February 4th, 2013 at 9:04 am by Ted Nesi under Nesi's Notes
By Tim White
CENTRAL FALLS, R.I. (WPRI) – A corrections officer from the Wyatt Detention Center is accusing the prison’s administration of mishandling an investigation into an alleged attack on him by an inmate and says he was admonished for raising questions about the incident.
January 23rd, 2013 at 4:31 pm by Ted Nesi under Nesi's Notes
By Tim White
CENTRAL FALLS, R.I. (WPRI) – A state police investigation has found the chief of security at Wyatt Detention Center may have destroyed video evidence that he put a correctional officer in harm’s way just before the officer suffered a serious head injury.
January 21st, 2013 at 5:00 am by Ted Nesi under General Talk
This week: RIPEC’s John Simmons talks about the Senate “Moving the Needle” report and Dexter Credit Union CEO Stephen Angell talks about doing business in Central Falls amid the city’s bankruptcy.
January 13th, 2013 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
December 12th, 2012 at 10:32 am by Ted Nesi under Nesi's Notes
December 2nd, 2012 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
November 27th, 2012 at 11:52 am by Ted Nesi under Nesi's Notes, On the Main Site
So much for a new era of political openness in Central Falls.
City Councilman James Diossa, the 27-year-old who won an overwhelmingly victory in the Nov. 6 mayoral primary, is refusing to debate the opponent he faces in the Dec. 11 runoff election, former Central Falls Police Chief Joseph Moran.
Diossa and Moran are seeking to finish the term of former mayor Charles Moreau, who resigned due to corruption charges. Diossa spokesman Bill Fischer turned down an invitation to debate Moran on the Nov. 30 taping of WPRI 12′s Newsmakers.
“James has already participated in three debates with Colonel Moran,” Fischer told WPRI.com in an email, noting that Diossa and Moran took part in candidate forums prior to the primary. “Given the short window between the primary and the general in the special election, we are respectfully going to decline the invitation.”
September 25th, 2012 at 3:27 pm by Ted Nesi under Nesi's Notes
September 24th, 2012 at 9:59 am by Ted Nesi under Nesi's Notes
September 21st, 2012 at 5:23 pm by Ted Nesi under Nesi's Notes
By Tim White
CENTRAL FALLS, R.I. (WPRI) – The surprising indictment of now-former Mayor Charles Moreau in Central Falls has come at the same time leaders are in the process of trying to hand the reins of power back to state leaders, potentially slowing the process down.
September 19th, 2012 at 2:50 pm by Ted Nesi under Nesi's Notes
Charles Moreau is now the former mayor of Central Falls. He resigned – effective noon Wednesday, according to a letter delivered by former House Speaker Bill Murphy, his lawyer – after serving for nine years.
Two hours after Moreau’s resignation, law enforcement officials announced Moreau will plead guilty to corruption charges. Full story here. The news comes less than two weeks after a bankruptcy judge approved Central Falls’ plan for exiting the bankruptcy process. Moreau was mayor when the city filed for receivership in May 2010.
Right now there’s a lot of hope – and some concern – about a post-Moreau, post-bankruptcy Central Falls. WPRO’s Matt Allen recommends this Providence Phoenix story to remember the ex-mayor.
WPRI.com has uploaded the Moreau court papers as PDFs here: one, two, three.
Republican Brendan Doherty issued a statement noting he ordered the state police probe into Moreau. “Corruption, fraud and dishonesty by our elected officials who abuse the public’s trust will not and cannot be tolerated,” Doherty said. (Central Falls is in the 1st Congressional District).
• Related: Lower pensions pain retirees as CF emerges from bankruptcy (April 27)
September 5th, 2012 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
First it was pot cannoli in House District 44. Now pensions are an ice cream flavor in Senate District 16.
State Sen. Betty Crowley is sending voters a mailer that attacks her opponent, former Central Falls Police Chief Joseph Moran, for negotiating a lucrative deal that allowed him to collect a pension and keep working for the city. He reached a $75,211 settlement with the state-appointed receiver last month.
