New York's agreement with the Seneca Nation is a credit positive for Niagara Falls, N.Y., Moody's Investors Service says.
The casino-revenue sharing agreement reached Thursday is also a credit positive for Buffalo, though it will have a smaller affect there than on Niagara Falls, Moody's analysts wrote in a report Monday evening. The agreement will have a major impact on Salamanca, a city of about 5,800 people that isn't rated by Moody's, the analysts said.
Niagara Falls, population 50,200, has $65 million in outstanding debt. It is rated Baa3 by Moody's, BBB-plus by Standard & Poor's and BBB by Fitch Ratings. The city's government had concerns about possibly running out of cash in the fall. It has a $1.6 million debt service payment due in December. The government had made contingency plans with the New York Power Authority to get a payment, which would have sacrificed the city's long-term fiscal health.
Under the agreement, the tribe will retain the right to operate casinos in the three cities. Niagara Falls would get $89 million, of which $65 million would go to the city government and $24 million to related entities including the school district. Buffalo would get $15.5 million and Salamanca $34.5 million.
Of the city's $65 million, $22 million will go to Niagara Falls' general fund, according to Moody's. Niagara Falls will also get nearly $5 million a year in annual revenues from the Seneca's gambling operations, equivalent to 6.3% of the city's 2012 revenues, bringing the budget closer to structural balance, Moody's analysts wrote.
"This agreement is great news for the city of Niagara Falls and all of western New York," said Niagara Falls mayor Paul Dyster. "It will ensure this much needed revenue benefits our city and this dispute is finally behind us."
New York Gov. Andrew Cuomo called the agreement "a win for the local governments of Niagara Falls, Buffalo, and Salamanca, a win for the Seneca Nation whose exclusivity will be honored, and a win for all New Yorkers with hundreds of millions of dollars coming to the state now and for the future."
In the last decade the Senecas reached an agreement with New York to share some of the revenues from their casinos with New York in exchange for exclusive gaming rights in their part of the state. Over the last three years, the Senecas have withheld casino revenue from New York State, which normally distributed some of it to communities near the casinos. The Senecas raised concerns about video lottery terminals at nearby racetracks in their exclusive casino zone.
The agreement preserves these terminals but bars outside introduction of other gambling.
New York and the Senecas were in arbitration and the panel was expected to reach a decision this summer. The agreement between all parties obviates any decision.
