion/

Red

empt

ion

Fund

beg

inni

ng in

201

0.

Opt

ion

B -

Ope

ratin

g C

ash

Flow

Impa

ctH

otel

at 9

th S

tree

t Site

FY20

05FY

2006

FY20

07FY

2008

FY20

09FY

2010

FY20

11FY

2012

FY20

13

Non

-Ope

ratin

g R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$74,

700,

000

$77,

688,

000

$80,

795,

520

$84,

027,

341

$87,

388,

434

$90,

883,

972

Incr

emen

tal D

ue to

Exp

ansi

on/H

otel

00

01,

388,

000

1,44

3,52

01,

501,

261

1,56

1,31

11,

623,

764

1,68

8,71

4In

crem

enta

l Net

Hea

dqua

rters

Hot

el R

even

ue0

00

9,85

2,00

011

,808

,000

16,9

83,0

0017

,764

,000

18,4

33,0

0018

,579

,000

Tota

l Non

-Ope

ratin

g R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$85,

940,

000

$90,

939,

520

$99,

279,

781

$103

,352

,652

$107

,445

,198

$111

,151

,686

Cur

rent

Deb

t Ser

vice

($36

,176

,363

)($

36,2

89,7

20)

($36

,294

,220

)($

36,2

94,2

20)

($36

,289

,720

)($

36,2

91,9

70)

($36

,293

,845

)($

36,2

92,4

05)

($36

,292

,750

)O

ther

Non

-Ope

ratin

g Ex

pens

es (1

)($

21,0

71,7

48)

($17

,048

,572

)($

17,3

43,3

63)

($17

,646

,683

)($

18,6

66,3

98)

($29

,044

,894

)($

29,4

38,5

30)

($29

,847

,911

)($

30,2

73,6

68)

Incr

emen

tal N

on-O

pera

ting

Expe

nses

00

0(6

,247

,413

)(6

,247

,413

)(6

,247

,413

)(6

,247

,413

)(6

,247

,413

)(6

,247

,413

)N

et O

pera

ting

Expe

nses

(16,

276,

286)

(15,

447,

676)

(15,

128,

896)

(14,

722,

857)

(14,

341,

704)

(13,

938,

008)

(13,

474,

316)

(12,

825,

520)

(12,

160,

155)

Incr

emen

tal N

et O

pera

ting

Expe

nses

00

00

00

00

0

Tota

l Exp

ense

s($

73,5

24,3

97)

($68

,785

,968

)($

68,7

66,4

79)

($74

,911

,174

)($

75,5

45,2

36)

($85

,522

,285

)($

85,4

54,1

04)

($85

,213

,250

)($

84,9

73,9

86)

Net

Cas

h Fl

ows

($9,

624,

397)

($1,

285,

968)

$2,5

33,5

21$1

1,02

8,82

6$1

5,39

4,28

4$1

3,75

7,49

6$1

7,89

8,54

8$2

2,23

1,94

8$2

6,17

7,70

0

Begi

nnin

g Ba

lanc

e$6

0,91

9,08

1$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$6

3,57

1,06

4$7

8,96

5,34

7$9

2,72

2,84

3$1

10,6

21,3

91$1

32,8

53,3

39Ad

just

ed C

ash

Flow

s at

End

of P

erio

d$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$6

3,57

1,06

4$7

8,96

5,34

7$9

2,72

2,84

3$1

10,6

21,3

91$1

32,8

53,3

39$1

59,0

31,0

39

(1) A

ssum

es a

$10

milli

on a

nnua

l con

tribu

tion

to S

tabi

lizat

ion/

Red

empt

ion

Fund

beg

inni

ng in

201

0.

Opt

ion

C -

Ope

ratin

g C

ash

Flow

Impa

ct75

,000

squ

are

feet

of m

eetin

g/ba

llroo

m s

pace

at 9

th S

tree

t Site

FY20

05FY

2006

FY20

07FY

2008

FY20

09FY

2010

FY20

11FY

2012

FY20

13

Non

-Ope

ratin

g R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$74,

700,

000

$77,

688,

000

$80,

795,

520

$84,

027,

341

$87,

388,

434

$90,

883,

972

Incr

emen

tal D

ue to

Exp

ansi

on/H

otel

00

099

7,00

01,

036,

880

1,07

8,35

51,

121,

489

1,16

6,34

91,

213,

003

Incr

emen

tal N

et H

eadq

uarte

rs H

otel

Rev

enue

00

00

00

00

0

Tota

l Non

-Ope

ratin

g R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$75,

697,

000

$78,

724,

880

$81,

873,

875

$85,

148,

830

$88,

554,

783

$92,

096,

975

Cur

rent

Deb

t Ser

vice

($36

,176

,363

)($

36,2

89,7

20)

($36

,294

,220

)($

36,2

94,2

20)

($36

,289

,720

)($

36,2

91,9

70)

($36

,293

,845

)($

36,2

92,4

05)

($36

,292

,750

)O

ther

Non

-Ope

ratin

g Ex

pens

es (1

)($

21,0

71,7

48)

($17

,048

,572

)($

17,3

43,3

63)

($17

,646

,683

)($

18,6

66,3

98)

($29

,044

,894

)($

29,4

38,5

30)

($29

,847

,911

)($

30,2

73,6

68)

Incr

emen

tal N

on-O

pera

ting

Expe

nses

00

0(8

,245

,352

)(8

,245

,352

)(8

,245

,352

)(8

,245

,352

)(8

,245

,352

)(8

,245

,352

)N

et O

pera

ting

Expe

nses

(16,

276,

286)

(15,

447,

676)

(15,

128,

896)

(14,

722,

857)

(14,

341,

704)

(13,

938,

008)

(13,

474,

316)

(12,

825,

520)

(12,

160,

155)

Incr

emen

tal N

et O

pera

ting

Expe

nses

00

0(1

,147

,500

)(1

,193

,400

)(1

,241

,136

)(1

,290

,781

)(1

,342

,413

)(1

,396

,109

)

Tota

l Exp

ense

s($

73,5

24,3

97)

($68

,785

,968

)($

68,7

66,4

79)

($78

,056

,612

)($

78,7

36,5

75)

($88

,761

,360

)($

88,7

42,8

24)

($88

,553

,602

)($

88,3

68,0

34)

Net

Cas

h Fl

ows

($9,

624,

397)

($1,

285,

968)

$2,5

33,5

21($

2,35

9,61

2)($

11,6

95)

($6,

887,

485)

($3,

593,

994)

$1,1

82$3

,728

,940

Begi

nnin

g Ba

lanc

e$6

0,91

9,08

1$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$5

0,18

2,62

5$5

0,17

0,93

0$4

3,28

3,44

5$3

9,68

9,45

1$3

9,69

0,63

3Ad

just

ed C

ash

Flow

s at

End

of P

erio

d$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$5

0,18

2,62

5$5

0,17

0,93

0$4

3,28

3,44

5$3

9,68

9,45

1$3

9,69

0,63

3$4

3,41

9,57

3

(1) A

ssum

es a

$10

milli

on a

nnua

l con

tribu

tion

to S

tabi

lizat

ion/

Red

empt

ion

Fund

beg

inni

ng in

201

0.

Opt

ion

D -

Ope

ratin

g C

ash

Flow

Impa

ctH

otel

and

WC

C m

eetin

g/ba

llroo

m S

pace

at 9

th S

tree

t Site

FY20

05FY

2006

FY20

07FY

2008

FY20

09FY

2010

FY20

11FY

2012

FY20

13

Non

-Ope

ratin

g R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$74,

700,

000

$77,

688,

000

$80,

795,

520

$84,

027,

341

$87,

388,

434

$90,

883,

972

Incr

emen

tal D

ue to

Exp

ansi

on/H

otel

00

02,

161,

000

2,24

7,44

02,

337,

338

2,43

0,83

12,

528,

064

2,62

9,18

7In

crem

enta

l Net

Hea

dqua

rters

Hot

el R

even

u e0

00

9,85

2,00

011

,808

,000

16,9

83,0

0017

,764

,000

18,4

33,0

0018

,579

,000

Tota

l Non

-Ope

ratin

g R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$86,

713,

000

$91,

743,

440

$100

,115

,858

$104

,222

,172

$108

,349

,499

$112

,092

,159

Cur

rent

Deb

t Ser

vice

($36

,176

,363

)($

36,2

89,7

20)

($36

,294

,220

)($

36,2

94,2

20)

($36

,289

,720

)($

36,2

91,9

70)

($36

,293

,845

)($

36,2

92,4

05)

($36

,292

,750

)O

ther

Non

-Ope

ratin

g Ex

pens

es (1

)($

21,0

71,7

48)

($17

,048

,572

)($

17,3

43,3

63)

($17

,646

,683

)($

18,6

66,3

98)

($29

,044

,894

)($

29,4

38,5

30)

($29

,847

,911

)($

30,2

73,6

68)

Incr

emen

tal N

on-O

pera

ting

Expe

nses

00

0(1

3,70

0,00

0)(1

3,70

0,00

0)(1

3,70

0,00

0)(1

3,70

0,00

0)(1

3,70

0,00

0)(1

3,70

0,00

0)N

et O

pera

ting

Expe

nses

(16,

276,

286)

(15,

447,

676)

(15,

128,

896)

(14,

722,

857)

(14,

341,

704)

(13,

938,

008)

(13,

474,

316)

(12,

825,

520)

(12,

160,

155)

Incr

emen

tal N

et O

pera

ting

Expe

nses

00

0(1

,147

,500

)(1

,193

,400

)(1

,241

,136

)(1

,290

,781

)(1

,342

,413

)(1

,396

,109

)

Tota

l Exp

ense

s($

73,5

24,3

97)

($68

,785

,968

)($

68,7

66,4

79)

($83

,511

,260

)($

84,1

91,2

23)

($94

,216

,008

)($

94,1

97,4

72)

($94

,008

,249

)($

93,8

22,6

82)

Net

Cas

h Fl

ows

($9,

624,

397)

($1,

285,

968)

$2,5

33,5

21$3

,201

,740

$7,5

52,2

17$5

,899

,850

$10,

024,

700

$14,

341,

249

$18,

269,

477

Begi

nnin

g Ba

lanc

e$6

0,91

9,08

1$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$5

5,74

3,97

7$6

3,29

6,19

4$6

9,19

6,04

4$7

9,22

0,74

4$9

3,56

1,99

3Ad

just

ed C

ash

Flow

s at

End

of P

erio

d$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$5

5,74

3,97

7$6

3,29

6,19

4$6

9,19

6,04

4$7

9,22

0,74

4$9

3,56

1,99

3$1

11,8

31,4

69

(1) A

ssum

es a

$10

milli

on a

nnua

l con

tribu

tion

to S

tabi

lizat

ion/

Red

empt

ion

Fund

beg

inni

ng in

201

0.

Opt

ion

E - O

pera

ting

Cas

h Fl

ow Im

pact

Hot

el a

nd W

CC

exh

ibit/

mee

ting/

ballr

oom

Spa

ce a

t Old

Con

vent

ion

Cen

ter S

ite

FY20

05FY

2006

FY20

07FY

2008

FY20

09FY

2010

FY20

11FY

2012

FY20

13

Non

-Ope

ratin

g R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$74,

700,

000

$77,

688,

000

$80,

795,

520

$84,

027,

341

$87,

388,

434

$90,

883,

972

Incr

emen

tal D

ue to

Exp

ansi

on/H

otel

00

01,

867,

000

1,94

1,68

02,

019,

347

2,10

0,12

12,

184,

126

2,27

1,49

1In

crem

enta

l Net

Hea

dqua

rters

Hot

el R

eve

00

09,

852,

000

11,8

08,0

0016

,983

,000

17,7

64,0

0018

,433

,000

18,5

79,0

00

Tota

l Non

-Ope

ratin

g R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$86,

419,

000

$91,

437,

680

$99,

797,

867

$103

,891

,462

$108

,005

,560

$111

,734

,463

Cur

rent

Deb

t($

36,1

76,3

63)

($36

,289

,720

)($

36,2

94,2

20)

($36

,294

,220

)($

36,2

89,7

20)

($36

,291

,970

)($

36,2

93,8

45)

($36

,292

,405

)($

36,2

92,7

50)

Oth

er N

on-O

pera

ting

Expe

nses

(1)

($21

,071

,748

)($

17,0

48,5

72)

($17

,343

,363

)($

17,6

46,6

83)

($18

,666

,398

)($

29,0

44,8

94)

($29

,438

,530

)($

29,8

47,9

11)

($30

,273

,668

)In

crem

enta

l Non

-Ope

ratin

g Ex

pens

es0

00

(31,

948,

002)

(31,

948,

002)

(31,

948,

002)

(31,

948,

002)

(31,

948,

002)

(31,

948,

002)

Net

Ope

ratin

g Ex

pens

es(1

6,27

6,28

6)(1

5,44

7,67

6)(1

5,12

8,89

6)(1

4,72

2,85

7)(1

4,34

1,70

4)(1

3,93

8,00

8)(1

3,47

4,31

6)(1

2,82

5,52

0)(1

2,16

0,15

5)In

crem

enta

l Net

Ope

ratin

g Ex

pens

es0

00

(5,8

90,5

00)

(6,1

26,1

20)

(6,3

71,1

65)

(6,6

26,0

11)

(6,8

91,0

52)

(7,1

66,6

94)

Tota

l Exp

ense

s($

73,5

24,3

97)

($68

,785

,968

)($

68,7

66,4

79)

($10

6,50

2,26

3)($

107,

371,

945)

($11

7,59

4,03

9)($

117,

780,

704)

($11

7,80

4,89

1)($

117,

841,

269)

Net

Cas

h Fl

ows

($9,

624,

397)

($1,

285,

968)

$2,5

33,5

21($

20,0

83,2

63)

($15

,934

,265

)($

17,7

96,1

72)

($13

,889

,243

)($

9,79

9,33

1)($

6,10

6,80

7)

Begi

nnin

g Ba

lanc

e$6

0,91

9,08

1$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$3

2,45

8,97

5$1

6,52

4,70

9($

1,27

1,46

2)($

15,1

60,7

05)

($24

,960

,036

)Ad

just

ed C

ash

Flow

s at

End

of P

erio

d$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$3

2,45

8,97

5$1

6,52

4,70

9($

1,27

1,46

2)($

15,1

60,7

05)

($24

,960

,036

)($

31,0

66,8

42)

(1) A

ssum

es a

$10

milli

on a

nnua

l con

tribu

tion

to S

tabi

lizat

ion/

Red

empt

ion

Fund

beg

inni

ng in

201

0.

Opt

ion

F - O

pera

ting

Cas

h Fl

ow Im

pact

Hot

el a

nd W

CC

exh

ibit/

mee

ting/

ballr

oom

Spa

ce a

t 9th

Str

eet S

ite

FY20

05FY

2006

FY20

07FY

2008

FY20

09FY

2010

FY20

11FY

2012

FY20

13

Non

-Ope

ratin

g (T

ax) R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$74,

700,

000

$77,

688,

000

$80,

795,

520

$84,

027,

341

$87,

388,

434

$90,

883,

972

Incr

emen

tal D

ue to

Exp

ansi

on/H

otel

00

02,

450,

000

2,54

8,00

02,

649,

920

2,75

5,91

72,

866,

153

2,98

0,80

0In

crem

enta

l Net

Hea

dqua

rters

Hot

el R

even

ue0

00

9,85

2,00

011

,808

,000

16,9

83,0

0017

,764

,000

18,4

33,0

0018

,579

,000

Tota

l Non

-Ope

ratin

g R

even

ues

$63,

900,

000

$67,

500,

000

$71,

300,

000

$87,

002,

000

$92,

044,

000

$100

,428

,440

$104

,547

,258

$108

,687

,588

$112

,443

,771

Cur

rent

Deb

t Ser

vice

($36

,176

,363

)($

36,2

89,7

20)

($36

,294

,220

)($

36,2

94,2

20)

($36

,289

,720

)($

36,2

91,9

70)

($36

,293

,845

)($

36,2

92,4

05)

($36

,292

,750

)N

on-O

pera

ting

Expe

nses

(1)

($21

,071

,748

)($

17,0

48,5

72)

($17

,343

,363

)($

17,6

46,6

83)

($18

,666

,398

)($

29,0

44,8

94)

($29

,438

,530

)($

29,8

47,9

11)

($30

,273

,668

)In

crem

enta

l Non

-Ope

ratin

g Ex

pens

es0

00

(51,

795,

174)

(51,

795,

174)

(51,

795,

174)

(51,

795,

174)

(51,

795,

174)

(51,

795,

174)

Net

Ope

ratin

g Ex

pens

es(1

6,27

6,28

6)(1

5,44

7,67

6)(1

5,12

8,89

6)(1

4,72

2,85

7)(1

4,34

1,70

4)(1

3,93

8,00

8)(1

3,47

4,31

6)(1

2,82

5,52

0)(1

2,16

0,15

5)In

crem

enta

l Net

Ope

ratin

g Ex

pens

es0

00

(5,3

55,0

00)

(5,5

69,2

00)

(5,7

91,9

68)

(6,0

23,6

47)

(6,2

64,5

93)

(6,5

15,1

76)

Tota

l Exp

ense

s($

73,5

24,3

97)

($68

,785

,968

)($

68,7

66,4

79)

($12

5,81

3,93

4)($

126,

662,

197)

($13

6,86

2,01

4)($

137,

025,

511)

($13

7,02

5,60

3)($

137,

036,

923)

Net

Cas

h Fl

ows

($9,

624,

397)

($1,

285,

968)

$2,5

33,5

21($

38,8

11,9

34)

($34

,618

,197

)($

36,4

33,5

74)

($32

,478

,254

)($

28,3

38,0

15)

($24

,593

,152

)

Begi

nnin

g Ba

lanc

e$6

0,91

9,08

1$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$3

2,45

8,97

5$1

6,52

4,70

9($

1,27

1,46

2)($

15,1

60,7

05)

($24

,960

,036

)Ad

just

ed C

ash

Flow

s at

End

of P

erio

d$5

1,29

4,68

4$5

0,00

8,71

6$5

2,54

2,23

7$1

3,73

0,30

3($

2,15

9,22

2)($

19,9

08,8

65)

($33

,749

,716

)($

43,4

98,7

21)

($49

,553

,188

)

(1) A

ssum

es a

$10

milli

on a

nnua

l con

tribu

tion

to S

tabi

lizat

ion/

Red

empt

ion

Fund

beg

inni

ng in

201

0.