Moran is now challenging Crowley in next week’s Senate primary, leading her to send this:
Moran and Crowley are both expected to take part in a candidates forum at Central Falls High School tonight sponsored by Leadership Rhode Island, Common Cause Rhode Island and Progreso Latino. It begins at 6 p.m. and I’ll be on hand to moderate.
August 30th, 2012 at 9:33 am by Ted Nesi under Nesi's Notes, On the Main Site
First it was Bond Buyer, and now Bloomberg News is using Central Falls’ expected exit from bankruptcy next week to take stock of Rhode Island’s solicitous attitude toward Wall Street and its bondholders. Michael McDonald and Steven Church report for Bloomberg:
Central Falls, the first city in Rhode Island’s 222-year history to go bankrupt, is preparing to exit court protection after 13 months by keeping bondholders whole while raising taxes and cutting workers and pensions.
The financial and political support Central Falls got from state officials makes the case unique among municipal bankruptcies in the past year from Alabama to California. …
The Central Falls approach “is a good sign for bondholders of Rhode Island bonds compared to, say, California,” said Alan Schankel, head of fixed-income research at Janney Montgomery Scott LLC, an investment bank in Philadelphia. …
“You take the bonds being held hostage out of the equation,” said James Spiotto, a bankruptcy lawyer in Chicago with Chapman & Cutler LLP.
To understand why Central Falls’ bankruptcy will likely go down as one of the major policy achievements of the Chafee administration, it’s instructive to read this May 2011 post explaining just how difficult the process was expected to be. For better or worse, depending on your perspective, Central Falls will now be held up as evidence that municipalities can use Chapter 9 effectively to get out from under their financial burdens.
Rhode Island’s high unemployment rate and long list of financial problems make it easy to miss the fact that significant progress has been made by the class of officials elected in 2010 – Chafee (and Rosemary Booth Gallogly) in Central Falls and other municipalities, Raimondo and Chafee with the state pension system, Taveras with the mess in Providence. The most important and toughest task remains, though – fixing the state’s economy.
• Related: Could RI’s pay-bondholders-first law be unconstitutional? (Aug. 12)
(photo: Ted Nesi/WPRI)
August 28th, 2012 at 10:44 am by Ted Nesi under Nesi's Notes, On the Main Site
Bond Buyer reporter Paul Burton has been keeping an eye on Rhode Island and its myriad financial problems, and over the past week he weighed in with not one but two lengthy stories about the state.
The first article, published Thursday, is “Under Chafee, Rhode Islanders Tackle Fiscal Woes,” and it focuses on the new pension law and efforts to stabilize distressed municipalities like Providence, Central Falls and Woonsocket. Burton interviewed Chafee, who called the various problems “icebergs,” and also spoke with investors:
“Rhode Island, in a way, is the poster child for trying to resolve distress, whether it involves getting a community out of bankruptcy or pooling resources to save money,” said Natalie Cohen, managing director and head of municipal research for Wells Fargo Securities in New York. …
“Because of the weaker communities, investors are staying away from even the stronger credits,” said [William Fazioli, a senior management consultant in the Providence office of Philadelphia consulting firm PFM Group Inc. and] former East Providence city manager. “The interest rate is higher, even for the more highly rated communities.”
“There is still a great deal of credit stress,” said Naomi Richman, a managing director at Moody’s, which last December issued a special report on municipal struggles in Rhode Island. “Most of the factors that were discussed in December are still evident to a certain degree.” …
Analysts and government observers alike say few governors if any have spent as many hours [as Chafee] on municipal matters.
“He seems to be paying attention to his knitting, that’s for sure,” said Alan Schankel, a managing director at Janney Capital Markets in Philadelphia. “Rhode Island, of course, has some economic issues. But everyone there seems to be pulling the oars in the same direction.”
