The Kansas City Star from Kansas City, Missouri • 27

i DOW JONES: 6617 836 30-YEAR T-BOND YIELD: 546 NASDAQ: 4576 -SECTION BUSINESS wwwkcstarcom THE KANSAS CITY STAR Friday February 9 2001 COMMENTARY First developer leaves More layoffs likely at Birch JERRY HEASTER Power Light project President says backers will continue to provide substantial investment Surplus is a figment of rhetoric By SUZANNE KING The Kansas City Star City will look at other ideas mayor says for itself" King said letter was sent in response to a January letter from Stephen Sparks a lawyer for the Kansas City Tax Increment Financing Commission In January Sparks sent a notice of default to Power Light District LLC the developer designated by the city and the TIF Commission to create a $454 million development district on the southern end of downtown may be eliminated or when layoffs would be announced Scott also would not discuss the investment which he said would come from combination of our existing backers" A subsidiary of Kohlberg Kravis Roberts which owns 51 percent of Birch is the largest backer The firm has invested $110 million in Birch Scott said the company is battling the financial pressures that set up to pursue movie theater mogul Stan dream of a downtown entertainment district has asked the city to terminate its rights to a 12 -block parcel on the south end of the loop In a letter to Kansas City officials James Beynon senior vice president and treasurer of Centertain-ment Development Inc said the company to a termination without penalty" Rick King a spokesman for AMC declined to elaborate on the response letter speaks By MARK COUCH The Kansas City Star Birch Telecom Inc employees were told Thursday that more layoffs are likely said David Scott the president and chief executive In addition Scott said financial backers have committed to making substantial additional investment" in the Kansas City-based telephone company He would not reveal details about the layoffs such as how many jobs The original developer of the Power Light District has bowed out A subsidiary of Kansas City-based AMC Entertainment Inc that was See BIRCH C-5 See DISTRICT C-5 MORNING MEMO On track for a bright retail future By the numbers The number of Americans filing new claims for state unemployment insurance rose sharply last week suggesting that some workers are having trouble finding jobs as the economy has weakened The Labor Department reported Thursday that initial applications for jobless benefits climbed by a bigger-than-expect-ed 15000 to a seasonally adjusted 361 000 for the week ending Feb 3 Rates for 30-year mortgages dipped below 7 percent this week for the second time this year The average in- Moripgt rates 30-year fixed-rate Be 86 terest rate on 30-year fixed-rate mortgages was 698 percent down from 709 percent last week according to a survey released Thursday by Freddie Mac the mortgage company Fifteen-year mortgages a popular op- KE1TH MYKRSThe Kansas City Star Unified Government Mayor Carol Marinovich (standing) was among those cheering the project Thursday at the Kansas Speedway 1999 2000 Source: Freddie Mac A tale of two federal finance developments recently revealed confusing perspectives about where the vaunted budget surpluses may be leading and how genuine they might prove to be The development getting the center-stage spotlight was the revelation that the Congressional Budget Office had revised its surplus estimates upward to $56 trillion over the next 1 0 years 1 trillion higher than its forecast last July The other development made for only a short story with a modest headline inside The Wall Street Journal It revealed Treasury Department plans to borrow $46 billion in marketable debt this quarter more than twice the amount initially announced Treasury said earlier that it would borrow $20 billion this quarter and end up with a cash balance of $30 billion The extra borrowing will allow for an expected cash balance of $45 billion on March 31 A Treasury official said the bookkeeping shift to insure added cash on hand was undertaken take us through the April 15 income tax filing deadline and the receipts that typically accompany that date" Does this sound like an operation rolling in dough? Hardly Nevertheless the Tfeasury announcement was accompanied by assurances that the national debt would continue to be paid down at what the reporter characterized as a The December summary of public debt outstanding shows that recent debt pay-down progress has been less than rapid The total of the marketable debt paid down during the October-December quarter was $26 billion but the nonmarketable debt owed to trust funds such as Social Security rose $22 billion This means total interest-bearing debt decreased only $4 billion during the first quarter of this fiscal year If you take a longer view of what has been happening since the era of budget surpluses began three fiscal years ago it raises serious questions as to whether these budget surpluses are real or a fiscal mirage In the three years and three months since the budget went from deficit to surplus the black ink has totaled nearly $430 billion Despite this alleged surplus total interest-bearing debt