Oct 26 Moody's Investors Service upgraded its
credit rating for Central Falls, Rhode Island, to B2 from Caa1
after the tiny city's emergence from Chapter 9 bankruptcy.
The credit rating agency also revised its outlook for the
city to positive. The actions affect $14.7 million of
outstanding general obligation bonds.
A state-appointed receiver for the city won court approval
for a bankruptcy plan on Sept. 6, laying out an exit course just
13 months after its bankruptcy filing.
Central Falls' widely watched bankruptcy plan balances the
city budget by slashing pensions and raising taxes, while
leaving bondholders unscathed.
A Rhode Island law, passed as Central Falls' insolvency
reached a crisis point, protects bondholders by giving them a
priority lien on property tax revenue. The law is likely to spur
Central Falls to continue making general obligation debt service
payments, Moody's said.
The city is also expected to continue making full payments
toward its unfunded pension liability.
"I am thrilled that the hard work and accomplishments in the
city of Central Falls has been recognized," said Rhode Island
Revenue Director Rosemary Booth Gallogly, who orchestrates the
state's oversight of distressed municipalities.
"This is yet another positive sign that we have begun a new
chapter for the city."
Central Falls, one of Rhode Island's poorest cities, still
faces serious financial challenges, including growing expenses,
weak projected revenue growth and a small and shrinking tax
base, Moody's said.
Since former Mayor Charles Moreau resigned in September and
agreed to plead guilty to a federal fraud charge that he steered
contracts to board up foreclosed houses to a long-time friend
and political contributor.
Central Falls has scheduled a special primary election for
Nov. 6 and a special election on Dec. 11 to elect a new mayor to
serve the rest of Moreau's term.