Appendix

Summary of Headquarters Hotel Financing Issues

Presented to the Washington Convention Center Authority

Appendix Page 1

Summary of Headquarters Hotel Financing Issues Presented to the Washington Convention Center Authority

The purpose of this report is to provide the Washington Convention Center Authority (“WCCA”) with various assessments, both general industry and project specific, related to the development of a headquarters hotel in the District. This report has been prepared for the use of the WCCA in evaluating potential public/private financing scenarios, and assessing potential risk to WCCA revenues as they may be pledged in any described financing options. Specific areas addressed herein include:

♦ Historical Overview of Headquarters Hotel Financing

Overview – 2001 to 2003 Overview – Early 2003 to present

♦ Issues Specific to Hotel Financing

Financing for new hotel development Financing for large-scale hotel development

♦ Overview of Current, Directly Competitive Hotel Development Projects

♦ Ownership Structure of Convention Center Hotels in the 1990’s

♦ Changes in Ownership Structures of Convention Center Hotels

♦ Hotel Financing with Project Revenue Tax-Exempt Bonds

♦ Private Financing Versus Project Revenue Financing

♦ Sources of Revenue for a Hotel Sponsored by the WCCA

♦ Considerations for a Project Revenue Tax-Exempt Hotel Financing

♦ Potential Hotel Financing Structures

♦ Proposed Structure for the WCCA

OVERVIEW: 2001 TO 2003 Since the concept of a District convention center hotel was formally introduced, there have been several shifts in private debt and equity markets. Initially, these shifts generated downward pressure on capital availability. Borrowers also experienced greater pressure relative to debt providers seeking stronger guarantees, greater recourse and credit enhancements. Borrowers saw these types of additional credit restrictions in transactions of all sizes but “tightening” was most notable in transactions over $20 million. Many single asset transactions of significant size, generally those over $50

Appendix Page 2

million that required the participation of debt providers in the traditional capital markets, simply did not get done. Industry Tightening of Debt & Equity Underwriting The tightening of available debt occurred not only relative to the terms and conditions that debt providers were prepared to offer, it also took the form of restrictions on the type of lodging real estate assets that debt providers would consider for financing. Debt did remain available for high quality assets with stable cash flows. However, borrowers oftentimes had to accept debt coverage ratios that were at higher than historical averages. These debt offerings often included loan-to-value ratios that were at lower than historical averages. Below is a table detailing investment trends for select years during the period 1995 to 2002.

2002 2000 1998 1996 1995

Loan–to-value 62.17% 66.41% 65.33% 69.70% 69.12% Debt coverage

ratio 1.52 1.41 1.38 1.4 1.38

Source: PKF 2004 Hotel Investment Survey In many cases, current and prospective owners of lodging real estate could not purchase real estate on terms and conditions that supported the debt underwriting criteria required by lending institutions. In addition, traditional debt providers would not consider financing certain types of lodging real estate assets and projects. For a number of both market-based and balance sheet based reasons, traditional debt providers were simply not providing construction financing for new hotel projects. Complicating issues relative to securing debt for hotel investments was the apparent inelasticity in yield requirements within the equity market for hotel real estate. Despite the fact that capital available for hotel debt had diminished, and the tightening of underwriting criteria had reduced the ability to use debt effectively within the capital structure, there was little moderation in the yields that equity investors expected to generate from hotel real estate investments. Many investors thought that the economic softness in 2001, the terrorist acts of 9/11, and resulting economic recovery issues in 2002 would create opportunities to buy existing hotel assets. In past cycles, downward economic pressures, with their accompanying decline in lodging occupancies and average daily rate, created buying opportunities because hotel owners sought to sell into the decline in order to enjoy capital gains built up over the previous economic cycle. However, during this particular time period, many owners simply chose to hold their hotel assets. Despite the resistance on the part of hotel owners to sell, yield expectations for hotel investors did not moderate. The combination of these debt and equity factors widened the financing gap for hotel projects of all kinds from 2001 through 2nd and 3rd quarter 2003. These factors, among

Appendix Page 3

others, greatly contributed to making new hotel development financing infeasible from a private sector financing perspective. OVERVIEW: EARLY 2003 TO PRESENT 2003 was a year of uncertainty for the lodging business. As such, it was similarly so for those who financed hotels. There was broad based concern as to whether certain formative changes had taken place relative to the Individual Business and Individual Leisure segments of lodging demand. Hotel operators and owners questioned whether traditional patterns within the Group segment were changing. One issue of significance was the question whether the tragedy of 9/11 had brought about fundamental changes in how customers would view “fly in” markets versus “drive in” markets. The war in Iraq, SARS and the absence of clear economic indicators about the direction of the economy heightened uncertainties.

Appendix Page 4

Optimism in Investment Trends As we entered 2004, the lodging industry was cautiously optimistic that lodging demand would improve after experiencing declines during the period 2001 through 2003. Such optimism continues given national lodging demand statistics for the first and second quarters of 2004 as well as certain notable holiday period statistics. With interest rates at the lows of the past 18 months, hotel investors have been aggressive in pursuing existing properties for acquisition. This acquisition activity has also been spurred by the fact that replacement costs of hotels have generally been above hotel market values for at least the past three years. Equity investors have sought to realize yields principally through acquiring existing assets and generating favorable returns through renovation and repositioning. Below is a table of the average interest rates applicable to hotel acquisitions for select periods between 1996 and estimated 2004.

Est. 2004 2002 2000 1998 1996

Interest rate 7.08% 8.25% 9.21% 7.65% 9.10% Source: PKF 2004 Hotel Investment Survey The lodging industry also has attracted capital due to the investment returns on other forms of real estate. The returns on office, industrial and multi-family housing generally have been below historical averages. Institutional and private investors are looking to the lodging industry to outperform other sectors. With the increase in equity capital seeking to be deployed in lodging real estate, lower rates of return have emerged. This, in turn, has caused property values to increase. Given this rise in values, many hotel owners who have been waiting to sell for the past three years are now seeking to take advantage of market timing. Many industry experts expect that transaction volume in 2004 will be high and will remain that way for the near to mid term. FINANCING FOR NEW HOTEL DEVELOPMENT New construction tends to follow the bottoming of market cycles. In 2003, Revenue Per Available Room (“RevPAR”) declined less than 1% from 2002. Many believed this was the bottoming out of the market. Various industry experts are predicting that RevPAR in the major metropolitan markets in the U.S. will increase, generally, between 7% and 9% in 2004 as compared to 2003. RevPAR growth for the year 2005 is expected to moderate slightly, in the 5% to 7% range, but these gains will be well above expected GDP growth and inflation growth. New construction starts are also a “following” signal of a market bottom. That is to say that a lag occurs between a market bottom and new construction starts given the time necessary to complete pre-construction related activities including activities related to planning, permitting and financing. Construction starts in the second quarter of 2004 indicate that, for the first time in the past four years, construction starts have increased for two consecutive quarters. The second quarter figures also detailed the highest guestroom count in construction starts in over two years. It is generally believed that these

Appendix Page 5

economic activity signals suggest that new development will pick up in 2005 and, if historical cycles are an indicator, will continue for an additional 24 to 36 months. However, the vast majority of expected construction starts over the next 2 to 3 years will be for smaller projects with fewer amenities located in secondary and tertiary markets. Most of these projects will also be located in suburban and highway markets. These projects are typically less than 200 keys, are usually ”stick” construction, that is lumber versus concrete and steel, have construction schedules that often do not exceed 12 months, and often have financial pro forma’s that achieve positive cash flow in less than 6 months of operation. Development costs for these projects, excluding land, are generally in the range of $65,000 to $85,000 per key (room). FINANCING FOR LARGE SCALE HOTEL DEVELOPMENT The capital structure and market for financing large-scale hotel developments is quite different from that for other types of hotel development product. We have reviewed over 20 recent convention center and conference center hotel projects that have been developed, are under construction, in pre-construction and/or pre-finance stages. The purpose of this review was to reveal issues relative to the ownership, financing and development of these projects. We found no 100% private-sector financing transactions for large-scale convention center hotels developed in any primary or secondary markets from 1998 to present. In addition, of those large-scale convention center hotels that are reported to be under active and serious consideration, all that we have researched are planning to be financed through some form of bond financing for design, development, construction and interior build out. Proceeds of these offerings will also fund operating cash requirements as well as debt service reserves and operating reserves. On the following three pages are tables that detail the capital structure used for several hotels financed with project revenue tax-exempt bond offerings.

Exhibit ASAMPLE OF TAX EXEMPT HOTEL FINANCINGS

SUMMARY OF TERMS

DENVER, COLORADO

BAY CITY,MICHIGAN

OMAHA, NEBRASKA MYRTLE BEACH, SOUTH CAROLINA

Transaction Date: June 17, 2003 September 23, 2002 April 24, 2002 June 28, 2001Interest Rates:

Senior A 4.614% 7.625% 5.41% 6.71%Sub Series B n/a n/a n/a 5.15%Sub Series C n/a n/a 9.50% n/a

City/Govt. Cash Contribution:

Annual appropriation pledge equal to

approximately 40%-50% of annual debt service.

$3,000,000 $9,561,920

City/Govt. Guarantees: None Contingent Guarantee (subject to appropriation)

Limited Guarantee (subject to

of % of annual debt service (40-66%) with cap

of 40% in aggregate

appropriation) of Series B debt service

Other Contributions / Guarantees:

XL Capital Assurance$10MM Manager Letter of

Credit

$2.5MM HUD Loan$4.0 MM Power Fund

Loan

Ambac $2.59MM (Land) MBIA (Series B Bonds)

$.06MM GLCF Loan$8.8MM HUD Grant$1.5MM MEDC Loan

Principal Amounts:Senior A $354,825,000 $15,455,000 $102,970,000 $40,845,000

Sub Series B n/a n/a n/a $23,500,000Sub Series C n/a n/a $6,000,000 n/a

Other n/a n/a n/a n/a

Senior Ratings AAA/Aaa (Insured) Unrated AAA/Aaa (Insured) BBB- (S&P) - Series A AAA/Aaa (Insured) -

Series B

Number of Rooms: 1,100 150 450 404Hotel Flag: Hyatt Hilton Doubletree Hilton Radisson

Final Maturity: 2033 2033 2032 2036Opening Date: December 2005 March 2004 December 2003 January 2003


SUMMARY OF TERMS

Transaction Date:Interest Rates:

Senior ASub Series BSub Series C


City/Govt. Guarantees:


Principal Amounts:Senior A

Sub Series BSub Series C

Other

Senior Ratings

Number of Rooms:Hotel Flag:

Final Maturity:Opening Date:

AUSTIN, TEXAS HOUSTON, TEXAS OVERLAND PARK, KANSAS

CHESAPEAKE BAY, MD

SACRAMENTO, CALIFORNIA

June 10, 2001 May 8, 2001 January 10, 2001 November 16, 1999 April 21, 1999

6.68% 5.35% 7.50% 7.50% to 7.75% 6.25%5.59% n/a n/a 9.50% n/a9.75% n/a 9.00% and 11:50% n/a 12.00%

$15,000,000 None $5MM (land) $1.5MM (infrastructure)

$5MM Land Acquisition $8,000,000

None Citywide HOT, Garage Revenues from 7 City

Max Annual Ds ($7MM) $9MM (Loan for Debt Service)

None

Facilities and Tax Rebates $12.8 MM (Subordinated Loan - FF&E)

ZC Speciality Insurance Company (Senior Bonds)

Ambac TGT Revenue Pledge to Fund Supp DSR

$10MM (Subordinated Loan)

City Owned Parking Garage (1,071) Spaces

TGT Revenue Pledge until 2.2x DSC met)

County Tax Abatement (20 Years)

Net Revenues

$800 (Line of Credit) City Tax Abatement (20 Years)

$109,665,000 $326,204,594 $62,535,000 $124,165,000 $92,800,000 $134,950,000 n/a n/a n/a n/a$20,498,811 n/a $29,680,000 n/a n/a

n/a n/a None $32 MM (Subordinated Loans)

$4.098 MM (Subordinated Loans)

Series A Baa3 (Moody's) / BBB- (S&P)

Series B: AA (Insured)

AAA/Aaa BBB - (Fitch) Non-Rated Non-Rated

800 1,200 400 400 500Hilton Hilton Sheraton Hyatt Sheraton Grand2032 2033 2032 2031 2030

November 2003 December 2003 December 2002 December 2001 August 2001


SUMMARY OF TERMS

Transaction Date:Interest Rates:

Senior ASub Series BSub Series C


City/Govt. Guarantees:


Principal Amounts:Senior A

Sub Series BSub Series C

Other

Senior Ratings

Number of Rooms:Hotel Flag:

Final Maturity:Opening Date:

AUSTIN, TEXAS DAUPHIN COUNTY, PA

PITTSBURGH AIRPORT

February 26, 1999 July 1, 1998

6.75% 6.00% to 6.20%n/a n/a

10.50% n/aNone None

None None

None None

$38,785,000 $64,500,000 n/a n/a

$3,730,000 n/an/a n/a

Non-Rated Non-Rated

265 331Hilton Hyatt2027 2029

January 2001 August 2000

Appendix Page 8

Confidential Draft CopyFor Internal Use Only

CURRENT, DIRECTLY COMPETITIVE HOTEL DEVELOPMENT PROJECTS We have reviewed many convention center hotel projects including the recently announced 1,000 room Sheraton in Phoenix, AZ and the proposed 750 room convention center hotel currently in pre-finance planning in Baltimore, MD. These properties will service similar, if not identical, lodging market segments and customer profiles as will any hotel that may be associated with the WCCA. Please find below an exhibit detailing the capital structures currently being considered for the Phoenix and Baltimore project revenue tax-exempt financings.

OWNERSHIP STRUCTURES OF CONVENTION CENTER HOTELS IN THE 1990’S Our research indicates that throughout the 1990’s, most of the convention center hotel projects developed were publicly subsidized yet, privately developed and owned. These were often funded with public subsidies in the 20% to 30% range of total development cost often utilizing traditional economic development tools. These subsidies took many forms including the conveyance of cash, the contribution of various tax revenue streams, and the abatement of various other taxes. Sometimes the contributions by municipalities were funded through participatory notes or bond issues. The obligations of many of these issues were structured to remain, even if the developer sold his interest in the hotel asset or sold the asset itself. On the following page, please find an exhibit detailing several examples of public/private transactions.

Structures

Under Consideration

Baltimore Phoenix

City/Govt. Cash Contribution: Annual appropriation pledge equal to 40% of annual debt service

City/Govt. Guarantees: Contingent debt service guarantee on Series B up to 35%; 10 year PILOT pmt

none

Principal amounts: Senior A Sub Series B Sub Series C

estimate: $ 90 million estimate: $156 million estimate: $ 8 million

$290 million $ 10 million

Special Features: Senior A Sub Series B Sub Series C

n/a n/a capital appreciation bonds

n/a n/a capital appreciation bonds

Ratings: Senior A Sub Series B Sub Series C

Unenhanced AAA N/a

AAA n/a n/a

Construction Amount: Rooms

$170 million 750

$200 million 1,000

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Appendix Page 10


TREND: CHANGES IN OWNERSHIP STRUCTURES OF CONVENTION CENTER HOTELS Despite the use of the public-private partnership mechanism in the past, public-private hotel developments appear to be waning. The number of convention center hotel projects that have stalled under the public subsidy / private developer model appears to have increased over the last 36 months. Our research suggests that these projects have stalled primarily due to two reasons:

1) the inability of the respective private development entities to raise required levels of debt and equity financing, and;

2) greater awareness of municipal finance instruments that allow such projects to be financed and constructed with: (a) less municipally generated capital than is required under a traditional public/private

structure; (b) a lower cost of capital than a traditional public/private structure thereby creating an

opportunity for a more successful venture; (c) a higher level of control relative to the use of available hotel rooms for convention

and association meetings, and; (d) access to the distributable income that the hotel generates.