An article Monday – “Central Falls, R.I. Could Exit Bankruptcy Next Week” – is a straightforward examination of how Rhode Island’s smallest city managed to avoid the sort of grinding slog through bankruptcy reorganization experienced by Vallejo, Calif.:
“One of the reasons why we’re so close to exiting bankruptcy is the extra attention we’ve gotten from the leadership. They profoundly understood the problems that a city faces. Both of them understood the goals and never wavered from the problem. There was no ego, no attitude,” [Central Falls attorney Ted] Orson said, naming Gallogly and Chafee. …
Moody’s analyst Vito Galluccio warned that Rhode Island municipalities still face serious challenges. “Although there has been some stabilization and helpful intervention from the state, we still expect some challenges for cities and towns,” he said, citing a slow recovery, stagnant tax bases, property tax cap limits and a high unemployment rate. “They’ve been proactive, but there are still a lot of risks and we will continue to monitor them.”
Orson called the Central Falls case a game-changer. “It changes the communication that cities have with their stakeholders. Before Central Falls, when cities negotiated with stakeholders, there was a strong feeling that cities did it without an ‘or else’. Central Falls has made it very clear, at least in Rhode Island, that there is an ‘or else,” he said. …
“What Ted [Orson] did in Central Falls is no different than how a professional services firm runs an engagement. Central Falls is doing it differently than the folks in Jefferson County, [Ala.,] and Vallejo, [Calif.,] who just threw up their hands and said, ‘We’re bankrupt,’ ” said [Gary Lewis, a private-sector financial consultant in Scranton, Pa.], who has been trying to convince officials in distressed Scranton to seriously consider filing for bankruptcy.
The hearings on Central Falls’ bankruptcy case are scheduled for next Thursday and Friday.
July 11th, 2012 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
Ted Nesi is traveling on assignment.
By Carroll Andrew Morse
If you are interested in understanding the eternal wisdom of the conservative viewpoint towards government, here are two questions to ask yourself: Do we really think that people are smarter now than they were in medieval times? Are we really sure we know more about governing ourselves than did our ancestors?
Governments of the medieval past were headed by kings, nobles and/or local warlords. The common folk didn’t have much say in who the leaders were who might demand taxes from them or start a war with the neighboring clan. Rulers ruled, they didn’t change often, and everyone else obeyed. People went along with this system because – well, truth be told, we can’t be fully sure why people went along with this system. There were theoretical justifications, like the king having a direct connection to God that allowed him to know best, but we don’t know the degree to which the medieval man-on-the-street bought into this versus just going along with the governing system that was there, because that was the easiest thing to do.
Fast-forward to the present. At least in this part of the world, kings (with real power) aren’t around anymore. Representative democracy has taken their place. People get an opportunity to select their leaders. Instead of kings and warlords, we have presidents, governors and mayors; instead of royal courts, we have legislatures.
June 27th, 2012 at 11:41 am by Ted Nesi under Nesi's Notes, On the Main Site
The 2012-13 state budget Governor Chafee signed into law last week will help Rhode Island municipalities and school districts by providing $34 million in new education funding, Moody’s Investors Service says.
The nearly 4% hike in state aid for K-12 schools is the third annual increase in a row and “a credit positive for both school districts and for cities and towns,” Moody’s analysts wrote in a research note Tuesday. “State funding for education now stands at over $900 million, well above the pre-recession peak,” they said.
However, Moody’s said the impact isn’t uniform across the state because of the new school funding formula. Barrington will get the biggest increase in education aid in 2012-13 at 42%, while the Chariho school district will suffer the biggest drop, losing 14%. Non-education aid will be flat after plunging since 2007.
Moody’s also noted lawmakers’ $2.6 million appropriation to offset some of the deep cuts in Central Falls’ pension benefits will help that city emerge from bankruptcy, but expressed concern about the failure of a proposed supplemental tax sought by cash-strapped Woonsocket.
The failure to enact any laws to stabilize the 36 locally run pension plans also drew concern. “Members of the legislature have publicly stated that they intend to take up local pension reform, but the delay into the next legislative year highlights the significant political hurdles they’ll have to surmount,” Moody’s wrote.
