A plan to speed C.F. recovery

EXECUTING ON A PLAN: Gayle Corrigan, the chief of staff for the receiver of Central Falls, has been using some economic development ideas from Woonsocket in the effort to bring growth to Central Falls. / PBN PHOTO/MICHAEL PERSSON
EXECUTING ON A PLAN: Gayle Corrigan, the chief of staff for the receiver of Central Falls, has been using some economic development ideas from Woonsocket in the effort to bring growth to Central Falls. / PBN PHOTO/MICHAEL PERSSON

It is an economic-recovery program unlike any other attempted in Rhode Island, designed to help a community that had declared bankruptcy get back on its feet. State officials are confident the Economic Expansion Incentive Program is a step in the right direction toward solvency for economically distressed Central Falls.
If it works, the plan could become a template used to assist other financially strapped municipalities, including East Providence, says Keith W. Stokes, executive director of the R.I. Economic Development Corporation.
After stabilizing Central Falls’ finances, state-appointed Receiver Robert G. Flanders Jr. has proposed a series of measures to encourage strong capital investments, improvements to property and employment of city residents.
The plan includes 25 percent increases in property tax exemptions for homeowners, senior citizens and veterans. It also proposes a 25 percent increase to existing property-improvement tax exemptions and increases the annual homestead exemption to $800 from $647.
“It’s a multistage process,” Flanders told Providence Business News. “The ordinances that will implement the ideas won’t be fully vetted and finalized until after the hearings, which could be at the end of March or early April.”
Flanders said the powers of the city’s elected officials are now in the office of the receiver, and therefore he is in charge of the planned ordinance changes. Other than that, the changes will go through the usual public-hearing procedures to be held at City Hall for comment, disapproval or improvement. Flanders will have final say on the ordinances and insists he will act in the best interest of the city, as directed by the governor.
“I hope we get some suggestions that if they were an improvement, would make us reconsider one or more of these ideas,” he said.
Flanders’ goal is to encourage lasting growth of the city’s tax base by making large investments more attractive. The recovery plan is comprised of two parts. A Jobs Creation Incentive Plan would reduce tangible personal property taxes for employers who create quality jobs in the city. A Real Property Improvement Incentive Plan, in turn, would promote construction or renovation projects. He views it as an investment in the city. “It only gives tax breaks on the increased revenue over and above what we would currently be getting if we did nothing and the city remained at its status quo,” he said. “In effect it gives a break on the incremental value created by improving property above its current valuation.”
Much of the plan is an assemblage of different programs, procedures and ideas developed from many sources. “We looked at other municipalities here and elsewhere where parts of these plans are working. The [EDC] and the Chafee administration were very helpful,” he said.
Some, however, are skeptical that tax incentives for commercial and residential construction improvements will help. A carpenter and woodworker for 20 years, Stephen Morris, owner of Angle Wright Woodworking in Central Falls, has already seen tax-incentive plans in Providence fail to result in construction-job growth. “I don’t think you can create new jobs just by having tax incentives.” he said. “Either the [need for more construction] is there or it’s not, and I don’t think incentives make that much of a difference.”
He has seen his income decrease each year for the last four years, mirroring the trend of the national recession. Morris sees the economy as a whole and believes his business will improve once the entire nation starts improving. “The jobs for me to work on haven’t been out there. That needs to change,” he said.
Stokes said state intervention in Central Falls is part of a bigger picture, to build an entire urban-strategy plan throughout Rhode Island. For the last year, EDC has been forming a plan to economically revive five urban communities – Central Falls, Pawtucket, West Warwick, Providence and Woonsocket, as well as other areas with urban character, including parts of Newport, Cranston and East Providence. These areas have positive qualities, said Stokes, including population, transportation access, utilities and real estate opportunities. “Part of that strategy is the existing state enterprise-zone program. But we’re also creating some new, targeted small-business capital credit programs for urban-community businesses,” he said.
“We are also working on minority and women’s business-assistance programs and training programs, and a Main Street program,” he said. “So what EDC is doing in Central Falls is an extension of a larger policy.”
“Regarding Central Falls, there are two very important objectives here. One is to provide sustainable expansion to the commercial and industrial tax base. The second is to tie that into job opportunities for the city’s residents,” Stokes said.
Flanders said that credit for the tax-incentive program goes to a variety of people but was overseen by Gayle A. Corrigan of Municipal Management Solutions Inc., who was named as chief of staff for the receiver and given the responsibility of running the city. She coordinated the work with the City Hall staff, specifically the offices of the tax assessor and planning department. “The heart is modeled from plans in Woonsocket. There were some things we really liked, so we used some of those ideas,” Corrigan said. Her staff reviewed Woonsocket’s job-creation and enterprise-zone plans, among others. “We looked at ideas that were not only local but some that we found across the country. We had a great team working on it.”
Corrigan believes the work accomplished in Central Falls is appropriate for other municipalities, including East Providence.
“It’s consolidation, division of labor and taking the politics out of it,” Corrigan said. “Having gone through this with Central Falls and having looked at other municipalities, there is a template of things you can improve.
“We knew the revenue we needed to have for the next five years, so that was defined,” she said. With a strong business background and no ties to the city, her approach was clear. “This is where we are and this is where we need to be,” she said. “There weren’t any secrets, just total transparency and [the staff] helped out with a lot of solutions. Once we got everyone on the same page, the rest seemed to fall in place.” As one who has worked in close communication with Rosemary Booth Gallogly, the director of revenue for the state, Corrigan is also aware of some of the recent difficulties in East Providence, where a state-appointed budget commission is evaluating the city’s finances. The city recently received an advance of $12.6 million in state school dollars from the General Assembly in order to pay its bills. The advance gives the commission time to create a plan to deal with the city’s financial problems. The city has a $7.2 million budget shortfall and its bond rating plummeted to less than investment grade. Aside from Central Falls, East Providence is the only other municipality to receive such a level of state intervention.
“We have been watching what has been going on in Central Falls and Pawtucket,” said Jeanne M. Boyle, the East Providence city planner. “We have been working with the EDC and their urban-strategy plan and have also discussed possibilities with the enterprise zones. We’ve had conversations with some property owners, so these options are being explored.”
There is also growing concerns with Woonsocket’s financial status, where Moody’s Investors Service downgraded the city’s Ba1 general-obligation bond rating to Ba2 on Jan. 16, along with a negative outlook.
Although the state is using some of its existing initiatives and incentives to help the situation, much of the blueprint for the Central Falls’ plan will be adopted and executed under the city’s ordinances, therein giving the city authority to manage the plan once the receiver is informed to relinquish his power. Gallogly will decide when the receiver is no longer necessary.
“When people think of Central Falls, they think of the need to cut expenses, and we’ve done all that hard work. In the long run the real economic vitality depends on creating a better tax base and a better place to work and live,” Flanders said. •

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