Municipalities that have gone through private development processes and have then explored public-private financing mechanisms, but have not moved forward to actual construction under such models, include, but are not necessarily limited to:

San Antonio, TX San Diego, CA Boston, MA New Orleans, LA Palm Beach County, FL Ft. Lauderdale, FL San Jose, CA Columbia, SC

HOTEL FINANCING WITH PROJECT REVENUE TAX-EXEMPT BONDS There are advantages and disadvantages to every capital structure. The extent of such advantages or disadvantages usually exists due to the asset class or asset type being financed, the character of the income stream upon which the capital structure is based, and the ownership entity involved. For a local Agency or Authority, tax-exempt bonds are usually a better and cheaper option than making substantial financial contributions to a developer. One of the principal advantages is that funding comes from the tax-exempt markets. These markets have different risk and yield characteristics than traditional real estate debt and equity markets and offer more favorable terms and conditions than the private sector debt and equity markets. Benefits in Major Markets In major metropolitan areas with existing and stable lodging markets, project revenue tax-exempt bonds can often be structured so that they do not impact the bonding capacity or the credit rating of the issuing entity. These types of bond offerings are also non-recourse to the issuing entity. Tax-exempt bonds also have durations that are more closely linked to the life of the asset. Bonds generally have a term of 30 years or more. Traditional commercial real estate construction loans are rarely longer than 3 years in duration and often require an up-front commitment for permanent financing before the construction loan will be made.

Appendix Page 11


Lower Cost of Capital Tax-exempt bonds also represent the lowest cost of financing available for hotel projects. Generally, tax-exempt bonds have a fixed interest rate that is 2 to 4 points lower than traditional debt financings. The tax-exempt feature of the bonds also generates incremental benefit in the form of exemptions from federal tax. Cost of debt and equity also translates into issues relating to project size and quality. The cost of debt and equity secured through the private sector will always generate downward pressure of the total development budget, at any given hotel revenue and income level, as compared to the cost of capital in a project revenue tax-exempt financing. A higher cost of capital generally translates into fewer rooms, less public space, and/or lower quality finishes throughout the hotel project itself. Control over Development and Ownership Issues Control over the financing mechanism used to develop a convention center hotel also means control over other important issues. Issues of control in a convention center hotel should be considered differently than in other types of hotels. We believe that these control issues can be identified as control over the physical planning of the hotel, guest room availability, control over decisions regarding the operation, physical maintenance and service standards, and control over the income generated by the hotel from ongoing operations as well as upon disposition. A Private Developers Perspective A private hotel developer will create a spatial plan for a hotel that maximizes revenue-generating opportunities from the hotel guests that occupy rooms or patronize secondary or tertiary profit centers within the hotel. An Agency or Authority wishes a hotel to complement its convention center operation and seeks to maximize room count for the purpose of accommodating the largest groups possible, or multiple medium and small size groups, to support patronage of the convention center itself. In addition, an Agency or Authority generally wants hotel guests not to patronage the headquarters hotel’s food and beverage outlets. It prefers that hotel guests go out into the local community and spend discretionary dollars on local business’s that include retail, food, beverage and shopping venues. Private developers generally seek to contain hotel guests so as to capture discretionary dollars in-house. Control over the planning of the physical asset is essential to ensure that convention center goals as well as community and economic development goals are considered. Control over Room Inventory A convention center needs to have some level of control over guest room availability so that it can provide firm room commitments to its potential customers. A private developer is interested in maximizing revenues so that return on investment can be maximized. Providing large blocks of rooms, far in advance, at what may be considered lower than market rates, is perceived to be contrary to the interest of the development community. Yet this is exactly what a convention center sales force and a convention and visitor’s bureau sales force requires. A mechanism must be put in place in which large blocks of rooms are available at certain room rates, and on certain days of the week, weeks of the month, and months in the year. There are numerous cities that have subsidized deals yet did not have sufficient control over the transaction to negotiate room block arrangements that enhanced convention center competitiveness.

Appendix Page 12


Control over Service Quality and Facility Maintenance Over the life of a hotel, there are many decisions regarding the operation and its physical maintenance. A private developer may seek to defer maintenance or defer replacement of furniture, fixtures or equipment in order to enhance return on investment. Reserves for replacing furniture and fixtures may not be established at appropriate levels to provide adequate funding for future renovations. Over the life of a hotel asset a private developer may seek to replace the hotel brand and hotel operator of a hotel. This may change brand standards, may lessen required finish levels, and may lessen service levels. Although such actions may be in the best interest of the developer, such actions are rarely in the best interest of the community or a convention center. Control over Income Distribution Unlike other forms of finance used by Authorities and Agencies, a project revenue tax-exempt financing for a convention center hotel will allow income distributions from the operation of the hotel to be used by the issuing entity for any lawful purpose whatsoever. Our review of project revenue tax-exempt financings completed over the last five years indicates that each issuing entity, of each transaction reviewed, had the right to expend its received distributions in any lawful manner. In the case of the WCCA, funds received from distributions could be used for many purposes to include, but not necessarily be limited to, future convention center projects, future headquarters hotel projects, or disbursed in accordance with the regulations of the issuing entities controlling body. Use of a tax-exempt financing model can also generate proceeds, available at the time of the bond transaction closing, for related development issues including the purchase of the ground the convention center hotel will be constructed upon. PRIVATE FINANCING VERSUS PROJECT REVENUE FINANCING

In general, the funding options associated with a headquarters hotel are one of three:

1) with private sector financing of both debt and equity; 2) a hybrid of private sector debt and equity and public sector subsidies which can take

many forms; and, 3) with public capital markets financing.

Lack of Private Financing Examples In the sections above entitled FINANCING FOR NEW HOTEL DEVELOPMENT and FINANCING FOR LARGE SCALE HOTEL DEVELOPMENT, we described the challenging environment for financing new hotel development. We indicated that we had reviewed over 20 recent convention center and conference center hotel projects that have been developed, are under construction, in pre-construction and/or pre-finance stages. The purpose of this review was to reveal issues relative to the ownership, financing and development of these projects. We further indicated that we had found no 100% private-sector financing transactions for large-scale convention center hotels developed in any primary or secondary markets from 1998 to present. We also found that those large-scale convention center hotels that are reported to be under active and serious consideration, all that we have researched are planning to be financed through some form of bond financing for design, development, construction and interior build out.

Appendix Page 13


Examining Private Financing Yields In order to assess changing return on investment criteria within the private sector, we utilized PKF Consulting’s 2004 Hotel Investment Survey published in May 2004. This periodic professional publication is widely read and well-respected within the lodging real estate industry. The purpose of our review of the Hotel Investment Survey was to obtain recent, up-to-date survey data on investment criteria used by hotel real estate investors. With this information we prepared certain return on investment analysis utilizing the PKF operations pro forma prepared specifically for this report, project specific cost data prepared by Turner, and land acquisition cost data prepared by Jair Lynch. Please find, in the exhibit below, investment criteria from the PKF 2004 Hotel Investment Survey we used for our analysis. In determining terminal capitalization rates for our analysis, we used an average from the past eight years of PKF surveys, after deducting fees and reserves, of 10.94%.

Est. 2004

Equity yield 19.44% Cash on cash return 7.29%

Holding period (years) 6.33

Discount / IRR 13.61%

Source: PKF 2004 Hotel Investment Survey We performed a number of sensitivity analyses using the PKF survey data as well as the project specific assumptions. These analyses were performed initially on development options A and B. For option A, we assumed no land costs. That is to say that whatever portion of the old convention center site would be needed for headquarters hotel development would be conveyed free and clear to an ownership entity. For option A, we were able to generate only single digit yields on the project. Using the increase project costs for option B, as well as the $68 million in estimated land costs, the downward pressure on yields was significant. Complimenting Private Financing While it is likely that a “package” of incentives, tax abatements, guarantees, loans and other financing mechanisms could be created in a hybrid public-private deal, it is unlikely that the “blended” net cost of capital of such a package would approach the low cost of capital available in a project revenue tax-exempt bond financing for the headquarters hotel. SOURCES OF REVENUE FOR A HOTEL SPONSORED BY THE WCCA The District and the WCCA have formerly evaluated methods of financing a headquarters hotel through a project revenue tax-exempt financing. In the cash flow models we have reviewed, tax increment financing was utilized as a source of revenues to support the bonds. Given that the proposed bond offering contemplated a refinance of outstanding bonds used to finance the new Convention Center, it was also contemplated that WCCA revenues would be pledged to support the proposed bond issue. We have concluded that based on the strength of the financing for a

Appendix Page 14


headquarters hotel, a refunding of the WCCA debt is not needed for hotel financing, and in fact may add costs to the WCCA. District Tax Increment Financing

We are currently of the opinion that should the WCCA seek to sponsor the development of a headquarter hotel, alternatives to the use of Tax Increment Financing (“TIF”) should be considered. We have reviewed the “Tax Increment Financing Authorization Act of 1998”, and subsequent supporting documents. It is our current opinion that these documents suggest that the District’s vested authorization to enter into TIF financing, as well as having the authority to determine how TIF bonds may be applied, may result in the WCCA having less control and less participation relative to the planning, construction, control, operation and maintenance of a headquarters hotel. In addition, if a capital structure utilizing TIF revenues were to allow for the return of any portion of TIF revenues generated, due to excess cash flow, the District may be entitled to receive 100% of those TIF revenues regardless of how WCCA revenues may be used to “backstop” any required guarantees as part of a transaction. This is what has been contemplated in prior tax-exempt modeling efforts prepared on behalf of the District.

Document Review

In an effort to determine if other revenue sources could be used to finance the development of a headquarters hotel, we have reviewed several documents. These have included the “Washington Convention Center Authority Act of 1994”, as well as the documents for the “Washington Convention Center Authority Dedicated Tax Revenue Bond Resolution of 1998”. We have reviewed many supporting and supplemental documents to these primary documents for the WCCA. These have included financing resolutions as well as site control resolutions such as the “Transfer of Site Control of the Old Washington Convention Center Property to the Washington Convention Center Authority Approval Resolution of 2003”.

WCCA Capacity Regarding Additional Issuances

As a result of our document review and calculations of hotel revenue streams, we are currently of the opinion that the WCCA does not have to refinance the bonds issued for the new Convention Center hotel in order to participate in a financing for a headquarters hotel. We are currently of the opinion that the WCCA has issuance authority for tax exempt bonds to support hotel financing. It is our opinion that the potential for an additional issuance to include a headquarters hotel should be fully explored. In the alternative, we are of the opinion that the WCCA should explore its authority to create a Single Purpose Development Subsidiary (“SPDS”) that would issue bonds to finance a headquarters hotel, own and hold the property, and retain a professional hotel manager for the operation of the hotel. SPDS governance, to include its articles of incorporation, bylaws and Board of Directors, would be established by the WCCA. The SPDS would retain all entities necessary to complete a transaction. Any monies necessary to conduct the business obligations of the SPDS could be expended through the WCCA and would be reimbursed to the WCCA at the closing of a bond offering.

Appendix Page 15


Alternate Revenue Source

The purpose of the aforementioned research is relevant given what we believe may be an alternate source of revenues to finance the development of a headquarters hotel. It is our opinion that the tax revenues that the hotel would generate, minus those lodging and food & beverage taxes that would normally go to the WCCA, could be used as a source of revenue to finance a transaction. Similar to the prior tax-exempt cash flow models that have been reviewed, a capital structure that utilizes Site Specific Taxes (“SST’s”), that also allows for the return of SST revenues when excess cash flow occurs, would allow these revenues to flow back to the WCCA, through an entity established to own the hotel, and not the District.

CONSIDERATIONS FOR A PROJECT REVENUE TAX-EXEMPT HOTEL FINANCING The benefit for the WCCA in utilizing Site Specific Taxes to finance a headquarters hotel is of importance only if a transaction can be properly supported. By “support” we mean that market supply and demand factors will allow for the generation of adequate hotel Net Operating Income, that the type and extent of SST’s provides adequate funds to pledge, and that other forms of income, either from the hotel or, if necessary, from other sources, are available. Of equal importance is an understanding of the risks associated with each of these potential revenue source. There are a number of analyses that must occur to determine the likelihood that each revenue source will occur at the levels forecasted. Further, once these risks are adequately evaluated, an assessment must occur relative to the impact on the operation of the hotel and the operation of the ownership entity should such risks endanger the financial health of the hotel asset itself. Each issue relative to a hotel’s operating business, its resultant net operating income and its other forms of support, as described above, is likely to impact the marketability of any capital structure devised. We are of the opinion that creating a business plan that soundly supports the local market and its customer base, and crafting a capital structure that supports the hotel operating business in its early years, especially its first three years of operation, are two critical elements to ensuring a marketable project revenue tax-exempt transaction. Hotel Market Issues The District of Columbia is a top tier, national destination with a strong hotel market and a first rate convention center complex. The projected Revenue Per Available Room (“RevPAR”), as determined by PKF, is the highest of any market that has considered the use of a project revenue tax-exempt financing to generate proceeds to develop a headquarters hotel. The municipal credit community will look favorably upon the strong historical average daily rates and the occupancy rates of the hotel markets primary and secondary competition, the positive attributes of the District and the convention center, and what this combined “package” can offer convention attendees. The fact that the District has such a successful convention center despite the lack of a headquarters hotel will further speak to the strength of the local market. WCCA Business Objectives We are of the opinion that the WCCA should consider a project revenue tax-exempt financing for a headquarters hotel only if the concept fits within its own business objectives. In addition, the WCCA should only accept a proposed capital structure for this type of transaction if all known

Appendix Page 16


risks are adequately defined and the WCCA is willing to accept all identified risks knowing what economic benefits it may and may not receive. “Base Case” Assumptions There are a number of “base case” assumptions that must be made in order to identify risks and economic benefits. These “base case” assumptions should also include certain structuring elements that, in our opinion, enhance marketability of a potential bond offering. It is our opinion that the credit and bond insurance markets are increasing their level of scrutiny at certain elements of proposed structures as they assess ratability and insurability. As such, we believe the following should be considered in any proposed capital structure:

• debt service reserve requirements should be funded in their entirety at the time of the bond closing.

• cash traps should be fully funded at or before the conclusion of the first year of operation. • If site specific taxes are used to support bonds, less than 100% of those taxes should be

used in order to have a “cushion” of available income should actual operations results be more pessimistic that current pro forma figures.

• Sinking funds for bond redemptions should be funded as early as possible and deposits should be aggressive.

• Operations budgets for the issuing entity should be fully funded through the time that a certificate of occupancy is issued, and future obligations of the issuing entity should be fully budgeted.

• Hotel income should be able to provide better than 1.0 coverage on subordinate bonds without additional support.

• debt coverage ratios on any senior bonds should be at least 2.30 to 2.50. • Furniture, Fixture & Equipment Reserves as well as Capital Project reserves should be

established with sufficiently meaningful deposit requirements so that the likelihood of any additional moneys for improvements of any kind is minimized.

It is our opinion that many of these elements were not adequately addressed in earlier cash flow models. POTENTIAL HOTEL FINANCING STRUCTURES There are several approaches that may be taken when considering how to structure a plan of finance for a project revenue tax-exempt hotel financing. In addition, there are numerous ways to structure an issuing entities financial participation in a headquarters hotel. Underlying Fundamentals Any structure developed must be in accordance with a development cost that can be supported by the cash flow, an issuing entities legal and practical capacity to contribute to the financing, adequate support on the part of the issuing entity to meet the rating agencies loan-to-value ratios required for investment grade status, and adequate coverage ratios to meet the most recent debt coverage requirements of the rating agencies, the bond insurers and the institutional investors that buy these type of bonds.

