BondBuyer.com: Diossa: New Face of Central Falls, R.I.

CENTRAL FALLS, R.I. — Lleras Grille sits in a tiny, cluttered strip mall on Broad Street, wedged next to a tattoo parlor and a bodega.

To Central Falls Mayor James Diossa, it represents hope for a city in recovery.

"It just opened up Friday," Diossa said in a lengthy interview at the little Colombian eatery four days afterward. "We have other new restaurants, also on Broad. They're Honduran and Guatemalan."

One-square-mile Central Falls, population 19,000, is Rhode Island's smallest and poorest municipality. It generated national headlines with its bankruptcy filing in 2011 and exit from Chapter 9 protection only 13 months later.

Diossa, 29 and the son of Colombian immigrants, is the new face of Central Falls. The former councilman won a special election in December 2012 and earned a four-year term a year later. He is the first mayor since Rhode Island returned local control to the city.

"He's the perfect person for this time," Gov. Lincoln Chafee said in an interview at the State House in Providence. "He's young, energetic and smart. He's worked at the grass-roots level."

Central Falls also made the A-list. Actor Alec Baldwin came to town in early June to start yet another fundraising campaign for Adams Memorial Library, whose closing during the city's dark days caught the actor's attention. Baldwin donated $15,000 to the library in 2011 and 2012 and this time pledged another $10,000 if the city can match that amount.

Diossa said he found none of the ill-tempered persona that gossip magazines and New York tabloids often portray. "Baldwin was very interesting," he said of the four-hour visit. "I read the news articles about him. I found him a totally different person. He didn't ask for any special detail."

Central Falls has also been working to re-establish itself in the credit markets after federal Judge Frank Bailey in Providence cleared its exit from Chapter 9 in September 2012. The city has received several bond rating upgrades, including three from Moody's Investors Service totaling four notches from Caa1. Standard & Poor's late in 2012 raised the city to BB from C.

Moody's cited "recent trend of favorable operating results" last week in elevating Central Falls' general obligation bond rating to Ba3.

The city's GOs, however, are still junk.

"Central Falls is not yet out of the woods, having a very weak tax base, a 29% poverty rate and median family income equal to 61% of national rate, but the city is on track to recovery with its six-year, court-approved plan," said Alan Schankel, a managing director at Janney Capital Markets in Philadelphia.

The city, according to Moody's, has $8.7 million in GO debt outstanding.

Pensioners in Central Falls, hit with benefit cuts of up to 55% while the city was in bankruptcy, also received some good news in June. Rhode Island's General Assembly approved legislation to channel $4.8 million their way, raising the amount of what they used to receive to 75%. It was the second move to increase Central Falls pensions since 2012, prompting debate over whether Rhode Island was setting a troubling precedent for reworking deals in distressed communities.

Moody's, meanwhile, warned of "significant challenges" facing Central Falls. They include high fixed costs and years of deferred capital expenses and projected weakness in revenue growth, including the loss of an annual impact fee and back taxes owed by the privately owned Wyatt Detention Center, which is in receivership.

Wyatt, sitting along the Blackstone River a 10-minute drive from Lleras Grille, stands as a dark, foreboding testament to enterprise risk gone sour, akin to the incinerator in Harrisburg, Pa., a city that barely avoided bankruptcy.

The city several years ago had envisioned a windfall from Wyatt housing federal inmates, but the feds removed 153 such prisoners late in 2008 after a Chinese national died while in custody.

New economic development plans, said Diossa, include nine new storefronts on Dexter Street and 90 high-end lofts at the site of an old factory mill. Light-bulb manufacturer Osram Sylvania, however, will close in September, leaving 88 workers jobless, including Diossa's father.

Diossa filled out the mayoral term of Charles Moreau, who resigned under scandal in May 2012 and served one year in a federal prison on federal corruption charges. Moreau admitted he accepted bribes from longtime businessman friend Michael Bouthillette for a contract to board up the many foreclosed homes.

"Diossa's a breath of fresh air in Central Falls," said Gary Sasse, the founding director at the Hassenfeld Institute for Public Leadership at Bryant University and a former director of the state administration and finance departments. "The city was corrupt and now he's trying to clean it up."

Diossa spoke last November at a Wayne State University forum in bankrupt Detroit, where he appeared with former Harrisburg Mayor Linda Thompson. "She's very sharp with numbers," Diossa said of Thompson.

Diossa's rise also reflects the rising population and political clout of Latinos in the Ocean State. He counts Providence mayor and Democratic gubernatorial candidate Angel Taveras, of Dominican ancestry, as a role model.

"The previous mayor and City Council did not reflect the changing demographics of Central Falls. Latinos were dissuaded from running," said Chafee.

Diossa said he often found himself out of the loop under the Moreau administration. "I was the only council member that worked days and they were scheduling meetings at noon," he said.

His points of emphasis as mayor include making the city more presentable.

The City Council — now up from five to seven members — recently approved funding for large garbage totes. Under parks and recreation director Joshua Giraldo, city events ranging from cultural to awareness sessions are up 50%. In an effort to fix tattered infrastructure, the city intends to pave 16 roads this summer and hopes for 10 more by next spring.

One sign welcoming visitors to "the world in one square mile" was hopelessly faded. "We're updating that," said Diossa. "We've got a pretty good sign company in town."

Crime still makes the newswires, which within a one-week span covered the stabbing of a 17-year-old, a 9 p.m. curfew for teens, and the police discovery of two dead goats and three dead chickens — all beheaded and decomposed — along railroad tracks.

Safety measures, said Diossa, include the reopening of a resource office at Central Falls High School, a police dog and partnerships with the Federal Bureau of Investigation and the State Police. Policing includes bike patrols and old-fashioned beat-walking. "Since bankruptcy, our numbers have been cut," he said. "We have to be creative."

Central Falls' school district also partnered with Rhode Island College to acquire a nuisance property and convert it into a tutoring center.

Diossa said the Obama movement and pride in his hometown motivated his run for public office. "I recognize what Central Falls has done for my family and I wanted to give something back."

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