(chart: Moody’s Investors Service)
June 19th, 2012 at 5:00 am by Ted Nesi under Nesi's Notes, On the Main Site
Woonsocket’s financial turmoil has led to much discussion about the example of Central Falls, which first entered receivership in May 2010 and filed for bankruptcy in August 2011. One lesson from the tiny city – there’s probably no way Woonsocket residents avoid a big increase in their tax bills over the coming years.
This chart shows total property taxes levied in Central Falls from 2008-09 through 2015-16, the last year projected in its court-ordered restructuring plan. Taxes will jump nearly 35% citywide before inflation:
Taxes are already high in Woonsocket when compared with other cities, though.
Another chart included in Central Falls’ bankruptcy filing shows effective tax rates for six distressed communities in 2010-11, adjusted for income; Woonsocket is the most-taxed by that measurement:
June 1st, 2012 at 11:24 am by Ted Nesi under Nesi's Notes, On the Main Site
It’s no secret that the finances of Central Falls and other troubled Rhode Island cities have been woefully mismanaged over the years. With state leaders continuing to wrestle with how to fix them – and desperate to avoid more bailouts and interventions – it may be time to abolish these governmental units altogether, Josh Barro writes for Bloomberg View:
When a headline-grabbing event occurs, such as the exposure of Bell’s outrageous salaries or the exhaustion of the Central Falls pension fund, these cities get state-level attention and supervision. But that typically comes only after corrupt officials have had years to mismanage and exploit their cities.
The best way to protect residents of these impoverished places is to end the jurisdictions in their current form, reconstituting them in such a way that officials are more likely to be held accountable. Three such options are dissolution, merger and state takeover.
Meanwhile, Governor Chafee’s office just announced that Robert Flanders is out as Central Falls’ receiver after shepherding the community through Chapter 9; John F. McJennett III, who was chairman of DEPCO, will take over. Last night, legislative leaders signaled they will pony up $2.6 million to pay for a settlement with Central Falls’ retirees to restore part of their pension payments, which should close out the bankruptcy.
May 9th, 2012 at 5:00 am by Ted Nesi under Nesi's Notes
By Ted Nesi
WEST WARWICK, R.I. (WPRI) – The bankruptcy on the Blackstone River hung over West Warwick High School’s auditorium Tuesday as town leaders got a dire warning from state officials: their pension fund for 654 active and retired police officers, firefighters and town workers is on track to run out of cash within five years.
April 27th, 2012 at 3:23 pm by Ted Nesi under Nesi's Notes
city retirees hear about the pension cuts last year
By Ted Nesi
CENTRAL FALLS, R.I. (WPRI) – Central Falls is being carefully and painfully nursed back to health.
The city could be out of bankruptcy within three months, but the situation is bittersweet because of the people who have been impacted, according to Rosemary Booth Gallogly, the Chafee administration’s director of revenue.
Those people include Paul Gagnon, a retired Central Falls firefighter who’s battling stage four prostate cancer. Gagnon, whose story will be told Monday night on Eyewitness News at 11 on WPRI 12, saw his accidental disability pension cut by almost a third after the city filed for bankruptcy.
(photo: Ted Nesi/WPRI)
April 2nd, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site
The General Assembly should give Rhode Island’s cities and towns as much flexibility as possible to fix their finances without declaring bankruptcy in order to help Providence and Woonsocket avoid following Central Falls into Chapter 9, according to a new study out Monday.
“Bankruptcy protection may aid municipalities who are having difficulties meeting their financial obligations by allowing greater flexibility with regard to contractual requirements and payments,” says the study by the Rhode Island Public Expenditure Council [pdf], the business-backed think tank.
“However, it often also results in greater borrowing costs for the municipality, and potentially for the state,” RIPEC says. “Furthermore, the community may become less attractive to current and potential businesses and residents … further straining the community’s fiscal capacity.”
