In the city once known as “Chocolateville” because it attracted one of America’s first chocolate factories, the nonprofit Confectioners Mill Preservation Society and the family behind Mars chocolate bars considered investing millions of dollars in Central Falls.
They wanted to build a replica of the original chocolate mill and create a museum. But those plans are now on the back burner because of fiscal woes at the city, state and national levels.
And now that Central Falls has filed for bankruptcy, some economic-development experts and business leaders say the latest news weakens Rhode Island’s chances for jump-starting its economy and attracting out-of-state investments.
“The real problem is the message it sends for Rhode Island, which is struggling, right now, to be an attractive place for investment,” said Robert D. Atkinson, who was the first executive director, in 1996, of what was then the Rhode Island Economic Policy Council.
In a state they say is recognized for high unemployment, high taxes and a difficult business climate, several former directors of the state Economic Development Corporation say they’ve watched local municipalities mismanage finances for years.
“I had said that things have to get worse before they can get better and, hopefully, this is a wake-up call,” said Michael McMahon, a former EDC executive director and now managing director of a private equity firm in New York.
But with other towns and cities throughout Rhode Island struggling with the same unfunded-pension liabilities that helped lead to Central Falls’ financial downfall, this first municipal bankruptcy in the state may be a harbinger of more to come, says Richard C. Reed, a former deputy director of the EDC.
“Central Falls may well be the canary in the coal mine for Rhode Island,” Reed said.
But even worse, the city may be among the first of many financially troubled municipalities around the country to file for bankruptcy.
“It creates uncertainty, and markets don’t like uncertainty,” he said.
Companies that might have considered moving to Rhode Island may now reach the conclusion that promises from municipalities about taxes and services probably won’t be kept, said Atkinson, now president of the Information Technology and Innovation Foundation in Washington, D.C.
And yet, others remain optimistic that the bankruptcy filing sends a message that Central Falls is working to get its finances in order.
“We are talking about shoring up the city’s finances, which were really dysfunctional and really needed to be restructured,” said Edinaldo Tebaldi, assistant economics professor at Bryant University. “The way the city was being run at this point was a lose-lose situation.”
Mark Higgins, dean of the College of Business Administration at the University of Rhode Island, says the impact on local businesses will become clearer once the state-appointed receiver presents his plan for how the city will work its way out of bankruptcy.
But for Rhode Island businesses farther away, Higgins doesn’t see Central Falls’ troubles having much impact.
“I don’t think there’s any impact on a business in Narragansett,” he said.
The confectioners society decided in May that 2011 was not the right time for a project of its scope, said Robert D. Billington, president of the Blackstone Valley Tourism Council. The council is now working on a more modest proposal to create a small park overlooking the site.
“The Blackstone Valley has been working on developing itself as a destination for 25 years now,” Billington said. “You take one step forward, and then maybe one step back. This is one of those times that makes it more difficult.”
But he said he’s worried more about Central Falls’ reputation among Rhode Islanders than out-of-state visitors, who don’t really care about a city’s financial problems.
“If Rhode Islanders feel negative toward the Blackstone region, that’s harder for me to overcome,” he said.
In neighboring Cumberland, the CEO and president of Hope Global worries about her employees. Cheryl Merchant says many of the textile company’s 250 to 275 employees live in Central Falls. If municipal services disappear, she worries some of her workers will leave the state.
“If they move, where do they move to?” she said. “We have a very stable work force, a very loyal and hard-working team.... I don’t think things like this will do us any good.”
She’s also concerned about the state’s business reputation.
“I truly see this rippling all through the state.... It becomes our reputation,” she said. “We do business internationally, and people always ask ‘Why are you in Rhode Island’ and ‘What’s going on there?’ Stability is a huge concern for everyone. Being in a state that’s unstable is not good.”
Cities go bankrupt for two reasons, Atkinson said: their underlying economics are not strong, or they have high levels of inefficiency or ineptitude.
He thinks both are true here in Rhode Island.
“And now, the chickens are coming home to roost,” he said. “I think it sends the message to companies that Central Falls may not be an anomaly. It’s not one city. This is an endemic problem to the state.”