Appendix Page 17


“Base Case” Assumptions “Base case” assumptions must also be made about the potential headquarter hotel’s operating business. In assembling our analysis we have assumed a 1,220 key hotel with 100,000 square feet of meeting and ballroom space that would open for business on July 1, 2008. We have utilized the operations pro forma generated by PKF specifically for this engagement. We have capitalized bond interest for each financing scenario for six months beyond the projected opening date. For each financing scenario, we have created a Sources and Uses of Funds that contemplates fully funding debt service reserves at the time of the bond closing. We have also accounted for, at the time of the bond closing, fully funding operating capital, pre-opening expenses, WCCA or SPDS operating budgets, and have included estimated bond insurance premiums. We have assumed a project budget of $352 million for a project on the old convention center site. This figures does not include deductions from the Turner project cost estimates that would also be financed in a bond offering but are separate line items from project cost. These costs include, for example, pre-opening hotel expenses of $7.32 million. Project costs for the 9th Street site were an additional $12 million as detailed on the Turner project costs estimates. In addition to project cost, an additional $68 million in costs were assumed for land acquisition as detailed in the Jair Lynch report. Many changes and alternatives to our “base case” assumptions could be made in addition to further supporting analysis. These may include changes to the proposed facility and its costs or to the capital structure and the type of income and credit support we have suggested. However, a “base case” of assumptions and results must be prepared so that future opinions can be generated and comparisons can be made. We believe that the “base case” assumptions we have used are reasonable and consider the facts gathered to date. “Base Case” Financing Scenarios We have chosen three financing structures as part of our “base case”. Each was used to evaluate the development options. Each had the “base case” assumption described above including 30 year fixed rate capital structure with a weighted average maturity for the bonds being less than 24 years. Our discussions with credit market participants confirmed our research that investors expect sufficient “paydown” of bonds to occur so that principal is defeased in its entirety in less than 22 to 24 years despite the fact that 30 year financing is utilized. The three “base case” financing structures included:

a) a single traunche of bonds that could be rated “AAA” and be fully insured, b) an unenhanced senior traunche of bonds representing approximately 60% of the total

bond offering with the balance of the bonds being in a subordinate traunche of bonds. This subordinate traunche of bonds would be insured and would have a “backstop” guarantee utilizing site specific taxes, and

c) a single traunche of bonds that would be uninsured. Hotel Operator Participation in Bond Purchase There have been several tax-exempt hotel financings done which include a deeply subordinated traunche of bonds which are purchased by the hotel operator. Given that a highly variable incentive fee based on performance tests, payable to the hotel managing agent before debt service, is forbidden under I.R.S. regulations, it has been suggested that the only way to “incentivize” a hotel managing agent to ensure that sufficient financial performance occurs to pay

Appendix Page 18


the senior bonds is to require the managing agent to buy bonds that are subordinated to the senior bonds. The rationale further suggests that if the hotel manager manages revenue and costs in such a manner that cash flow is generated to service these deeply subordinated bonds, senior bonds are “protected”. Operator Bond Impact On Cash Flow The argument for the purchase of deeply subordinated bonds by the hotel operation appears plausible. However, the argument does not take into account the significant impact that the interest expense of these subordinate bonds has on the capital structure. In addition, any principal and interest on these operator bonds, if not paid on a current basis, accrues and must be paid off before senior liens, such as the mortgage on the hotel, can be released. In addition, the interest expense represents monies that, if not used to service bonds, can flow through the capital structure and be used for many uses including defeasing bonds, growing capital improvement reserves, or distributing to the issuing entity. A Better Mechanism for Hotel Operator Participation Asking the potential hotel operator to purchase deeply subordinated bonds may be useful for attracting financially secure hotel operators. However, we are of the opinion that it is an inefficient use of hotel net revenues. Hotel operators that are capable of purchasing such bonds tend to be operating businesses with sophisticated balance sheets. A better type of credit support to secure from a hotel operator of this type would be an irrevocable letter of credit (“LOC”). This LOC would sit in the account which holds hotel operating capital and would be drawn down after all operating capital is exhausted but before debt service reserves are drawn from. This type of hotel operator credit was used in the largest tax-exempt transaction done to date for a hotel, in Denver, CO, and we expect this type of hotel operator credit will be used more often as its efficiency within the capital structure is more widely recognized. Please see Exhibit A, contained on pages 5-7, entitled “Sample of Tax-Exempt Hotel Financings”, for greater detail on the Denver transaction. Using Other Payment Types In each financing scenario we ran, we also utilized a Payment in Lieu of Taxes (“PILOT”) as part of the credit support for each scenario. A property tax assessment would not be required as a result of the proposed ownership structure. However, the financing structure assumes that the WCCA would charge the hotel operation a PILOT assessment in an amount equal to the property taxes that would have been otherwise due. This maintains a more level playing field between this and other hotels and provides the WCCA/District with funds to “contribute” to the hotel. Each financing scenario we prepared assumes that the WCCA/District would pledge the PILOT assessment to the financing as a source of cash equity annually for the term of the bonds. This structure was successfully employed in the Denver transaction and the PILOT payment was assumed as an equity contribution by the bond insurers and the rating agencies. Other Development Options Initial financing analyses were also prepared for development options D, E and F. However, preliminary analysis indicated that none of these scenarios were capable of being financed, given their respective project costs, using estimated hotel net operating income and any additional support common to private financing, public-private financing or project revenue tax-exempt financing. Financing for development scenario D would require sufficient WCCA or other public

Appendix Page 19


sector investment to finance approximately $181 million, assuming hotel revenues are sufficient to finance the estimated $352 million in costs associated with the hotel in Option A. Current WCCA debt capacity would be sufficient to fund this amount. For Options E and F, the amount that would have to be financed through means other than hotel revenue approximates $422 million and $684 million, respectively. It is very likely that added tax revenues (through a tax increase or reallocation of existing collections), or other form of public sector contribution would be necessary to fund these amounts. PROPOSED STRUCTURE Insured Single Traunche Modeling We ran the “single traunche of insured bonds” scenario for both the A and B development scenarios. Although this scenario has the highest bond insurance premium costs, it has the lowest overall cost of capital and appears to satisfy all of the elements we discussed above that are necessary for a marketable transaction. However, in recent transactions that have sought to use a single insured traunche, the credit markets have sought ongoing guarantees from the hotel operators for the net operating income stated in the operations pro formas. The guarantees sought have been quite substantive. These requested guarantees have “killed” at least one recent transaction; that being in Osceola, FL. It is our current opinion that if the WCCA sought to utilize the “single traunche of insured bonds”, credit market participants that would provide investment grade ratings to a potential offering would operator guarantees as well as debt service guarantees. The debt service guarantees would likely be equal to 35% to 40% of the annual debt service. Participation in guarantees may also include required guarantees from the District given the relatively limited income stream that the WCCA has. For these reasons, we are not recommending a proposed structure that would use the “single traunche of insured bonds” approach. Uninsured Single Traunche Modeling We ran the “single traunche of uninsured bonds” for both the A and B development scenarios. Although it has the highest cost of capital of the three financing scenarios, it is a structure that appears to have all of the characteristics necessary to work. However, it remains an untested “product” from a marketability standpoint. There have been no tax-exempt financings for hotels successfully marketed as a single unenhanced, uninsured offering. This is not to say that such a structure may not be sold in the near to mid term. However, given the structures limited exposure to institutional bond buyers, we do not recommend using a “single traunche of uninsured bonds” approach. Senior/ Subordinated Traunches Modeling We ran the “senior/subordinate”” scenario for both the A and B development scenarios. Above, we described this scenario as an unenhanced senior traunche of bonds representing approximately 60% of the total bond offering with the balance of the bonds being in a subordinate traunche of bonds. This subordinate traunche of bonds would be insured and would have a backstop guarantee provided by the WCCA using site specific taxes.

Appendix Page 20


Recommended Approach We believe that in today’s credit markets, this structure has a reasonable likelihood of receiving necessary investment grade ratings, it has reasonable issuance and insurance costs, the enhanced subordinate traunche of bonds has a strong likelihood of securing bond insurance, the structure limits the guarantees that would likely be required by the WCCA, is not likely to require participation on the part of the District, and has sufficient awareness and interest on the part of the institutional investor community that it has a high probability of being well received by the market. Debt Coverage Issues Under the “senior/subordinate” scenario, the Series A bonds have coverage that exceeds 2.5 times coverage in every year. This should be considered strong coverage. In order to assess the strength of the Series B coverage ratios, we have assessed them two ways: first was against revenue remaining after the payment of the Series A notes without the PILOT payment and without the Site Specific Taxes (“SST”s). The coverage is in excess of 1.23 in every year of the cash flow model. We believe this speaks highly of the quality of the hotel income stream on a stand-alone basis. Secondly, we sought to evaluate the strength of the Site Specific Taxes on a stand-alone basis. We did this because it is the Site Specific Taxes that constitute the Series B debt service “backstop” that the WCCA would agree to provide. Note that the Series B coverage using Site Specific Taxes only is in excess of 1.25 in every year of the cash flow model. Using Site Specific Taxes The SST’s play an interesting role in the capital structure. Note that only 75% of the SST’s are used in any one year as part of Total Net Revenues. We have chosen to use only 75% so that there remains a “cushion” to SST’s that can also be used for Net Revenue. Yet, when using the PKF operations pro forma figures, the full amount of the SST’s are reversed back to the WCCA in every ear of the pro forma. These monies can be used for any legal purpose whatsoever. Distributions to the WCCA Note also the Application of Excess Revenue. Beginning in year 2, there are sufficient excess revenues such that 50% of the excess is funded into the Bond Redemption Fund and 50% would be distributed to the WCCA. These monies could be used for any legal purpose whatsoever. Disposition of the Hotel Asset One question that often comes out when viewing project revenue tax-exempt cash flows is “when can we sell the hotel?” This may be important for many reasons not the least of which is the time the issuing entity may wish to have its balance sheet “tied up” with the investment. Using this particular structure, and utilizing all of the assumptions detailed above, it appears as though the hotel could be sold at the end of year 7 and pay off all outstanding bonds. Economic Benefits to the WCCA During that proposed 7 year holding period, the WCCA could receive approximately $84 million in SST revenues reversed to it for deposit in WCCA general accounts, it would received approximately $54 million in distributions for deposit to its general accounts, and at the

Appendix Page 21


disposition of the hotel, it would received an additional $19 million from residual balances in hotel reserve accounts. This represents a nominal return to the WCCA of approximately $158 million over its seven-year holding period. As stated above, these monies could be used for any lawful purpose to include, but not necessarily be limited to, paying down WCCA debt, funding reserves for capital improvements or new projects, or distributing in some manner consistent with the bylaws of the WCCA or its SPDS. Analysis of Development Option B We also ran the “senior/subordinate” scenario for the B development option. All assumptions were similar with the exception that project costs were $12 million more than the A development scenario. In addition, we included a land acquisition cost of $68 million. This incremental $80 million in total cost pushed the Series A debt coverage ratios below 2.0 for the first six years of operation. This degree of coverage likely renders these bonds as not marketable. Using these same project and land acquisition figures with the “single traunche of uninsured bonds” financing scenario produced debt coverage below 2.0 coverage as well. Previously in this and related reports, we have identified the amount of funding required (beyond costs financed by hotel revenues) for options C through F. For options C (WCC meeting/ballroom space), and D (headquarters hotel plus WCC meeting/ballroom space), existing WCCA dedicated revenues are sufficient to fund project cost not covered by hotel revenues. For options E and F (both reflecting headquarters hotel plus WCC exhibit/meeting/ballroom space) project cost are significant enough that WCCA dedicated revenues will not be sufficient to fund project costs not covered by hotel revenues. For these options, added taxes would have to be levied, or other sources of public sector funding would be required. Projected Tax Revenues / Cash Flows Please find the site-specific tax projections used in our financing scenarios in the appendix. Also find the cash flow model for the Senior/Subordinate scenario in the appendix.

Recommended Financial Model

Development Option A - Senior/Subordinate Model Sources and Uses of Funds

WCCA Convention Center Hotel (Dollars in Thousands)

Sources of Funds Total Series A Series BPar Amount of Bonds 457,890$ 265,995$ 191,895$ Interest Earnings on Project Construction Fund 10,740 5,891 4,849 Manager Credit Support 10,000 10,000 - TOTAL SOURCES OF FUNDS 478,630$ 281,886$ 196,744$

Uses of FundsDeposit to Project Construction Fund 331,518$ 181,831$ 149,687$ Deposit to Capitalized Interest (CIF) Fund 73,547 47,666 25,882 Debt Service Reserve Fund 35,496 21,746 13,750 Operating Capital 15,000 15,000 - Pre-Opening Expenses 7,320 7,320 - Costs of Issuance (including UD) 9,158 5,320 3,838 Gross Bond Insurance Premium 3,584 - 3,584 Authority Budget 3,000 3,000 - Rounding Amount 7 4 3

TOTAL USES OF FUNDS 478,630$ 281,886$ 196,744$

Dated DateTrue Interest Cost 5.891% 6.527% 5.030%All-In-Cost 5.997% 6.571% 5.208%Weighted Average Maturity 23.826 Years 23.548 Years 24.212 Years

The total project budget of $331,518,000 includes Techincal Services.The first construction draw occurs 32 months prior to the hotel opening.Interest is capitalized for 6 months after hotel opening.

1

Development Option A - Senior/Subordinate ModelProject Cash Flow Summary

WCCA DC Convention Center Hotel (Dollars in Thousands)

Year Ending, 2008 2009 2010 2011 2012 2013 2014 2015

OPERATING SUMMARYAvailable Rooms 438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 Occupied Rooms 284,700 315,360 337,260 337,260 337,260 337,260 337,260 337,260 Occupancy 65.00% 72.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%Average Daily Rate 197.00 203.00 213.00 222.00 228.00 235.00 242.00 250.00

TOTAL NET REVENUESPILOT Payment 2,701 2,782 2,866 2,952 3,040 3,131 3,225 3,322 Residual Site-Specfic Taxes (1) 5,555 2,252 2,963 3,078 3,162 3,253 3,354 3,459 Net Operating Income 27,502 33,472 39,435 41,411 42,455 43,776 45,073 46,650 Other Investment Earnings (2) 175 679 909 1,089 1,280 1,483 1,678 1,887 Less: Asset Manager Fee (240) (247) (255) (262) (270) (278) (287) (295) Less: Authority Budget (240) (247) (255) (262) (270) (278) (287) (295)

TOTAL NET REVENUES 35,453 38,690 45,663 48,005 49,396 51,086 52,756 54,728

CASH FLOW EXPENDITURESSeries "A" Gross Debt Service 17,024 17,024 18,094 19,075 19,290 19,506 19,729 19,951 Series A" Capitalized Interest/DSRF (8,610) (1,696) (1,196) (1,196) (1,196) (1,196) (1,196) (1,196) Series "A" NET DEBT SERVICE 8,414 15,328 16,898 17,879 18,094 18,310 18,533 18,755

FF&E Requirement (2%, 3%, 4%...) 2,023 3,332 4,831 5,011 5,152 5,309 5,467 5,641

Site Specific Tax Contribution (4,297) (8,594) (8,879) (9,215) (9,484) (9,756) (10,045) (10,370)

Series "B" Guaranteed Gross Debt Service 9,350 9,350 9,635 9,971 10,240 10,513 10,802 11,126 Series "B" Guaranteed Capitalized Interest/DSRF (5,053) (756) (756) (756) (756) (756) (756) (756) SERIES "B" GUARANTEED NET DEBT SERVICE 4,297 8,594 8,879 9,215 9,484 9,756 10,045 10,370 CASH FLOW REMAINING 25,017 20,031 23,935 25,115 26,151 27,467 28,756 30,331

Site Specific Tax Revenue Reversal 9,852 10,846 11,842 12,293 12,646 13,009 13,399 13,829 Subordinate Management Fee (.75%) 759 833 906 940 966 995 1,025 1,058 Subordinate FF&E Reserve Deposit - - - - - 1,327 1,367 1,410 Supersubordinate Management Fee (.75%) - 833 906 940 966 995 1,025 1,058 EXCESS REVENUES 14,406 7,519 10,282 10,943 11,573 11,140 11,939 12,976

APPLICATION OF EXCESS REVENUESDeposit to Cash Trap Fund 14,406 5,594 - - - - - - Distribution to Government - 962 5,141 5,471 5,787 5,570 5,969 6,488 Bond Redemption Fund - 962 5,141 5,471 5,787 5,570 5,969 6,488

Total Reserve Fund Deposits 14,406 7,519 10,282 10,943 11,573 11,140 11,939 12,976

COVERAGE RATIOSSeries "A" 4.21 2.52 2.70 2.68 2.73 2.79 2.85 2.92 Series "B" Hotel Revenue Coverage(3) 1.85 1.23 1.30 1.31 1.32 1.34 1.36 1.38 Series "B" Tax Revenue Coverage(4) 2.29 1.26 1.33 1.33 1.33 1.33 1.33 1.33

AGGREGATE DISTRIBUTION TO DISTRICT - 962 6,103 11,575 17,361 22,931 28,900 35,388

RESERVE FUND BALANCESOperating Reserve Fund Balance 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 Cash Trap Fund Balance 14,406 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Bond Redemption Fund Balance (5) - 962 6,103 11,575 17,361 22,931 28,900 35,388 Total Reserve Fund Balances 29,406 35,962 41,103 46,575 52,361 57,931 63,900 70,388

Series "A" Debt Service Reserve Fund 21,746 21,746 21,746 21,746 21,746 21,746 21,746 21,746 Series "B" Debt Service Reserve Fund 13,750 13,750 13,750 13,750 13,750 13,750 13,750 13,750 Total Debt Service Reserve Fund 35,496 35,496 35,496 35,496 35,496 35,496 35,496 35,496

TOTAL RESERVE FUND BALANCE 64,901 71,458 76,599 82,070 87,857 93,427 99,396 105,884

PRINCIPAL BALANCESSeries "A" 265,995 265,995 264,925 262,805 260,335 257,490 254,240 250,560 Series "B" Bonds 191,895 191,895 191,610 190,980 190,060 188,835 187,275 185,330

Total Bond Balance 457,890 457,890 456,535 453,785 450,395 446,325 441,515 435,890

(1) Equal to the residual site specific tax collected by the Hotel after the payment of Series B debt service.(2) Investment earnings on the cash portion of the Operating Reserve, Cash Trap, City Reserve Fund and Bond Redemption Fund balances at 3.5%.(3) Coverage provided by hotel net operating income only and excluding the PILOT Payment and site specific tax revenues.(4) Coverage provided by site specific tax revenues collected by the Hotel.(5) Balances in the Sinking Fund are used to redeem outstanding Series "A" Bonds after the first call date.