The new study from RIPEC comes amid a growing debate over whether bankruptcy could be an unavoidable and perhaps beneficial step for some of the nation’s most fiscally distressed cities and towns. Robert Flanders, the receiver in Central Falls, has become a leading proponent of that view since putting that city into Chapter 9 last year.
March 12th, 2012 at 9:38 pm by Ted Nesi under Nesi's Notes, On the Main Site
In my post earlier today about Bristol being Rhode Island’s best place to raise children, I jokingly said there was no word on where Central Falls ranked on the list. One reader who lived there from 1957 to 1977 wrote in to say she wasn’t amused:
Do you think your comment about Central Fall was funny? I grew up in CF. My family is French Canadian. I went to Catholic School – Notre Dame. We were not rich, after all, CF has always been the melting pot of the working class. In my childhood, CF residents were French, Portuguese, Polish and English (from my recollection) my father was a mailman and we owned our own four-family on Division St. I have very fond memories of Central Falls, it was not the place it is today but it made me whom I am today and guess what? I had a great and happy childhood in CF! You know what Ted? I turned out OK – great actually …. Please think about what you say to the public – you’re not just talking about today’s residents of Central Falls, RI.
A fair point. I apologize to anyone I offended.
March 2nd, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site
On Saturday morning, Providence Mayor Angel Taveras will convene a meeting of the city’s retirees to ask them to accept reductions in their pension benefits to help the capital avoid filing for bankruptcy, as nearby Central Falls did last August. What happens if they don’t come to an agreement?
David Skeel is a professor at the University of Pennsylvania Law School in Philadelphia and a nationally known expert on bankruptcy and Chapter 9. We spoke on Thursday about what bankruptcy would mean for Providence’s pension system, how Central Falls has changed the legal landscape, and why he doesn’t buy the case for Rhode Island’s bondholders-first law. The transcript has been lightly edited for length and clarity.
I was fascinated by the argument in your working paper that government employees’ and retirees’ property rights cover the pension fund but not the pension promises. Could you explain that?
The question is if a city or a state makes a pension promise, but does not fund the promises – which has been true in many states in recent years – what exactly is protected in the event of a default or of bankruptcy? A lot of people assume that what’s protected is the full promise, even if there’s no funding behind it.
Although this is certainly not free from doubt – this is unchartered territory in many respects – my view is that there’s a good argument that what’s protected is the amount of money that’s been set aside. Pension obligations are a form of what we refer to in the law as a property right, and other kinds of property rights are protected up to the value of the property that’s set aside for them. So if somebody has collateral for a transaction, we treat that promise as sacrosanct up to the value of the collateral.
February 22nd, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site
Providence Mayor Angel Taveras and city retirees don’t agree on much, but they’d probably both acknowledge that Providence’s pension system has a sizable long-term shortfall.
The math is pretty simple. Providence has promised its workers and retirees $1.32 billion in pension benefits, but it’s saved only $362 million to pay them. Thus, the city pension fund was short $958 million as of June 30 (based on market value).
As is often pointed out, there’s no immediate crisis there. The city must pay that $1.32 billion over decades – it’s not about to receive a bill for the other $958 million, an amount that’s far more than this year’s entire $614 million city budget.
But a more immediate crisis – a bankruptcy filing by the city – could force the question sooner. And if that happens, the retirees may discover their unfunded pension promises are worthless IOUs.
February 14th, 2012 at 6:58 pm by Ted Nesi under Nesi's Notes
First it was Whitey’s girlfriend Catherine Grieg, and now another famous name is being held at Wyatt Detention Center in Central Falls, the Boston Herald reports:
Disgraced former Bay State House Speaker Salvatore F. DiMasi is being held at Rhode Island’s Wyatt Detention Facility, a short drive from the federal courthouse in Worcester where he’s expected to be called to testify before a grand jury probing hiring and promotion corruption within the Massachusetts Probation Department.
The convicted extortionist — who last November began an eight-year sentence at a federal penitentiary in Kentucky — was listed today at a publicly accessible kiosk at the detention center where friends and family can deposit cash for people who are being held there.
