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Niagara Falls' credit rating downgraded

By Charlie Specht

The casino gambling dispute between the state and Seneca Nation of Indians has thrown Niagara Falls into a budget crisis.

Now it may affect the city's ability to borrow money.

Moody's credit rating service on Wednesday announced a credit downgrade for the city due in part to the unresolved casino dispute and its affect on the city's cash flow.

CityLogoMoody's dropped the city's credit rating two slots -- from A2 to Baa1 -- because of what it saw as "significant declines in the city's general fund liquidity and reserve levels...due primarily to budgeted casino revenus that have not been remitted to the city."

High unemployment and a poor population that is half its peak level of the 1950s were also factors in the downgrade, Moody's said, and municipal debt doesn't help, either. The city borrowed to pay for its Main Street police station under the Anello administration -- a $5 million yearly payment it paid with the casino funds.

Moody's names as strengths the city's proximity to the international border, which Canadians have been streaming across to spend their money, and the millions of yearly tourists who come to the falls each year.

And a resolution to the casino revenue dispute -- it's now in arbitration -- as well as a more balanced general fund (presumably with less dependence on the casino money) would improve Niagara Falls' rating, the credit agency states.

But the $65 million in long-term debt remains the key issue for the city's downgraded credit status. The city is owed more than $60 million in slot machine revenues by the Indian nation -- money that would no doubt help to pay down that debt.

(Photo courtesy of Niagara Falls Police Department)

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