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Casino Fight Causes Niagara Falls' Bond Rating To Drop

8:01 PM, Jan 12, 2013   |    comments
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Seneca Niagara Casino in Niagara Falls, New York.

NIAGARA FALLS, N.Y. - The City of Niagara Falls is facing another huge financial problem because of a three-year casino dispute between the state and the Senecas.

Moody's has downgraded the city's bond rating two notches, which is very unusual and serious. The rating agency also has indicated the rating could further drop in the next 90 days.

The Senecas continue to withhold more than 60 million dollars in casino revenue that was supposed to go the City. The Senecas have argued that the state violated their exclusive gambling compact when the state installed gambling machines at local race tracks.

The dispute has left the Falls strapped for cash. According to Niagara Falls Mayor Paul Dyster, a lower bond rating, which is now just two levels above junk status, could make it harder and more expensive for the city to borrow money for road repairs and construction. Alternatively, the city may have to delay or cancel the projects altogether. A control board also is not out of the question.

REPORTER: How worried are you that, if this doesn't get resolved favorably, things are going to get worse?
DYSTER: Well, I'm very concerned about that. . . It seems so unfair that, because of something that is totally beyond our control, now, we are suffering this downgrade.

There are signs the state and the Seneca leadership may finally settle their dispute. The two sides are currently in arbitration, which means someone eventually will emerge victorious. But this week Governor Cuomo seemed to suggest he would not put another casino in Western New York to compete with the Senecas if they honor their agreement and pay the money to Falls.

"It was something that set the possibilities for a resolution with the Seneca Nation on a very positive course, and I think it was a very wise move on his part," Dyster said.

State Senator George Maziarz (R-Newfane) agreed that the governor appears willing to settle the dispute.

REPORTER: What are the odds of this getting done before the city really gets into crisis mode?
MAZIARZ: Well, I think either way either a negotiated settlement or the arbitration is going to come through. So, I'm fairly confident that that's going to be done quickly.

According to Mayor Dyster, the governor is "anxious" to start talking to the Senecas about resolving this casino fight. This is departure from what happened last year, when the two sides seemed to be escalating the dispute. The Senecas have since elected a new President.

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