Niagara Gazette

Local News

January 9, 2013

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

(Continued)

Niagara Gazette — Moody's is one of several agencies that examine municipal finances to determine their credit worthiness. Higher ratings generally result in lower interests rates for cities and other municipal entities. Lower interests rates make it less expensive for communities like Niagara Falls to borrow money for large capital projects, including infrastructure repairs. 

Moody's downgraded the city's bond rating from A2, which is considered "upper medium grade" on the agency's rating system, to Baa1 which falls under the "lower medium grade" category. 

Dyster described the agency's bond rating downgrade as a "double whammy" for Niagara Falls, noting that the city has not in recent years been able to rely on casino revenue to pursue large-scale capital projects and now would likely face higher interests rates should it attempt to borrow money to finance such projects in the future. 

"I think it's an unfortunate consequence of the failure to resolve this dispute," Dyster said. 

While in Albany, Dyster said he also discussed the status of the gaming dispute with several state officials, including Lt. Gov. Robert Duffy.

"I had the opportunity to talk briefly with the lieutenant governor about the situation but I don't want to comment on it at this time," he said. 

In its release, Moody's notes that the city's rating has been placed under review for further downgrade "pending receipt of updated financial information concerning projected cash flows for fiscal 2013 in order to determine the magnitude of additional operational and liquidity pressures." 

The release counts among the city's strengths proximity to the Canadian border, relatively weaker U.S. dollar that has resulted in sales tax stability and location which continues to drive tourism and local development. Among the community's challenges, Moody's notes the loss of a major revenue source as a result of the gaming revenue dispute and "narrowed general fund liquidity and negative unassigned fund balance" as well as "elevated debt burden."

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