Ratings agency: Slowdown in tobacco sales pinching tribe

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.