They wanted to build a replica of the original chocolate mill and create a museum. But those plans are now on the back burner because of fiscal woes at the city, state and national levels.
And now that Central Falls has filed for bankruptcy, some economic-development experts and business leaders say the latest news weakens Rhode Island’s chances for jump-starting its economy and attracting out-of-state investments.
“The real problem is the message it sends for Rhode Island, which is struggling, right now, to be an attractive place for investment,” said Robert D. Atkinson, who was the first executive director, in 1996, of what was then the Rhode Island Economic Policy Council.
In a state they say is recognized for high unemployment, high taxes and a difficult business climate, several former directors of the state Economic Development Corporation say they’ve watched local municipalities mismanage finances for years.
“I had said that things have to get worse before they can get better and, hopefully, this is a wake-up call,” said Michael McMahon, a former EDC executive director and now managing director of a private equity firm in New York.
But with other towns and cities throughout Rhode Island struggling with the same unfunded-pension liabilities that helped lead to Central Falls’ financial downfall, this first municipal bankruptcy in the state may be a harbinger of more to come, says Richard C. Reed, a former deputy director of the EDC.
“Central Falls may well be the canary in the coal mine for Rhode Island,” Reed said.
But even worse, the city may be among the first of many financially troubled municipalities around the country to file for bankruptcy.
“It creates uncertainty, and markets don’t like uncertainty,” he said.
Companies that might have considered moving to Rhode Island may now reach the conclusion that promises from municipalities about taxes and services probably won’t be kept, said Atkinson, now president of the Information Technology and Innovation Foundation in Washington, D.C.
And yet, others remain optimistic that the bankruptcy filing sends a message that Central Falls is working to get its finances in order.
“We are talking about shoring up the city’s finances, which were really dysfunctional and really needed to be restructured,” said Edinaldo Tebaldi, assistant economics professor at Bryant University. “The way the city was being run at this point was a lose-lose situation.”
Mark Higgins, dean of the College of Business Administration at the University of Rhode Island, says the impact on local businesses will become clearer once the state-appointed receiver presents his plan for how the city will work its way out of bankruptcy.
But for Rhode Island businesses farther away, Higgins doesn’t see Central Falls’ troubles having much impact.
“I don’t think there’s any impact on a business in Narragansett,” he said.
The confectioners society decided in May that 2011 was not the right time for a project of its scope, said Robert D. Billington, president of the Blackstone Valley Tourism Council. The council is now working on a more modest proposal to create a small park overlooking the site.
“The Blackstone Valley has been working on developing itself as a destination for 25 years now,” Billington said. “You take one step forward, and then maybe one step back. This is one of those times that makes it more difficult.”
But he said he’s worried more about Central Falls’ reputation among Rhode Islanders than out-of-state visitors, who don’t really care about a city’s financial problems.
“If Rhode Islanders feel negative toward the Blackstone region, that’s harder for me to overcome,” he said.
In neighboring Cumberland, the CEO and president of Hope Global worries about her employees. Cheryl Merchant says many of the textile company’s 250 to 275 employees live in Central Falls. If municipal services disappear, she worries some of her workers will leave the state.
“If they move, where do they move to?” she said. “We have a very stable work force, a very loyal and hard-working team.... I don’t think things like this will do us any good.”
She’s also concerned about the state’s business reputation.
“I truly see this rippling all through the state.... It becomes our reputation,” she said. “We do business internationally, and people always ask ‘Why are you in Rhode Island’ and ‘What’s going on there?’ Stability is a huge concern for everyone. Being in a state that’s unstable is not good.”
Cities go bankrupt for two reasons, Atkinson said: their underlying economics are not strong, or they have high levels of inefficiency or ineptitude.
He thinks both are true here in Rhode Island.
“And now, the chickens are coming home to roost,” he said. “I think it sends the message to companies that Central Falls may not be an anomaly. It’s not one city. This is an endemic problem to the state.”
News Link:
Posts
No comments:
Post a Comment