2



Year Ending,

OPERATING SUMMARYAvailable RoomsOccupied RoomsOccupancyAverage Daily Rate

TOTAL NET REVENUESPILOT PaymentResidual Site-Specfic Taxes (1)

Net Operating IncomeOther Investment Earnings (2)

Less: Asset Manager FeeLess: Authority Budget

TOTAL NET REVENUES

CASH FLOW EXPENDITURESSeries "A" Gross Debt ServiceSeries A" Capitalized Interest/DSRFSeries "A" NET DEBT SERVICE

FF&E Requirement (2%, 3%, 4%...)

Site Specific Tax Contribution

Series "B" Guaranteed Gross Debt ServiceSeries "B" Guaranteed Capitalized Interest/DSRFSERIES "B" GUARANTEED NET DEBT SERVICECASH FLOW REMAINING

Site Specific Tax Revenue ReversalSubordinate Management Fee (.75%)Subordinate FF&E Reserve DepositSupersubordinate Management Fee (.75%)EXCESS REVENUES

APPLICATION OF EXCESS REVENUESDeposit to Cash Trap FundDistribution to GovernmentBond Redemption Fund

Total Reserve Fund Deposits

COVERAGE RATIOSSeries "A"Series "B" Hotel Revenue Coverage(3)

Series "B" Tax Revenue Coverage(4)

AGGREGATE DISTRIBUTION TO DISTRICT

RESERVE FUND BALANCESOperating Reserve Fund BalanceCash Trap Fund BalanceBond Redemption Fund Balance (5)

Total Reserve Fund Balances

Series "A" Debt Service Reserve FundSeries "B" Debt Service Reserve FundTotal Debt Service Reserve Fund

TOTAL RESERVE FUND BALANCE

PRINCIPAL BALANCESSeries "A"Series "B" Bonds

Total Bond Balance

2016 2017 2018 2019 2020 2021 2022 2023

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%257.00 265.00 272.95 281.14 289.57 298.26 307.21 316.42

3,422 3,524 3,630 3,739 3,851 3,966 4,085 4,208 3,558 3,668 3,778 3,892 4,007 4,128 4,255 4,383

47,898 49,423 50,906 52,433 54,006 55,626 57,295 59,014 2,114 2,354 2,612 2,861 3,125 3,407 3,708 4,027 (304) (313) (323) (332) (342) (352) (363) (374) (304) (313) (323) (332) (342) (352) (363) (374)

56,383 58,343 60,280 62,259 64,305 66,423 68,617 70,883

20,176 20,401 20,635 20,864 21,103 21,338 21,583 21,828 (1,196) (1,196) (1,196) (1,196) (1,196) (1,196) (1,196) (1,196) 18,980 19,205 19,439 19,668 19,907 20,142 20,387 20,632

5,804 5,982 6,162 6,346 6,537 6,733 6,935 7,143

(10,667) (10,997) (11,327) (11,666) (12,017) (12,377) (12,745) (13,128)

11,423 11,753 12,083 12,422 12,773 13,134 13,501 13,884 (756) (756) (756) (756) (756) (756) (756) (756)

10,667 10,997 11,327 11,666 12,017 12,377 12,745 13,128 31,600 33,156 34,680 36,245 37,861 39,547 41,295 43,108

14,225 14,665 15,105 15,558 16,024 16,505 17,000 17,510 1,088 1,122 1,155 1,190 1,226 1,262 1,300 1,339 1,451 1,496 3,081 3,173 3,268 3,366 3,467 3,571 1,088 1,122 1,155 1,190 1,226 1,262 1,300 1,339

13,747 14,752 14,184 15,134 16,117 17,151 18,227 19,348

- - - - - - - - 6,873 7,376 7,092 7,567 8,059 8,575 9,114 9,674 6,873 7,376 7,092 7,567 8,059 8,575 9,114 9,674

13,747 14,752 14,184 15,134 16,117 17,151 18,227 19,348

2.97 3.04 3.10 3.17 3.23 3.30 3.37 3.44 1.39 1.41 1.43 1.45 1.47 1.49 1.50 1.52 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33

42,262 49,638 56,730 64,297 72,355 80,931 90,045 99,718

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 42,262 49,638 56,730 64,297 72,355 80,931 90,045 99,718 77,262 84,638 91,730 99,297 107,355 115,931 125,045 134,718

21,746 21,746 21,746 21,746 21,746 21,746 21,746 21,746 13,750 13,750 13,750 13,750 13,750 13,750 13,750 13,750 35,496 35,496 35,496 35,496 35,496 35,496 35,496 35,496

112,757 120,133 127,226 134,793 142,851 151,427 160,540 170,214

246,420 241,790 236,630 230,910 224,585 217,620 209,965 201,575 183,010 180,265 177,075 173,410 169,235 164,515 159,215 153,290 429,430 422,055 413,705 404,320 393,820 382,135 369,180 354,865

3



Year Ending,





TOTAL NET REVENUES
















Total Bond Balance

2024 2025 2026 2027 2028 2029 2030 2031

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%325.92 335.69 345.76 356.14 366.82 377.83 389.16 400.84

4,334 4,464 4,598 4,736 4,878 5,024 5,175 5,330 4,513 4,646 4,784 4,932 5,079 5,227 5,385 5,548

60,784 62,608 64,486 66,420 68,413 70,465 72,579 74,757 4,365 4,724 5,105 5,507 5,933 6,383 6,858 7,359 (385) (397) (409) (421) (433) (446) (460) (474) (385) (397) (409) (421) (433) (446) (460) (474)

73,226 75,648 78,155 80,754 83,436 86,207 89,078 92,047

22,076 22,324 22,578 22,835 23,096 23,357 23,623 23,890 (1,196) (1,196) (1,196) (1,196) (1,196) (1,196) (1,196) (1,196) 20,880 21,128 21,382 21,639 21,900 22,161 22,427 22,694

7,357 7,578 7,805 8,039 8,281 8,529 8,785 9,048

(13,522) (13,931) (14,350) (14,776) (15,220) (15,681) (16,151) (16,633)

14,278 14,687 15,106 15,532 15,977 16,437 16,907 17,390 (756) (756) (756) (756) (756) (756) (756) (756)

13,522 13,931 14,350 14,776 15,220 15,681 16,151 16,633 44,989 46,943 48,968 51,075 53,255 55,517 57,866 60,305

18,036 18,577 19,134 19,708 20,299 20,908 21,535 22,181 1,379 1,421 1,463 1,507 1,553 1,599 1,647 1,697 3,679 3,789 3,903 4,020 4,140 4,265 4,392 4,524 1,379 1,421 1,463 1,507 1,553 1,599 1,647 1,697

20,516 21,735 23,005 24,333 25,711 27,146 28,644 30,206

- - - - - - - - 10,258 10,868 11,502 12,166 12,855 13,573 14,322 15,103 10,258 10,868 11,502 12,166 12,855 13,573 14,322 15,103 20,516 21,735 23,005 24,333 25,711 27,146 28,644 30,206

3.51 3.58 3.66 3.73 3.81 3.89 3.97 4.06 1.54 1.56 1.58 1.60 1.62 1.64 1.66 1.68 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33

109,977 120,844 132,346 144,513 157,368 170,941 185,263 200,366

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000

109,977 120,844 132,346 144,513 157,368 170,941 185,263 200,366 144,977 155,844 167,346 179,513 192,368 205,941 220,263 235,366

21,746 21,746 21,746 21,746 21,746 21,746 21,746 21,746 13,750 13,750 13,750 13,750 13,750 13,750 13,750 13,750 35,496 35,496 35,496 35,496 35,496 35,496 35,496 35,496

180,472 191,340 202,842 215,008 227,864 241,437 255,759 270,862

192,400 182,390 171,485 159,625 146,745 132,780 117,655 101,295 146,695 139,380 131,295 122,390 112,600 101,860 90,110 77,285 339,095 321,770 302,780 282,015 259,345 234,640 207,765 178,580



Year Ending,





TOTAL NET REVENUES
















Total Bond Balance

2032 2033 2034 2035

438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00%412.86 425.25 438.00 451.14

5,490 5,655 5,825 5,999 5,716 5,884 6,060 6,243

76,999 79,309 81,689 84,139 7,888 8,445 9,031 9,648 (488) (503) (518) (533) (488) (503) (518) (533)

95,118 98,288 101,569 104,964

24,163 24,441 24,720 46,747 (1,196) (1,196) (1,196) (22,942) 22,967 23,245 23,524 23,805

9,320 9,599 9,887 10,184

(17,131) (17,649) (18,178) (18,722)

17,887 18,405 18,935 33,228 (756) (756) (756) (14,506)

17,131 17,649 18,178 18,722 62,831 65,443 68,158 70,975

22,847 23,532 24,238 24,965 1,747 1,800 1,854 1,910 4,660 4,800 4,944 5,092 1,747 1,800 1,854 1,910

31,829 33,511 35,268 37,098

- - - - 15,915 16,756 17,634 18,549 15,915 16,756 17,634 18,549 31,829 33,511 35,268 37,098

4.14 4.23 4.32 4.41 1.70 1.72 1.74 1.76 1.33 1.33 1.33 1.33

216,281 233,036 250,670 269,220

15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000

216,281 233,036 250,670 269,220 251,281 268,036 285,670 304,220

21,746 21,746 21,746 - 13,750 13,750 13,750 - 35,496 35,496 35,496 -

286,776 303,532 321,166 304,220

83,615 64,525 43,935 - 63,315 48,120 31,625 -

146,930 112,645 75,560 -

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Additional Financial Models

Development Option A - Insured ModelSources and Uses of Funds WCCA Convention Center Hotel

(Dollars in Thousands)

Sources of Funds TotalPar Amount of Bonds 465,590$ Interest Earnings on Project Construction Fund 10,740 Manager Credit Support 10,000 TOTAL SOURCES OF FUNDS 486,330$

Uses of FundsDeposit to Project Construction Fund 331,518$ Deposit to Capitalized Interest (CIF) Fund 61,458 Debt Service Reserve Fund 31,908 Gross Bond Insurance Premium (274.0 bp) 26,811 Operating Capital 15,000 Pre-Opening Expenses 7,320 Costs of Issuance (including UD) 9,312 Authority Budget 3,000 Rounding Amount 3

TOTAL USES OF FUNDS 486,330$

Dated DateTrue Interest Cost 4.965%All-In-Cost 5.470%Weighted Average Maturity 22.530 Years


Page 1

Development Option A - Insured Model Project Cash Flow Summary WCCA Convention Center Hotel


Year Ending, 2006 2007 2008 2009 2010 2011 2012 2013

OPERATING SUMMARYAvailable Rooms - - 438,000 438,000 438,000 438,000 438,000 438,000 Occupied Rooms - - 284,700 315,360 337,260 337,260 337,260 337,260 Occupancy - - 65.00% 72.00% 77.00% 77.00% 77.00% 77.00%Average Daily Rate - - 197.00 203.00 213.00 222.00 228.00 235.00

TOTAL NET REVENUESPILOT Payment - - 2,701 2,782 2,866 2,952 3,040 3,131 Site Specific Tax Revenue Contribution (1) - - 9,852 10,846 11,842 12,293 12,646 13,009 Net Operating Income - - 27,502 33,472 39,435 41,411 42,455 43,776 Other Investment Earnings (2) - - 175 767 1,016 1,209 1,411 1,628 Less: Asset Manager Fee - - (240) (247) (255) (262) (270) (278) Less: Authority Budget - - (240) (247) (255) (262) (270) (278)

TOTAL NET REVENUES - - 39,750 47,372 54,649 57,341 59,012 60,988

CASH FLOW EXPENDITURESNon-guaranteed Series "A" Gross Debt Service 22,162 22,162 22,162 22,162 26,882 28,340 28,658 28,979 Non-guaranteed Series A" Capitalized Interest/DSRF (22,162) (22,162) (11,959) (1,755) (1,755) (1,755) (1,755) (1,755) Non-guaranteed Series "A" NET DEBT SERVICE - - 10,204 20,407 25,127 26,585 26,903 27,224

FF&E Requirement (2%, 3%, 4%...) - - 2,023 3,332 4,831 5,011 5,152 5,309 CASH FLOW REMAINING - - 27,524 23,633 24,691 25,745 26,957 28,455

Site Specific Tax Revenue Reversal - - 9,852 10,846 11,842 12,293 12,646 13,009 Subordinate Management Fee (.75%) - - 759 833 906 940 966 995 Subordinate FF&E Reserve Deposit - - - - - - - 1,327 Supersubordinate Management Fee (.75%) - - - 833 906 940 966 995 EXCESS REVENUES - - 16,913 11,121 11,038 11,573 12,379 12,128

APPLICATION OF EXCESS REVENUESDeposit to Cash Trap Fund - - 16,913 3,087 - - - - Distribution to Government - - - 4,017 5,519 5,786 6,189 6,064 Bond Redemption Fund - - - 4,017 5,519 5,786 6,189 6,064

Total Reserve Fund Deposits - - 16,913 11,121 11,038 11,573 12,379 12,128

COVERAGE RATIOSSeries A Coverage - - 3.90 2.32 2.17 2.16 2.19 2.24

AGGREGATE DISTRIBUTION TO DISTRICT - - - 4,017 9,536 15,322 21,512 27,576

RESERVE FUND BALANCESOperating Reserve Fund Balance 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 Cash Trap Fund Balance - - 16,913 20,000 20,000 20,000 20,000 20,000 Bond Redemption Fund Balance (3) - - - 4,017 9,536 15,322 21,512 27,576 Total Reserve Fund Balances 15,000 15,000 31,913 39,017 44,536 50,322 56,512 62,576

Series "A" Debt Service Reserve Fund 31,908 31,908 31,908 31,908 31,908 31,908 31,908 31,908 TOTAL RESERVE FUND BALANCE 46,908 46,908 63,821 70,925 76,444 82,230 88,419 94,483

PRINCIPAL BALANCESTotal Series "A" Bond Balance 465,590 465,590 465,590 465,590 460,870 454,545 447,690 440,270

Aggregate "A" Bonds Called - - - - - - - -

Equity as a % of Debt Service - - 123% 67% 59% 57% 58% 59%(1) Equal to the site specific tax revenues collected by the Hotel.(2) Investment earnings on the cash portion of the Operating Reserve, Cash Trap, and Bond Redemption Fund balances at 3.5%.(3) Balances in the Sinking Fund are used to redeem outstanding Series "A" Bonds after the first call date.

