Slowing sales of tobacco products and the
delayed start of a Wal-Mart store development
are beginning to squeeze finances of the Reno
Sparks Indian Colony.
Fitch Ratings trimmed its credit rating for
the Reno Sparks Indian Colony to "BB" from
"BBB minus." It said the financial outlook for
the tribe is stable.
The New York-based rating service said
tobacco sales generated 74 percent of the tribe's
revenues in 2005, but the figure fell to 49 percent
in 2007 as tobacco use continues to decline
throughout the nation.
The tribe operates five smoke shops in the
region.
The Reno Sparks Indian Colony is looking
to diversify its revenues, the ratings agency
said, and has made some headway with the
development of two high-end auto dealerships
on tribal land near South Virginia Street.
A key piece of the diversification strategy,
however, has relied on development of a Wal-
Mart store on tribal land at East Second Street
and U.S. 395. That project, stalled by the need
for an environmental cleanup of the property,
now is on track for a mid-2009 start,Reno
Sparks Indian Colony officials told Fitch
Ratings.
"Even if the project is built on schedule,
negative national economic trends, specifically
in the retail sector, could pressure revenues,"
Fitch analysts wrote.
They said the tribe's work to diversify its
economy is especially important because its
budget is running a deficit for the third consecutive
year.
The Reno Sparks Indian Colony has $15.8
million in outstanding bonds, which are rated
AA-minus by Fitch because they are guaranteed
by a letter of credit from U.S. Bank.
The tribe also has about $8 million in bank
loans outstanding, Fitch analysts said.
The Reno Sparks Indian Colony owns about
2,000 acres of land it's not contiguous
around the Reno area. It has 847 members, and
its businesses employ 317 people 45 percent
of them tribal members.