DiMasi’s lawyer Thomas R. Kiley confirmed today that his client is at the Wyatt facility, but he declined to discuss why the former speaker is locked up in Rhode Island.
The backstory here is that Beacon Hill politicians are freaking out about the possibility DiMasi may testify against his former legislative colleagues before the grand jury, perhaps to secure a reduced sentence or at least a different place to serve it out.
February 9th, 2012 at 11:01 am by Ted Nesi under Nesi's Notes, On the Main Site
East Providence’s state-appointed budget commission voted this week to stop offering health insurance to members of its City Council as of Nov. 1, which is expected to save nearly $50,000 a year. Do most Rhode Island communities give their elected officials health benefits?
The answer is no – or at least it was as of July 2006, the last time the state published a survey of salary and fringe benefits offered to municipal elected officials. East Providence was one of nine cities and towns that offered health insurance to their local councilors at the time, the results showed.
Another of the nine was Central Falls, where receiver Robert Flanders ended health benefits for the City Council last June, shortly before the city filed for bankruptcy. The other seven that offered councilors health insurance in 2006 were Burrillville, East Greenwich, Johnston, Newport, Pawtucket, Providence and Warwick.
The generosity of the plans ranged from a “fully paid” family health insurance plan for Burrillville councilors to an annual cap on coverage of $2,700 a year in East Greenwich. All nine cities offered councilors dental coverage, too, and some of them also offered vision coverage, life insurance and retirement benefits.
February 7th, 2012 at 10:58 am by Ted Nesi under Nesi's Notes
Eat Drink RI’s David Dadekian has the story here on a cool project by Leadership Rhode Island’s Mike Ritz. The launch party is tonight from 5 to 7 p.m. at Whole Foods University Heights on North Main Street in Providence.
As an aside, did you know Garrison Confections, the gourmet chocolatier that used to be on Hope Street in Providence, is now on Ledge Street in Central Falls?
February 3rd, 2012 at 9:53 am by Ted Nesi under Nesi's Notes
That was one of the riddles in the governor’s budget. My colleague Steve Nielsen tracked down the answer:
If you really want to dig in, check out the state law definition of a “distressed community.”
February 2nd, 2012 at 1:45 pm by Ted Nesi under Nesi's Notes
Providence Mayor Angel Taveras will be getting some guidance from Rhode Island’s leading authority on municipal bankruptcy.
Taveras is scheduled to hold a meeting Friday with Robert Flanders, the retired R.I. Supreme Court justice who has been Central Falls’ state-appointed receiver since last year, a person familiar with the matter told WPRI.com.
Flanders made Central Falls the first Rhode Island city ever to file for bankruptcy last August after he failed to win voluntary concessions on pension benefits from that city’s retirees. He was reportedly spotted leaving Providence City Hall.
Taveras warned Providence’s retirees on Thursday that he will reduce their benefits “one way or another,” even if it means following Central Falls’ example and asking a bankruptcy court judge to do so as part of a Chapter 9 filing.
Tim White contributed to this report.
(photo: Ted Nesi/WPRI.com)
January 11th, 2012 at 1:03 pm by Ted Nesi under Nesi's Notes, On the Main Site
State Reps. Eileen Naughton and Larry Ehrhardt raised a point I haven’t heard discussed much during yesterday’s House Finance Committee hearing on the fast-moving bill to give cash-strapped East Providence its state aid earlier than scheduled. From Bryan Rourke’s Projo story:
As written, both the House and Senate bills would allow a municipality to request early payment of state education aid if it’s recommended by the director of revenue and the municipality is under a state-appointed budget commission or receiver. So the bills would also apply to Central Falls, which is under a receiver.
That would also apply to any other city that winds up in the second or third level of state oversight under the Fiscal Stability Act, which is certainly conceivable. Put another way, in the future this would place the power to advance state aid solely in the hands of the governor and his administration, without lawmakers’ involvement.
The House is scheduled to vote on the legislation [pdf] on Thursday afternoon. The Senate is scheduled to vote on its version [pdf] next Tuesday.