Page 2



Year Ending,


TOTAL NET REVENUESPILOT PaymentSite Specific Tax Revenue Contribution (1)



TOTAL NET REVENUES

CASH FLOW EXPENDITURESNon-guaranteed Series "A" Gross Debt ServiceNon-guaranteed Series A" Capitalized Interest/DSRFNon-guaranteed Series "A" NET DEBT SERVICE

FF&E Requirement (2%, 3%, 4%...)CASH FLOW REMAINING




COVERAGE RATIOSSeries A Coverage




Series "A" Debt Service Reserve FundTOTAL RESERVE FUND BALANCE

PRINCIPAL BALANCESTotal Series "A" Bond Balance

Aggregate "A" Bonds Called

Equity as a % of Debt Service

2014 2015 2016 2017 2018 2019 2020 2021

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%242.00 250.00 257.00 265.00 272.95 281.14 289.57 298.26

3,225 3,322 3,422 3,524 3,630 3,739 3,851 3,966 13,399 13,829 14,225 14,665 15,105 15,558 16,024 16,505 45,073 46,650 47,898 49,423 50,906 52,433 54,006 55,626 1,840 2,070 2,322 2,591 2,882 3,168 3,475 3,804 (287) (295) (304) (313) (323) (332) (342) (352) (287) (295) (304) (313) (323) (332) (342) (352)

62,965 65,281 67,259 69,576 71,877 74,233 76,671 79,196

29,306 29,639 29,973 30,309 30,652 31,000 31,350 31,707 (1,755) (1,755) (1,755) (1,755) (1,755) (1,755) (1,755) (1,755) 27,551 27,884 28,218 28,554 28,897 29,245 29,595 29,953

5,467 5,641 5,804 5,982 6,162 6,346 6,537 6,733 29,946 31,755 33,237 35,040 36,819 38,641 40,540 42,511

13,399 13,829 14,225 14,665 15,105 15,558 16,024 16,505 1,025 1,058 1,088 1,122 1,155 1,190 1,226 1,262 1,367 1,410 1,451 1,496 3,081 3,173 3,268 3,366 1,025 1,058 1,088 1,122 1,155 1,190 1,226 1,262

13,129 14,400 15,384 16,637 16,323 17,530 18,795 20,114

- - - - - - - - 6,565 7,200 7,692 8,319 8,161 8,765 9,398 10,057 6,565 7,200 7,692 8,319 8,161 8,765 9,398 10,057

13,129 14,400 15,384 16,637 16,323 17,530 18,795 20,114

2.29 2.34 2.38 2.44 2.49 2.54 2.59 2.64

34,140 41,340 49,032 57,351 65,512 74,277 83,675 93,732

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 34,140 41,340 49,032 57,351 65,512 74,277 83,675 93,732 69,140 76,340 84,032 92,351 100,512 109,277 118,675 128,732

31,908 31,908 31,908 31,908 31,908 31,908 31,908 31,908 101,048 108,248 115,940 124,258 132,420 141,185 150,583 160,640

432,245 423,575 414,225 404,155 393,320 381,675 369,175 355,765

- - - - - - - -

60% 62% 63% 64% 65% 66% 67% 68%

Page 3



Year Ending,





TOTAL NET REVENUES














2022 2023 2024 2025 2026 2027 2028 2029

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%307.21 316.42 325.92 335.69 345.76 356.14 366.82 377.83

4,085 4,208 4,334 4,464 4,598 4,736 4,878 5,024 17,000 17,510 18,036 18,577 19,134 19,708 20,299 20,908 57,295 59,014 60,784 62,608 64,486 66,420 68,413 70,465 4,156 4,532 4,933 5,361 5,816 6,300 6,814 7,359 (363) (374) (385) (397) (409) (421) (433) (446) (363) (374) (385) (397) (409) (421) (433) (446)

81,810 84,516 87,317 90,216 93,217 96,323 99,537 102,864

32,064 32,432 32,796 33,169 33,548 33,930 34,317 34,706 (1,755) (1,755) (1,755) (1,755) (1,755) (1,755) (1,755) (1,755) 30,309 30,677 31,041 31,414 31,793 32,175 32,562 32,951

6,935 7,143 7,357 7,578 7,805 8,039 8,281 8,529 44,566 46,696 48,918 51,224 53,619 56,109 58,694 61,385

17,000 17,510 18,036 18,577 19,134 19,708 20,299 20,908 1,300 1,339 1,379 1,421 1,463 1,507 1,553 1,599 3,467 3,571 3,679 3,789 3,903 4,020 4,140 4,265 1,300 1,339 1,379 1,421 1,463 1,507 1,553 1,599

21,498 22,935 24,445 26,017 27,655 29,366 31,150 33,014

- - - - - - - - 10,749 11,468 12,222 13,008 13,828 14,683 15,575 16,507 10,749 11,468 12,222 13,008 13,828 14,683 15,575 16,507 21,498 22,935 24,445 26,017 27,655 29,366 31,150 33,014

2.70 2.75 2.81 2.87 2.93 2.99 3.06 3.12

104,481 115,949 128,171 141,179 155,007 169,690 185,265 201,772

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000

104,481 115,949 128,171 141,179 155,007 169,690 185,265 201,772 139,481 150,949 163,171 176,179 190,007 204,690 220,265 236,772

31,908 31,908 31,908 31,908 31,908 31,908 31,908 31,908 171,389 182,856 195,079 208,087 221,915 236,598 252,173 268,679

341,395 326,000 309,525 291,900 273,050 252,900 231,365 208,365

- - - - - - - -

70% 71% 72% 73% 75% 76% 77% 79%

Page 4



Year Ending,





TOTAL NET REVENUES














2030 2031 2032 2033 2034 2035

438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%389.16 400.84 412.86 425.25 438.00 451.14

5,175 5,330 5,490 5,655 5,825 5,999 21,535 22,181 22,847 23,532 24,238 24,965 72,579 74,757 76,999 79,309 81,689 84,139 7,937 8,549 9,196 9,880 10,602 11,364 (460) (474) (488) (503) (518) (533) (460) (474) (488) (503) (518) (533)

106,307 109,870 113,557 117,371 121,319 125,402

35,099 35,501 35,909 36,316 36,733 71,763 (1,755) (1,755) (1,755) (1,755) (1,755) (33,663) 33,344 33,746 34,154 34,561 34,978 38,100

8,785 9,048 9,320 9,599 9,887 10,184 64,178 67,075 70,083 73,211 76,453 77,118

21,535 22,181 22,847 23,532 24,238 24,965 1,647 1,697 1,747 1,800 1,854 1,910 4,392 4,524 4,660 4,800 4,944 5,092 1,647 1,697 1,747 1,800 1,854 1,910

34,956 36,976 39,081 41,279 43,563 43,242

- - - - - - 17,478 18,488 19,541 20,639 21,781 21,621 17,478 18,488 19,541 20,639 21,781 21,621 34,956 36,976 39,081 41,279 43,563 43,242

3.19 3.26 3.32 3.40 3.47 3.29

219,250 237,738 257,279 277,918 299,700 321,320

15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000

219,250 237,738 257,279 277,918 299,700 321,320 254,250 272,738 292,279 312,918 334,700 356,320

31,908 31,908 31,908 31,908 31,908 - 286,158 304,646 324,186 344,826 366,607 356,320

183,815 157,625 129,705 99,965 68,300 -

- - - - - -

80% 82% 83% 84% 86% 81%

Page 5

Development Option A - Uninsured ModelSources and Uses of Funds WCCA Convention Center Hotel



Uses of FundsDeposit to Project Construction Fund 331,518$ Deposit to Capitalized Interest (CIF) Fund 90,098 Debt Service Reserve Fund 40,498 Operating Capital 15,000 Pre-Opening Expenses 7,320 Costs of Issuance (including UD) 9,524 Costs of Issuance 3,000 Rounding Amount 2




Page 1

Development Option A - Uninsured Model Project Cash Flow Summary WCCA Convention Center Hotel


Year Ending, 2006 2007 2008 2009 2010 2011 2012 2013


TOTAL NET REVENUESPILOT Payment - - 2,701 2,782 2,866 2,952 3,040 3,131 Site Specific Tax Revenue Contribution (1) - - 9,852 10,846 11,842 12,293 12,646 13,009 Net Operating Income - - 27,502 33,472 39,435 41,411 42,455 43,776 Other Investment Earnings (2) - - 175 496 677 879 959 1,049 Less: Asset Manager Fee - - (240) (247) (255) (262) (270) (278) Less: Authority Budget - - (240) (247) (255) (262) (270) (278)



Guaranteed Series "A" Gross Debt Service 4,822 4,822 4,822 4,822 4,822 5,324 5,384 5,445 Guaranteed Series A" Capitalized Interest/DSRF (4,822) (4,822) (2,578) (334) (334) (334) (334) (334) Guaranteed Series "A" NET DEBT SERVICE (3) - - 2,244 4,488 4,488 4,990 5,050 5,111


Site Specific Tax Revenue Reversal - - 9,852 10,846 11,842 12,293 12,646 13,009 Subordinate Management Fee (.75%) - - 759 833 906 940 966 995 Subordinate FF&E Reserve Deposit - - - - - - - 1,327 Supersubordinate Management Fee (.75%) - - - - 906 940 966 995 EXCESS REVENUES - - 9,158 5,173 5,909 4,560 5,163 4,700

APPLICATION OF EXCESS REVENUESDeposit to Cash Trap Fund - - 9,158 5,173 5,669 - - - Distribution to Government - - - - 120 2,280 2,582 2,350 Bond Redemption Fund - - - - 120 2,280 2,582 2,350


COVERAGE RATIOS

District Coverage (4) - - 2.21 1.75 1.82 1.71 1.74 1.77 Market Coverage (5) - - 2.53 2.10 2.14 2.02 2.05 2.09

AGGREGATE DISTRIBUTION TO DISTRICT - - - - 120 2,400 4,981 7,331

RESERVE FUND BALANCESOperating Reserve Fund Balance 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 Cash Trap Fund Balance - - 9,158 14,331 20,000 20,000 20,000 20,000 Bond Redemption Fund Balance (6) - - - - 120 2,400 4,981 7,331 Total Reserve Fund Balances 15,000 15,000 24,158 29,331 35,120 37,400 39,981 42,331




Equity as a % of Debt Service - - 82% 67% 64% 61% 62% 62%(1) Equal to the site specific tax revenues collected by the Hotel.(2) Investment earnings on the cash portion of the Operating Reserve, Cash Trap, and Bond Redemption Fund balances at 3.5%.(3) District Coverage represents Total Net Revenues divided by Total Series "A" Net Debt Service (Non-guarateed Net Debt Service plus Guaranteed Net Debt Service).(4) It is assumed that the District would guarante 15% of the debt service on the Series "A" Bonds.(5) Market Coverage represents Total Net Revenues divided by the Total Series "A" Net Debt Service less the Guaranteed Net Debt Service.(6) Balances in the Sinking Fund are used to redeem outstanding Series "A" Bonds after the first call date.

Page 2



Year Ending,





TOTAL NET REVENUES


Guaranteed Series "A" Gross Debt ServiceGuaranteed Series A" Capitalized Interest/DSRFGuaranteed Series "A" NET DEBT SERVICE (3)





COVERAGE RATIOS

District Coverage (4)

Market Coverage (5)








2014 2015 2016 2017 2018 2019 2020 2021

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%242.00 250.00 257.00 265.00 272.95 281.14 289.57 298.26

3,225 3,322 3,422 3,524 3,630 3,739 3,851 3,966 13,399 13,829 14,225 14,665 15,105 15,558 16,024 16,505 45,073 46,650 47,898 49,423 50,906 52,433 54,006 55,626 1,132 1,228 1,342 1,470 1,616 1,752 1,905 2,076 (287) (295) (304) (313) (323) (332) (342) (352) (287) (295) (304) (313) (323) (332) (342) (352)

62,256 64,439 66,279 68,455 70,611 72,817 75,102 77,469

31,201 31,555 31,912 32,272 32,640 33,008 33,385 33,762 (1,893) (1,893) (1,893) (1,893) (1,893) (1,893) (1,893) (1,893) 29,307 29,662 30,019 30,379 30,747 31,115 31,492 31,869

5,506 5,569 5,632 5,695 5,760 5,825 5,892 5,958 (334) (334) (334) (334) (334) (334) (334) (334)

5,172 5,235 5,297 5,361 5,426 5,491 5,557 5,624

5,467 5,641 5,804 5,982 6,162 6,346 6,537 6,733 22,309 23,900 25,159 26,733 28,276 29,864 31,516 33,243

13,399 13,829 14,225 14,665 15,105 15,558 16,024 16,505 1,025 1,058 1,088 1,122 1,155 1,190 1,226 1,262 1,367 1,410 1,451 1,496 3,081 3,173 3,268 3,366 1,025 1,058 1,088 1,122 1,155 1,190 1,226 1,262 5,493 6,545 7,306 8,330 7,780 8,753 9,771 10,846

- - - - - - - - 2,746 3,273 3,653 4,165 3,890 4,377 4,886 5,423 2,746 3,273 3,653 4,165 3,890 4,377 4,886 5,423 5,493 6,545 7,306 8,330 7,780 8,753 9,771 10,846

1.81 1.85 1.88 1.92 1.95 1.99 2.03 2.07 2.12 2.17 2.21 2.25 2.30 2.34 2.38 2.43

10,078 13,350 17,003 21,168 25,058 29,435 34,321 39,744

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 10,078 13,350 17,003 21,168 25,058 29,435 34,321 39,744 45,078 48,350 52,003 56,168 60,058 64,435 69,321 74,744

40,498 40,498 40,498 40,498 40,498 40,498 40,498 40,498 85,576 88,848 92,501 96,666 100,556 104,933 109,819 115,242

458,875 452,725 445,740 437,860 429,015 419,140 408,155 395,985

- - - - - - - -

63% 64% 65% 66% 67% 68% 69% 70%

Page 3



Year Ending,





TOTAL NET REVENUES







COVERAGE RATIOS


Market Coverage (5)








2022 2023 2024 2025 2026 2027 2028 2029

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%307.21 316.42 325.92 335.69 345.76 356.14 366.82 377.83

4,085 4,208 4,334 4,464 4,598 4,736 4,878 5,024 17,000 17,510 18,036 18,577 19,134 19,708 20,299 20,908 57,295 59,014 60,784 62,608 64,486 66,420 68,413 70,465 2,266 2,476 2,706 2,958 3,232 3,531 3,855 4,204 (363) (374) (385) (397) (409) (421) (433) (446) (363) (374) (385) (397) (409) (421) (433) (446)

79,920 82,459 85,089 87,813 90,633 93,554 96,578 99,709

34,148 34,532 34,928 35,325 35,726 36,132 36,546 36,964 (1,893) (1,893) (1,893) (1,893) (1,893) (1,893) (1,893) (1,893) 32,255 32,639 33,035 33,432 33,832 34,239 34,652 35,071

6,026 6,094 6,164 6,234 6,305 6,376 6,449 6,523 (334) (334) (334) (334) (334) (334) (334) (334)

5,692 5,760 5,830 5,900 5,970 6,042 6,115 6,189

6,935 7,143 7,357 7,578 7,805 8,039 8,281 8,529 35,039 36,917 38,867 40,903 43,025 45,233 47,530 49,921

17,000 17,510 18,036 18,577 19,134 19,708 20,299 20,908 1,300 1,339 1,379 1,421 1,463 1,507 1,553 1,599 3,467 3,571 3,679 3,789 3,903 4,020 4,140 4,265 1,300 1,339 1,379 1,421 1,463 1,507 1,553 1,599

11,971 13,157 14,394 15,696 17,062 18,491 19,985 21,550

- - - - - - - - 5,985 6,579 7,197 7,848 8,531 9,245 9,992 10,775 5,985 6,579 7,197 7,848 8,531 9,245 9,992 10,775

11,971 13,157 14,394 15,696 17,062 18,491 19,985 21,550

2.11 2.15 2.19 2.23 2.28 2.32 2.37 2.42 2.48 2.53 2.58 2.63 2.68 2.73 2.79 2.84

45,729 52,308 59,505 67,353 75,884 85,129 95,122 105,896

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 45,729 52,308 59,505 67,353 75,884 85,129 95,122 105,896 80,729 87,308 94,505 102,353 110,884 120,129 130,122 140,896

40,498 40,498 40,498 40,498 40,498 40,498 40,498 40,498 121,227 127,806 135,003 142,851 151,382 160,627 170,619 181,394

382,540 367,735 351,465 333,630 314,120 292,815 269,585 244,295

- - - - - - - -

71% 72% 73% 74% 75% 76% 77% 78%

Page 4



Year Ending,





TOTAL NET REVENUES







COVERAGE RATIOS


Market Coverage (5)








2030 2031 2032 2033 2034 2035

438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%389.16 400.84 412.86 425.25 438.00 451.14

5,175 5,330 5,490 5,655 5,825 5,999 21,535 22,181 22,847 23,532 24,238 24,965 72,579 74,757 76,999 79,309 81,689 84,139 4,581 4,987 5,423 5,890 6,390 6,924 (460) (474) (488) (503) (518) (533) (460) (474) (488) (503) (518) (533)

102,952 106,308 109,784 113,382 117,107 120,962

37,383 37,812 38,245 38,683 39,123 73,992 (1,893) (1,893) (1,893) (1,893) (1,893) (36,316) 35,490 35,918 36,352 36,790 37,229 37,676

6,597 6,673 6,749 6,826 6,904 13,057 (334) (334) (334) (334) (334) (6,409)

6,263 6,339 6,415 6,492 6,570 6,649

8,785 9,048 9,320 9,599 9,887 10,184 52,414 55,003 57,697 60,501 63,420 66,454

21,535 22,181 22,847 23,532 24,238 24,965 1,647 1,697 1,747 1,800 1,854 1,910 4,392 4,524 4,660 4,800 4,944 5,092 1,647 1,697 1,747 1,800 1,854 1,910

23,192 24,904 26,695 28,569 30,530 32,578

- - - - - - 11,596 12,452 13,348 14,284 15,265 16,289 11,596 12,452 13,348 14,284 15,265 16,289 23,192 24,904 26,695 28,569 30,530 32,578

2.47 2.52 2.57 2.62 2.67 2.73 2.90 2.96 3.02 3.08 3.15 3.21

117,492 129,945 143,292 157,577 172,842 189,130

15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000

117,492 129,945 143,292 157,577 172,842 189,130 152,492 164,945 178,292 192,577 207,842 224,130

40,498 40,498 40,498 40,498 40,498 - 192,990 205,442 218,790 233,074 248,339 224,130

216,805 186,955 154,580 119,505 81,545 -

- - - - - -

79% 80% 81% 82% 84% 85%

Page 5

Development Option B - Uninsured ModelSources and Uses of Funds WCCA Convention Center Hotel



Uses of FundsDeposit to Project Construction Fund 413,213$ Deposit to Capitalized Interest (CIF) Fund 111,283 Debt Service Reserve Fund 49,941 Operating Capital 15,000 Costs of Issuance (including UD) 11,763 Costs of Issuance (including UD) 7,320 Authority Budget 3,000 Rounding Amount 1



The total project budget of $413,213,000 includes the cost of Land and Techincal ServicThe first construction draw occurs 32 months prior to the hotel opening.Interest is capitalized for 6 months after hotel opening.

