Niagara Gazette

Local News

January 9, 2013

Rating agency downgrades Falls' bond rating, citing casino cash concerns

Niagara Gazette — The ongoing casino revenue dispute between the Seneca Nation of Indians and the state and cash concerns caused largely by a lack of incoming gaming revenue are now having an impact on the bond rating in the city of Niagara Falls. 

Moody's Investors Service announced Wednesday that it has downgraded the city's bond rating and placed it under review for further downgrade. 

In a release issued by the agency, Moody's said the downgrade is directly related to casino cash concerns, including the failure of budgeted gaming revenue to arrive as expected and the uncertainty surrounding future payments. The agency also warns that an unfavorable resolution to the dispute could result in additional financial challenges for the city and, perhaps, another downgrade in its bond rating. 

"The downgrade reflects significant declines in the city's general fund liquidity and reserve levels beginning in fiscal 2010, due primarily to budgeted casino revenues that have not been remitted to the city," reads the agency's "Summary Ratings Rationale." "The rating also incorporates the city's high unemployment, depressed wealth levels, an elevated debt burden and a moderately sized tax base. Additionally, the rating reflects the uncertainty surrounding the outcome of a dispute with the Seneca Nation and the state over the casino revenue and the ongoing pressure that the lack of the revenues will continue to place on the city's finances during the dispute. An unfavorable resolution of the dispute could result in additional credit weakness and downgrade."

Reached by telephone while returning to the Falls from Albany where he sat in on Gov. Andrew Cuomo's annual state of the state address, Mayor Paul Dyster said he was alerted to the downgrade while at the state capital but had not yet had a chance to view any information supplied to the city by Moody's. Dyster said he did alert several state officials to the downgrade in an effort to let them know the level of impact the longstanding revenue dispute is having on the city and its finances. 

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