has increased more than $210 billion How did this happen? While more than $470 billion in the marketable portion of the debt has been paid down the nonmarketable portion owed to the trust funds has soared by more than $680 billion What the trust funds have received during this process is an additional mountain of debt that can only be redeemed by raising taxes reducing the oudays the trust funds are supposed to finance or a combination thereof The day of reckoning comes in 1 5 years or so when Social Security tax revenue becomes insufficient to finance benefits and the trust fund bonds must be cashed in to finance the difference Most of those perpetrating this fraud hope to be collecting cushy federal pensions by this time though In other words the surplus doesn't exist in accounting reality It exists only in political rhetoric media coverage and the public mind What's going to be interesting is how this gets finessed about 2004 when Congress tries to explain why it needs to increase die federal debt limit tion for refinancing were at 660 percent down from 666 percent On one-year adjustable-rate mortgages lenders were asking an average initial rate of 645 percent compared with 654 percent the week before Tourism district developments are introduced Stern's closings Federated Department Stores Inc will close its department store group eliminating about 2600 of Federated Price per share By MARK COUCH and MARK WIEBE The Kansas City Star 50 $4298 the 7400 jobs while converting 19 of the 24 stores to and The shutdown of the retail group based in Paramus NJ will cost FkS Source: Bloomberg News entertainment venture that is unmatched in the Kansas City The developments announced Thursday include the first constructed Nebraska Furniture Mart outside the company's home market of Omaha Other developments are a Nebraska-based dealer of outdoor goods: Warren Theatres a Wichita-based movie theater chain an Applebee's restaurant and a strip shopping center by Red Development the company that constructed BarryWoods Crossing in the Northland The news conference was held in the Winston Cup Garage on the infield of the Kansas Speedway a $287 million venture that is the Unified big bet on the future Unified Government officials offered property tax abatement to bring the developers to Wyandotte County The track of- The first stores for a proposed 400-acre commercial development near the Kansas Speedway were announced Thursday For years Wyandotte County has watched retail markets thrive in nearly all comers of the Kansas City area except its own On Thursday Unified Government of Wyandotte County and Kansas City Kan officials basked in the glow of a proposed $2366 million development that aims to make the western edge of Kansas City Kan a hot spot to shop At a morning news conference officials named five developments for a district" next to the nearly completed Kansas Speedway promise was made that high-quality well-planned development would anchor the speedway project" said Unified Government Mayor Carol Marinovich are on the verge of a unique retail and $130 million to $150 million Federated officials said Shares of Federated fell $296 to $4298 Discounts drew consumers into the nation's malls and stores in January Story C-3 Nebraska Furniture Mart One of the nation's largest furniture retailers WorldCom earnings Red Development A developer of shopping centers that have big-box stores Applebee's An Overland Park-based casual-dining chain with 1300 restaurants nationwide and around the world Cabala's Sells hunting fishing and outdoors goods Warren Theatres Movie theater company plans a multiplex with 12 screens See TRACK C-8 DAVE EAMEStThc bnni City Sot WorldCom Inc's fourth-quarter earnings dropped 44 percent as long-distance revenue fell but company executives say their strategy of focusing on high-growth businesses is starting to payoff The long-distance and Internet company said Thursday that it earned $726 million or 25 cents a share in the October-December period compared with $13 billion or 44 cents a share in the same period a year earlier More earnings reports on C-3 Union hopes to save GST jobs Leaders plan to ask Missouri for help By RANDOLPH HEASTER The Kaneae City Star visers and contract experts to assist us in investigating the options" said Randy McKinney president of United Steelworkers Local 13 would prefer financing for new ownership but we will also deal with the dismal realities of eventual Local 13 represents about 540 hourly employees at GST which options Thursday one day after parent company filed for bankruptcy reorganization and said it planned to close the Kansas City steel mil impossible to guarantee any outcome the Steelworkers union has committed to provide bankruptcy lawyers financial ad Jerry column appears Wednesdays Fridays Saturdays and Sundays 1b reach him write the business desk at 1729 Grand BhxL Kansas Gty MO 64108 1b share a comment on Starlbuch call (816) 889-7827 and enter 2301 Send e-mail to jheasterQkatarcom Union leaders say they will seek assistance from the state of Missouri in an effort to preserve 750 jobs at GST Steel Co Officials of United Steelworkers of America Local 13 discussed their.