Page 1

Development Option B - Uninsured Model Project Cash Flow Summary WCCA Convention Center Hotel


Year Ending, 2006 2007 2008 2009 2010 2011 2012 2013


TOTAL NET REVENUESPILOT Payment - - 2,701 2,782 2,866 2,952 3,040 3,131 Site Specific Tax Revenue Contribution (1) - - 9,852 10,846 11,842 12,293 12,646 13,009 Net Operating Income - - 27,502 33,472 39,435 41,411 42,455 43,776 Other Investment Earnings (2) - - 175 477 277 162 27 (98) Less: Asset Manager Fee - - (240) (247) (255) (262) (270) (278) Less: Authority Budget - - (240) (247) (255) (262) (270) (278)




Site Specific Tax Revenue Reversal - - 9,852 10,846 11,842 12,293 12,646 13,009 Subordinate Management Fee (.75%) - - 759 833 906 940 966 995 Subordinate FF&E Reserve Deposit - - - - - - - 1,327 Supersubordinate Management Fee (.75%) - - - 833 906 940 966 995 EXCESS REVENUES - - 8,640 (5,713) (3,295) (3,857) (3,561) (4,332)

APPLICATION OF EXCESS REVENUESDeposit to Cash Trap Fund - - 8,640 (5,713) (3,295) (3,857) (3,561) (4,332) Distribution to Government - - - - - - - - Bond Redemption Fund - - - - - - - -

Total Reserve Fund Deposits - - 8,640 (5,713) (3,295) (3,857) (3,561) (4,332)


AGGREGATE DISTRIBUTION TO DISTRICT - - - - - - - -

RESERVE FUND BALANCESOperating Reserve Fund Balance 11,763 11,763 11,763 11,763 11,763 11,763 11,763 11,763 Cash Trap Fund Balance - - 8,640 2,927 (368) (4,225) (7,786) (12,118) Bond Redemption Fund Balance (3) - - - - - - - - Total Reserve Fund Balances 11,763 11,763 20,403 14,690 11,395 7,538 3,977 (355)





Page 2



Year Ending,





TOTAL NET REVENUES














2014 2015 2016 2017 2018 2019 2020 2021

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%242.00 250.00 257.00 265.00 272.95 281.14 289.57 298.26

3,225 3,322 3,422 3,524 3,630 3,739 3,851 3,966 13,399 13,829 14,225 14,665 15,105 15,558 16,024 16,505 45,073 46,650 47,898 49,423 50,906 52,433 54,006 55,626

(249) (385) (494) (589) (659) (759) (837) (890) (287) (295) (304) (313) (323) (332) (342) (352) (287) (295) (304) (313) (323) (332) (342) (352)

60,875 62,826 64,443 66,396 68,336 70,306 72,360 74,502

45,207 45,715 46,233 46,757 47,282 47,816 48,360 48,907 (2,747) (2,747) (2,747) (2,747) (2,747) (2,747) (2,747) (2,747) 42,461 42,968 43,487 44,011 44,535 45,069 45,613 46,160

5,467 5,641 5,804 5,982 6,162 6,346 6,537 6,733 12,947 14,217 15,152 16,404 17,640 18,890 20,210 21,609

13,399 13,829 14,225 14,665 15,105 15,558 16,024 16,505 1,025 1,058 1,088 1,122 1,155 1,190 1,226 1,262 1,367 1,410 1,451 1,496 3,081 3,173 3,268 3,366 1,025 1,058 1,088 1,122 1,155 1,190 1,226 1,262

(3,869) (3,139) (2,701) (2,000) (2,856) (2,221) (1,534) (787)

(3,869) (3,139) (2,701) (2,000) (2,856) (2,221) (1,534) (787) - - - - - - - - - - - - - - - -

(3,869) (3,139) (2,701) (2,000) (2,856) (2,221) (1,534) (787)

1.43 1.46 1.48 1.51 1.53 1.56 1.59 1.61

- - - - - - - -

11,763 11,763 11,763 11,763 11,763 11,763 11,763 11,763 (15,987) (19,126) (21,827) (23,826) (26,682) (28,903) (30,437) (31,224)

- - - - - - - - (4,224) (7,363) (10,064) (12,063) (14,920) (17,140) (18,674) (19,461)

49,941 49,941 49,941 49,941 49,941 49,941 49,941 49,941 45,717 42,578 39,878 37,878 35,022 32,801 31,267 30,480

564,965 557,385 548,775 539,060 528,165 516,000 502,470 487,480

- - - - - - - -

39% 40% 41% 41% 42% 43% 44% 44%

Page 3



Year Ending,





TOTAL NET REVENUES














2022 2023 2024 2025 2026 2027 2028 2029

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%307.21 316.42 325.92 335.69 345.76 356.14 366.82 377.83

4,085 4,208 4,334 4,464 4,598 4,736 4,878 5,024 17,000 17,510 18,036 18,577 19,134 19,708 20,299 20,908 57,295 59,014 60,784 62,608 64,486 66,420 68,413 70,465

(918) (917) (886) (822) (723) (586) (408) (187) (363) (374) (385) (397) (409) (421) (433) (446) (363) (374) (385) (397) (409) (421) (433) (446)

76,736 79,067 81,498 84,033 86,678 89,437 92,315 95,318

49,460 50,017 50,587 51,160 51,743 52,332 52,926 53,526 (2,747) (2,747) (2,747) (2,747) (2,747) (2,747) (2,747) (2,747) 46,713 47,271 47,840 48,413 48,996 49,585 50,179 50,779

6,935 7,143 7,357 7,578 7,805 8,039 8,281 8,529 23,088 24,653 26,300 28,042 29,876 31,813 33,855 36,009

17,000 17,510 18,036 18,577 19,134 19,708 20,299 20,908 1,300 1,339 1,379 1,421 1,463 1,507 1,553 1,599 3,467 3,571 3,679 3,789 3,903 4,020 4,140 4,265 1,300 1,339 1,379 1,421 1,463 1,507 1,553 1,599

20 893 1,827 2,835 3,913 5,070 6,310 7,638

20 893 1,827 2,835 3,913 5,070 6,310 7,638 - - - - - - - - - - - - - - - -

20 893 1,827 2,835 3,913 5,070 6,310 7,638

1.64 1.67 1.70 1.74 1.77 1.80 1.84 1.88

- - - - - - - -

11,763 11,763 11,763 11,763 11,763 11,763 11,763 11,763 (31,204) (30,311) (28,484) (25,649) (21,736) (16,666) (10,356) (2,717)

- - - - - - - - (19,441) (18,548) (16,721) (13,886) (9,974) (4,903) 1,407 9,045

49,941 49,941 49,941 49,941 49,941 49,941 49,941 49,941 30,500 31,393 33,220 36,055 39,968 45,038 51,349 58,987

470,925 452,695 432,665 410,710 386,690 360,460 331,865 300,740

- - - - - - - -

45% 46% 47% 48% 48% 49% 50% 51%

Page 4



Year Ending,





TOTAL NET REVENUES














2030 2031 2032 2033 2034 2035

438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%389.16 400.84 412.86 425.25 438.00 451.14

5,175 5,330 5,490 5,655 5,825 5,999 21,535 22,181 22,847 23,532 24,238 24,965 72,579 74,757 76,999 79,309 81,689 84,139

80 397 767 1,034 1,274 1,542 (460) (474) (488) (503) (518) (533) (460) (474) (488) (503) (518) (533)

98,450 101,718 105,128 108,526 111,991 115,580

54,135 54,751 55,376 56,007 56,649 107,236 (2,747) (2,747) (2,747) (2,747) (2,747) (52,688) 51,388 52,004 52,630 53,260 53,902 54,547

8,785 9,048 9,320 9,599 9,887 10,184 38,277 40,665 43,178 45,666 48,201 50,849

21,535 22,181 22,847 23,532 24,238 24,965 1,647 1,697 1,747 1,800 1,854 1,910 4,392 4,524 4,660 4,800 4,944 5,092 1,647 1,697 1,747 1,800 1,854 1,910 9,055 10,566 12,176 13,734 15,311 16,972

9,055 10,566 3,096 - - - - - 4,540 6,867 7,656 8,486 - - 4,540 6,867 7,656 8,486

9,055 10,566 12,176 13,734 15,311 16,972

1.92 1.96 2.00 2.04 2.08 2.12

- - 4,540 11,407 19,063 27,549

11,763 11,763 11,763 11,763 11,763 11,763 6,337 16,904 20,000 20,000 20,000 20,000

- - 4,540 11,407 19,063 27,549 18,100 28,667 36,303 43,170 50,825 59,311

49,941 49,941 49,941 49,941 49,941 - 68,042 78,608 86,244 93,111 100,767 59,311

266,905 230,170 190,330 147,170 100,455 -

- - - - - -

52% 53% 54% 55% 56% 57%

Page 5

Development Option B - Insured ModelSources and Uses of Funds WCCA Convention Center Hotel



Uses of FundsDeposit to Project Construction Fund 413,213$ Deposit to Capitalized Interest (CIF) Fund 75,912 Debt Service Reserve Fund 39,412 Gross Bond Insurance Premium (274.0 bp) 33,117 Operating Capital 15,000 Costs of Issuance (including UD) 11,502 Pre-Opening Expenses 7,320 Authority Budget 3,000 Rounding Amount 1



The total project budget of $413,213,000 includes the cost of Land and Techincal ServicThe first construction draw occurs 32 months prior to the hotel opening.Interest is capitalized for 6 months after hotel opening.

Page 1

Development Option B - Insured Model Project Cash Flow Summary WCCA Convention Center Hotel


Year Ending, 2006 2007 2008 2009 2010 2011 2012 2013


TOTAL NET REVENUESPILOT Payment - - 2,701 2,782 2,866 2,952 3,040 3,131 Site Specific Tax Revenue Contribution (1) - - 9,852 10,846 11,842 12,293 12,646 13,009 Net Operating Income - - 27,502 33,472 39,435 41,411 42,455 43,776 Other Investment Earnings (2) - - 175 683 888 976 1,065 1,165 Less: Asset Manager Fee - - (240) (247) (255) (262) (270) (278) Less: Authority Budget - - (240) (247) (255) (262) (270) (278)




Site Specific Tax Revenue Reversal - - 9,852 10,846 11,842 12,293 12,646 13,009 Subordinate Management Fee (.75%) - - 759 833 906 940 966 995 Subordinate FF&E Reserve Deposit - - - - - - - 1,327 Supersubordinate Management Fee (.75%) - - - 833 906 940 966 995 EXCESS REVENUES - - 14,513 6,238 5,001 5,090 5,707 5,262

APPLICATION OF EXCESS REVENUESDeposit to Cash Trap Fund - - 14,513 5,487 - - - - Distribution to Government - - - 375 2,500 2,545 2,854 2,631 Bond Redemption Fund - - - 375 2,500 2,545 2,854 2,631



AGGREGATE DISTRIBUTION TO DISTRICT - - - 375 2,876 5,421 8,274 10,905

RESERVE FUND BALANCESOperating Reserve Fund Balance 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 Cash Trap Fund Balance - - 14,513 20,000 20,000 20,000 20,000 20,000 Bond Redemption Fund Balance (3) - - - 375 2,876 5,421 8,274 10,905 Total Reserve Fund Balances 15,000 15,000 29,513 35,375 37,876 40,421 43,274 45,905





Page 2



Year Ending,





TOTAL NET REVENUES














2014 2015 2016 2017 2018 2019 2020 2021

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%242.00 250.00 257.00 265.00 272.95 281.14 289.57 298.26

3,225 3,322 3,422 3,524 3,630 3,739 3,851 3,966 13,399 13,829 14,225 14,665 15,105 15,558 16,024 16,505 45,073 46,650 47,898 49,423 50,906 52,433 54,006 55,626 1,257 1,363 1,488 1,626 1,783 1,930 2,095 2,278 (287) (295) (304) (313) (323) (332) (342) (352) (287) (295) (304) (313) (323) (332) (342) (352)

62,381 64,574 66,425 68,611 70,778 72,995 75,292 77,671

36,201 36,606 37,024 37,439 37,863 38,292 38,723 39,166 (2,168) (2,168) (2,168) (2,168) (2,168) (2,168) (2,168) (2,168) 34,034 34,438 34,856 35,271 35,695 36,125 36,556 36,998

5,467 5,641 5,804 5,982 6,162 6,346 6,537 6,733 22,880 24,494 25,765 27,358 28,921 30,524 32,199 33,940

13,399 13,829 14,225 14,665 15,105 15,558 16,024 16,505 1,025 1,058 1,088 1,122 1,155 1,190 1,226 1,262 1,367 1,410 1,451 1,496 3,081 3,173 3,268 3,366 1,025 1,058 1,088 1,122 1,155 1,190 1,226 1,262 6,063 7,139 7,912 8,955 8,425 9,413 10,455 11,543

- - - - - - - - 3,032 3,569 3,956 4,477 4,213 4,707 5,228 5,772 3,032 3,569 3,956 4,477 4,213 4,707 5,228 5,772 6,063 7,139 7,912 8,955 8,425 9,413 10,455 11,543

1.83 1.88 1.91 1.95 1.98 2.02 2.06 2.10

13,937 17,506 21,462 25,940 30,152 34,859 40,086 45,858

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 13,937 17,506 21,462 25,940 30,152 34,859 40,086 45,858 48,937 52,506 56,462 60,940 65,152 69,859 75,086 80,858

39,412 39,412 39,412 39,412 39,412 39,412 39,412 39,412 88,349 91,918 95,874 100,352 104,564 109,271 114,498 120,270

533,905 523,200 511,650 499,210 485,825 471,440 456,000 439,435

- - - - - - - -

49% 50% 51% 52% 52% 53% 54% 55%

Page 3



Year Ending,





TOTAL NET REVENUES














2022 2023 2024 2025 2026 2027 2028 2029

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%307.21 316.42 325.92 335.69 345.76 356.14 366.82 377.83

4,085 4,208 4,334 4,464 4,598 4,736 4,878 5,024 17,000 17,510 18,036 18,577 19,134 19,708 20,299 20,908 57,295 59,014 60,784 62,608 64,486 66,420 68,413 70,465 2,480 2,702 2,945 3,210 3,499 3,811 4,149 4,514 (363) (374) (385) (397) (409) (421) (433) (446) (363) (374) (385) (397) (409) (421) (433) (446)

80,134 82,686 85,329 88,065 90,899 93,834 96,873 100,019

39,605 40,059 40,510 40,969 41,439 41,910 42,383 42,869 (2,168) (2,168) (2,168) (2,168) (2,168) (2,168) (2,168) (2,168) 37,438 37,891 38,342 38,802 39,272 39,743 40,216 40,701

6,935 7,143 7,357 7,578 7,805 8,039 8,281 8,529 35,762 37,652 39,629 41,686 43,822 46,052 48,376 50,789

17,000 17,510 18,036 18,577 19,134 19,708 20,299 20,908 1,300 1,339 1,379 1,421 1,463 1,507 1,553 1,599 3,467 3,571 3,679 3,789 3,903 4,020 4,140 4,265 1,300 1,339 1,379 1,421 1,463 1,507 1,553 1,599

12,694 13,891 15,156 16,478 17,859 19,309 20,832 22,418

- - - - - - - - 6,347 6,946 7,578 8,239 8,929 9,655 10,416 11,209 6,347 6,946 7,578 8,239 8,929 9,655 10,416 11,209

12,694 13,891 15,156 16,478 17,859 19,309 20,832 22,418

2.14 2.18 2.23 2.27 2.31 2.36 2.41 2.46

52,205 59,151 66,729 74,968 83,897 93,552 103,968 115,177

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 52,205 59,151 66,729 74,968 83,897 93,552 103,968 115,177 87,205 94,151 101,729 109,968 118,897 128,552 138,968 150,177

39,412 39,412 39,412 39,412 39,412 39,412 39,412 39,412 126,617 133,562 141,141 149,380 158,309 167,964 178,380 189,589

