NIAGARA FALLS – Moody’s credit agency has downgraded the city’s credit rating for the second time in five months.
Again, the agency said a key reason is the financial crunch caused by the casino revenue dispute between the Seneca Nation of Indians and New York State.
Niagara Falls has a “highly stressed liquidity position … given the continued delay in the remittance of casino revenue,” Moody’s said.
The city could run out of cash as soon as November, according to the agency.
The downgrade – from Baa1 to Baa3 – means that it will likely be more difficult for the city to borrow money and that it will cost more when it does.
Mayor Paul A. Dyster said he had hoped the credit rating agency would not revisit the city’s situation until the results of arbitration between the Senecas and the state materialize, or a negotiated settlement is reached.
Dyster has said he still expects the arbitration process to conclude by midyear.
“We were hoping that they would hold off for another month or so,” he said.
The Seneca Nation has withheld about $60 million in slot machine revenue owed to the city because it believes that the state’s racetrack casinos violate its gambling exclusivity agreement.
Last November, the New York Power Authority agreed to grant the city access to $13 million to plug budget holes, if needed.
The funding would amount to an advance on payments that the Power Authority owes the city over the next 44 years as part of a settlement agreement for the relicensing of the Niagara Power Project.
At the time it was offered, it was shot down by the three-member majority of the City Council who said they believed that the city would be better off taking the payments as originally scheduled.
Council Chairman Glenn A. Choolokian, a member of the majority, on Wednesday said he still opposes that proposed deal.
Because the scheduled annual payments equal $850,000 a year, taking a lump sum would cause an $850,000 gap in the budget going forward each year, Choolokian said.
The city has $65 million in long-term debt, and the latest rating puts the Falls on the low end of the part of Moody’s scale characterizing the city as a “moderate credit risk.”
In January, Moody’s downgraded the city’s rating from A2 to Baa1, which on its scale meant a shift from low risk to the high end of moderate risk.