Niagara Gazette — Mayor Paul Dyster said that while financial challenges remain in Niagara Falls, Fitch’s affirmation of an investment grade rating should be viewed as a sign that the city’s finances have at least stabilized in the near term.
“We were very much concerned that our bonds remain investment grade status,” Dyster said. “We were particularly concerned in light of the casino revenue situation that we would suffer a further downgrade. This takes some of the pressure of us for the time being, which is what we expected.”
In its press release, Fitch Ratings notes that its bond rating for Niagara Falls is “sensitive” to the overall state of the city’s economy. It recognizes “weak economic indicators” in the city, including wealth levels that are below average and high unemployment rates. It also cites as a benefit the city’s status as a “major tourist attraction, drawing visitors from around the world.”
Fitch notes that the city is dealing with increasing pension costs and other post-employment benefits that are high as a percentage of market value. It also characterizes the city’s overall debt levels as “high.”
The ratings firm assigned a “negative” watch to the city’s bond rating as part of its last review due to rapidly declining cash reserves and a projection that without gaming revenue the city would run out of cash before the end of 2013.
Earlier this year, after years of haggling, the state and the Seneca Nation agreed to settle their differences and move forward with an agreement that would allow the Senecas to continue to enjoy exclusive rights to operate Stage III gaming facilities in Western New York, including Seneca Niagara Casino in Niagara Falls. In August, the city received roughly $89 million in overdue payments from its share of the state’s take of gaming revenue from Seneca operations.