421,685 402,670 382,320 360,550 337,265 312,375 285,780 257,370

- - - - - - - -

56% 57% 58% 59% 60% 62% 63% 64%

Page 4



Year Ending,





TOTAL NET REVENUES














2030 2031 2032 2033 2034 2035

438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%389.16 400.84 412.86 425.25 438.00 451.14

5,175 5,330 5,490 5,655 5,825 5,999 21,535 22,181 22,847 23,532 24,238 24,965 72,579 74,757 76,999 79,309 81,689 84,139 4,906 5,328 5,779 6,263 6,780 7,331 (460) (474) (488) (503) (518) (533) (460) (474) (488) (503) (518) (533)

103,276 106,649 110,140 113,755 117,496 121,369

43,355 43,851 44,353 44,858 45,370 88,642 (2,168) (2,168) (2,168) (2,168) (2,168) (41,580) 41,187 41,684 42,185 42,690 43,203 47,063

8,785 9,048 9,320 9,599 9,887 10,184 53,304 55,917 58,636 61,465 64,406 64,123

21,535 22,181 22,847 23,532 24,238 24,965 1,647 1,697 1,747 1,800 1,854 1,910 4,392 4,524 4,660 4,800 4,944 5,092 1,647 1,697 1,747 1,800 1,854 1,910

24,082 25,818 27,634 29,533 31,516 30,246

- - - - - - 12,041 12,909 13,817 14,767 15,758 15,123 12,041 12,909 13,817 14,767 15,758 15,123 24,082 25,818 27,634 29,533 31,516 30,246

2.51 2.56 2.61 2.66 2.72 2.58

127,218 140,127 153,944 168,710 184,468 199,591

15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000

127,218 140,127 153,944 168,710 184,468 199,591 162,218 175,127 188,944 203,710 219,468 234,591

39,412 39,412 39,412 39,412 39,412 - 201,630 214,539 228,355 243,122 258,880 234,591

227,045 194,695 160,210 123,475 84,365 -

- - - - - -

65% 66% 67% 68% 70% 66%

Page 5

Development Option B - Senior/Subordinate ModelSources and Uses of Funds WCCA Convention Center Hotel


Sources of Funds Total Series A Series BPar Amount of Bonds 567,820$ 375,925$ 191,895$ Interest Earnings on Project Construction Fund 13,386 8,537 4,849 Manager Credit Support 10,000 10,000 - TOTAL SOURCES OF FUNDS 591,206$ 394,462$ 196,744$

Uses of FundsDeposit to Project Construction Fund 413,213$ 263,524$ 149,689$ Deposit to Capitalized Interest (CIF) Fund 93,246 67,365 25,882 Debt Service Reserve Fund 44,483 30,733 13,750 Operating Capital 15,000 15,000 - Costs of Issuance (including UD) 11,356 7,519 3,838 Pre-Opening Expenses 7,320 7,320 - Gross Bond Insurance Premium 3,584 - 3,584 Authority Budget 3,000 3,000 - Rounding Amount 4 2 1

TOTAL USES OF FUNDS 591,206$ 394,462$ 196,744$

Dated DateTrue Interest Cost 6.014% 6.527% 5.030%All-In-Cost 6.108% 6.571% 5.208%Weighted Average Maturity 23.773 Years 23.548 Years 24.212 Years

The total project budget of $413,213,000 includes the cost of Land and Techincal Services.The first construction draw occurs 32 months prior to the hotel opening.Interest is capitalized for 6 months after hotel opening.

Page 1

Development Option B - Senior/Subordinate ModelProject Cash Flow Summary


Year Ending, 2008 2009 2010 2011 2012 2013 2014 2015

OPERATING SUMMARYAvailable Rooms 438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 Occupied Rooms 284,700 315,360 337,260 337,260 337,260 337,260 337,260 337,260 Occupancy 65.00% 72.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%Average Daily Rate 197.00 203.00 213.00 222.00 228.00 235.00 242.00 250.00

TOTAL NET REVENUESPILOT Payment 2,701 2,782 2,866 2,952 3,040 3,131 3,225 3,322 Residual Site-Specfic Taxes (1) 5,555 2,252 2,963 3,078 3,162 3,253 3,354 3,459 Net Operating Income 27,502 33,472 39,435 41,411 42,455 43,776 45,073 46,650 Other Investment Earnings (2) 175 565 624 761 891 956 1,009 1,072 Less: Asset Manager Fee (240) (247) (255) (262) (270) (278) (287) (295) Less: Authority Budget (240) (247) (255) (262) (270) (278) (287) (295)

TOTAL NET REVENUES 35,453 38,576 45,379 47,678 49,007 50,559 52,088 53,914

CASH FLOW EXPENDITURESSeries "A" Gross Debt Service 24,059 24,059 25,574 26,957 27,261 27,567 27,880 28,196 Series A" Capitalized Interest/DSRF (12,375) (2,190) (1,690) (1,690) (1,690) (1,690) (1,690) (1,690) Series "A" NET DEBT SERVICE 11,684 21,869 23,884 25,267 25,570 25,877 26,190 26,506

FF&E Requirement (2%, 3%, 4%...) 2,023 3,332 4,831 5,011 5,152 5,309 5,467 5,641

Site Specific Tax Contribution (4,297) (8,594) (8,879) (9,215) (9,484) (9,756) (10,045) (10,370)

Series "B" Guaranteed Gross Debt Service 9,350 9,350 9,635 9,971 10,240 10,513 10,802 11,126 Series "B" Guaranteed Capitalized Interest/DSRF (5,053) (756) (756) (756) (756) (756) (756) (756) SERIES "B" GUARANTEED NET DEBT SERVICE 4,297 8,594 8,879 9,215 9,484 9,756 10,045 10,370 CASH FLOW REMAINING 21,746 13,375 16,664 17,400 18,285 19,374 20,431 21,766

Site Specific Tax Revenue Reversal 9,852 10,846 11,842 12,293 12,646 13,009 13,399 13,829 Subordinate Management Fee (.75%) 759 833 906 940 966 995 1,025 1,058 Subordinate FF&E Reserve Deposit - - - - - 1,327 1,367 1,410 Supersubordinate Management Fee (.75%) - - - - 966 995 1,025 1,058 EXCESS REVENUES 11,135 1,696 3,917 4,167 3,707 3,046 3,614 4,411

APPLICATION OF EXCESS REVENUESDeposit to Cash Trap Fund 11,135 1,696 3,917 3,252 - - - - Distribution to Government - - - 458 1,854 1,523 1,807 2,206 Bond Redemption Fund - - - 458 1,854 1,523 1,807 2,206

Total Reserve Fund Deposits 11,135 1,696 3,917 4,167 3,707 3,046 3,614 4,411

COVERAGE RATIOSSeries "A" 3.03 1.76 1.90 1.89 1.92 1.95 1.99 2.03 Series "B" Hotel Revenue Coverage(3) 1.51 0.99 1.05 1.05 1.06 1.08 1.09 1.11 Series "B" Tax Revenue Coverage(4) 2.29 1.26 1.33 1.33 1.33 1.33 1.33 1.33

AGGREGATE DISTRIBUTION TO DISTRICT - - - 458 2,311 3,834 5,642 7,847

RESERVE FUND BALANCESOperating Reserve Fund Balance 15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 Cash Trap Fund Balance 11,135 12,832 16,748 20,000 20,000 20,000 20,000 20,000 Bond Redemption Fund Balance (5) - - - 458 2,311 3,834 5,642 7,847 Total Reserve Fund Balances 26,135 27,832 31,748 35,458 37,311 38,834 40,642 42,847

Series "A" Debt Service Reserve Fund 30,733 30,733 30,733 30,733 30,733 30,733 30,733 30,733 Series "B" Debt Service Reserve Fund 13,750 13,750 13,750 13,750 13,750 13,750 13,750 13,750 Total Debt Service Reserve Fund 44,483 44,483 44,483 44,483 44,483 44,483 44,483 44,483

TOTAL RESERVE FUND BALANCE 70,618 72,314 76,231 79,941 81,794 83,317 85,124 87,330

PRINCIPAL BALANCESSeries "A" 375,925 375,925 374,410 371,415 367,925 363,905 359,315 354,115 Series "B" Bonds 191,895 191,895 191,610 190,980 190,060 188,835 187,275 185,330

Total Bond Balance 567,820 567,820 566,020 562,395 557,985 552,740 546,590 539,445

(1) Equal to the residual site specific tax collected by the Hotel after the payment of Series B debt service.(2) Investment earnings on the cash portion of the Operating Reserve, Cash Trap, City Reserve Fund and Bond Redemption Fund balances at 3.5%.(3) Coverage provided by hotel net operating income only and excluding the PILOT Payment and site specific tax revenues.(4) Coverage provided by site specific tax revenues collected by the Hotel.(5) Balances in the Sinking Fund are used to redeem outstanding Series "A" Bonds after the first call date.

Page 2

Development Option B - Senior/Subordinate ModelProject Cash Flow Summary WCCA Convention Center Hotel


Year Ending,





TOTAL NET REVENUES
















Total Bond Balance

2016 2017 2018 2019 2020 2021 2022 2023

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%257.00 265.00 272.95 281.14 289.57 298.26 307.21 316.42

3,422 3,524 3,630 3,739 3,851 3,966 4,085 4,208 3,558 3,668 3,778 3,892 4,007 4,128 4,255 4,383

47,898 49,423 50,906 52,433 54,006 55,626 57,295 59,014 1,150 1,236 1,336 1,421 1,518 1,628 1,752 1,889 (304) (313) (323) (332) (342) (352) (363) (374) (304) (313) (323) (332) (342) (352) (363) (374)

55,420 57,225 59,004 60,820 62,698 64,644 66,661 68,745

28,513 28,834 29,160 29,489 29,821 30,159 30,504 30,847 (1,690) (1,690) (1,690) (1,690) (1,690) (1,690) (1,690) (1,690) 26,823 27,144 27,470 27,798 28,131 28,469 28,814 29,156

5,804 5,982 6,162 6,346 6,537 6,733 6,935 7,143

(10,667) (10,997) (11,327) (11,666) (12,017) (12,377) (12,745) (13,128)

11,423 11,753 12,083 12,422 12,773 13,134 13,501 13,884 (756) (756) (756) (756) (756) (756) (756) (756)

10,667 10,997 11,327 11,666 12,017 12,377 12,745 13,128 22,792 24,099 25,372 26,675 28,031 29,442 30,912 32,446

14,225 14,665 15,105 15,558 16,024 16,505 17,000 17,510 1,088 1,122 1,155 1,190 1,226 1,262 1,300 1,339 1,451 1,496 3,081 3,173 3,268 3,366 3,467 3,571 1,088 1,122 1,155 1,190 1,226 1,262 1,300 1,339 4,940 5,695 4,877 5,565 6,287 7,045 7,844 8,686

- - - - - - - - 2,470 2,848 2,438 2,782 3,143 3,523 3,922 4,343 2,470 2,848 2,438 2,782 3,143 3,523 3,922 4,343 4,940 5,695 4,877 5,565 6,287 7,045 7,844 8,686

2.07 2.11 2.15 2.19 2.23 2.27 2.31 2.36 1.12 1.13 1.15 1.16 1.17 1.19 1.20 1.22 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33

10,317 13,165 15,603 18,385 21,529 25,051 28,973 33,316

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 10,317 13,165 15,603 18,385 21,529 25,051 28,973 33,316 45,317 48,165 50,603 53,385 56,529 60,051 63,973 68,316

30,733 30,733 30,733 30,733 30,733 30,733 30,733 30,733 13,750 13,750 13,750 13,750 13,750 13,750 13,750 13,750 44,483 44,483 44,483 44,483 44,483 44,483 44,483 44,483 89,800 92,648 95,086 97,868 101,011 104,534 108,456 112,799

348,265 341,720 334,430 326,345 317,410 307,565 296,745 284,890 183,010 180,265 177,075 173,410 169,235 164,515 159,215 153,290 531,275 521,985 511,505 499,755 486,645 472,080 455,960 438,180

Page 3

Development Option B - Senior/Subordinate ModelProject Cash Flow Summary


Year Ending,





TOTAL NET REVENUES
















Total Bond Balance

2024 2025 2026 2027 2028 2029 2030 2031

438,000 438,000 438,000 438,000 438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%325.92 335.69 345.76 356.14 366.82 377.83 389.16 400.84

4,334 4,464 4,598 4,736 4,878 5,024 5,175 5,330 4,513 4,646 4,784 4,932 5,079 5,227 5,385 5,548

60,784 62,608 64,486 66,420 68,413 70,465 72,579 74,757 2,041 2,208 2,392 2,592 2,811 3,048 3,304 3,581 (385) (397) (409) (421) (433) (446) (460) (474) (385) (397) (409) (421) (433) (446) (460) (474)

70,902 73,132 75,443 77,839 80,314 82,872 85,524 88,269

31,198 31,553 31,913 32,271 32,638 33,009 33,386 33,768 (1,690) (1,690) (1,690) (1,690) (1,690) (1,690) (1,690) (1,690) 29,508 29,863 30,222 30,581 30,948 31,318 31,695 32,077

7,357 7,578 7,805 8,039 8,281 8,529 8,785 9,048

(13,522) (13,931) (14,350) (14,776) (15,220) (15,681) (16,151) (16,633)

14,278 14,687 15,106 15,532 15,977 16,437 16,907 17,390 (756) (756) (756) (756) (756) (756) (756) (756)

13,522 13,931 14,350 14,776 15,220 15,681 16,151 16,633 34,037 35,692 37,415 39,219 41,085 43,025 45,043 47,143

18,036 18,577 19,134 19,708 20,299 20,908 21,535 22,181 1,379 1,421 1,463 1,507 1,553 1,599 1,647 1,697 3,679 3,789 3,903 4,020 4,140 4,265 4,392 4,524 1,379 1,421 1,463 1,507 1,553 1,599 1,647 1,697 9,564 10,484 11,452 12,476 13,540 14,653 15,821 17,044

- - - - - - - - 4,782 5,242 5,726 6,238 6,770 7,327 7,911 8,522 4,782 5,242 5,726 6,238 6,770 7,327 7,911 8,522 9,564 10,484 11,452 12,476 13,540 14,653 15,821 17,044

2.40 2.45 2.50 2.55 2.60 2.65 2.70 2.75 1.23 1.25 1.26 1.28 1.29 1.31 1.32 1.34 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33

38,098 43,341 49,066 55,304 62,075 69,401 77,312 85,834

15,000 15,000 15,000 15,000 15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 38,098 43,341 49,066 55,304 62,075 69,401 77,312 85,834 73,098 78,341 84,066 90,304 97,075 104,401 112,312 120,834

30,733 30,733 30,733 30,733 30,733 30,733 30,733 30,733 13,750 13,750 13,750 13,750 13,750 13,750 13,750 13,750 44,483 44,483 44,483 44,483 44,483 44,483 44,483 44,483

117,581 122,823 128,549 134,787 141,557 148,884 156,795 165,317

271,925 257,775 242,360 225,600 207,400 187,665 166,290 143,165 146,695 139,380 131,295 122,390 112,600 101,860 90,110 77,285 418,620 397,155 373,655 347,990 320,000 289,525 256,400 220,450

Page 4

Development Option B - Senior/Subordinate ModelProject Cash Flow Summary WCCA Convention Center Hotel


Year Ending,





TOTAL NET REVENUES
















Total Bond Balance

2032 2033 2034 2035

438,000 438,000 438,000 438,000 337,260 337,260 337,260 337,260 77.00% 77.00% 77.00% 77.00%412.86 425.25 438.00 451.14

5,490 5,655 5,825 5,999 5,716 5,884 6,060 6,243

76,999 79,309 81,689 84,139 3,879 4,200 4,544 4,912 (488) (503) (518) (533) (488) (503) (518) (533)

91,109 94,043 97,082 100,228

34,153 34,543 34,936 66,069 (1,690) (1,690) (1,690) (32,423) 32,462 32,853 33,246 33,646

9,320 9,599 9,887 10,184

(17,131) (17,649) (18,178) (18,722)

17,887 18,405 18,935 33,228 (756) (756) (756) (14,506)

17,131 17,649 18,178 18,722 49,327 51,590 53,948 56,398

22,847 23,532 24,238 24,965 1,747 1,800 1,854 1,910 4,660 4,800 4,944 5,092 1,747 1,800 1,854 1,910

18,325 19,659 21,058 22,522

- - - - 9,163 9,829 10,529 11,261 9,163 9,829 10,529 11,261

18,325 19,659 21,058 22,522

2.81 2.86 2.92 2.98 1.36 1.37 1.39 1.41 1.33 1.33 1.33 1.33

94,997 104,826 115,355 126,616

15,000 15,000 15,000 15,000 20,000 20,000 20,000 20,000 94,997 104,826 115,355 126,616

129,997 139,826 150,355 161,616

30,733 30,733 30,733 - 13,750 13,750 13,750 - 44,483 44,483 44,483 -

174,480 184,309 194,838 161,616

118,175 91,195 62,095 - 63,315 48,120 31,625 -

181,490 139,315 93,720 -

Page 5

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