The Riverboat Development Authority held a meeting Wednesday afternoon to discuss the pending sale of Rhythm City Casino to the city of Davenport. There was a heated debate throughout the meeting, because RDA members are worried about the risk involved.
During the meeting, TV6 learned that Moody's has concerns about Davenport's credit rating. Moody's recently kept the city's credit rating at AA2, but put Davenport on a negative watch list. It's because of the pending casino purchase, the fund balance being high and Moody's wants the city to diversify its revenue.
Several members of the RDA say the city buying Rhythm City for $46-million is a bet they should not take. They worry about what would happen if the city buys the casino and it is not profitable. Some RDA members are worried that would put local charities at risk, because the RDA hands out money to them. If the city is downgraded tax payers are also at risk, because bond interest rates would be higher.
"It's damn serious. In this world we live in, the investment world, this would make you nervous," says RDA board member Don Decker, "It would create a higher interest payment for bonds and it would reduce the value of bonds on the market."
"They're worried about diversifying our revenue stream and they're tired of Davenport going back to the tax payer to finance operations," says Davenport Alderman Jeff Justin, "This is an opportunity to diversify our revenue streams."
City leaders also said that they have a long list of people who are interested in buying their bonds. The city administrator added that Dubuque and Altoona, cities that own gaming facilities, have the 2 highest credit ratings available.
