IE 11 is not supported. For an optimal experience visit our site on another browser.

Rhode Island inches out of deep, dark recession

Corruption, scandal, and bankruptcy have battered the tiny town of Central Falls. Can the town's new young leaders help it come back?

CENTRAL FALLS, Rhode Island — James Diossa was in college when the housing meltdown first hit his hometown. He was only an intern when Central Falls started careening towards bankruptcy. He was the council member ever when the city’s mayor came under investigation for corruption.

Now Central Falls is looking to Diossa for help. The 28-year-old Democrat has become its mayor, tasked with turning around the poorest city in Rhode Island—the state with the highest unemployment rate in the country.

“The comeback city,” Diossa said, “That’s what we’ve been screaming, ‘We are the comeback city!’” 

He’s turned it into a hashtag on Twitter, of course.

Central Falls was the only Rhode Island town to go bankrupt. But its troubles reflect the economic and political dysfunction that’s left communities across the country wondering whether America can pull itself together.

Once the cradle of the nation’s industrial revolution, Central Falls had been slowly turning into its graveyard. Then the Great Recession made things even worse—along with unscrupulous leaders who wanted to profit from the city's suffering. And it’s fallen to Diossa to deal with the mess.

“Everyone looked at me as the different one, the young one, the new guy,” says Diossa, who was first elected in 2012 after the former mayor, Charles Moreau, pled guilty to giving a friend a fat, no-bid contract to board up the city’s foreclosed houses. In exchange for the favor, Moreau got a cheap furnace installed in his home.

Meanwhile, Central Falls was hurtling towards bankruptcy, and Moreau, who was first elected in 2003, disavowed himself of any responsibility. “I didn’t create the problem,” he said in late 2011.

The scars still haven't healed. Unemployment in Central Falls is still 10.4%, significantly above the statewide average—and the nation’s. Boarded-up buildings still pockmark the city, which spans just one square mile. And average home prices are only 55% of what they were during the peak of the housing boom.

One resident, Manuel Perez, has been looking for work since he was laid off six months from his factory job. Originally from the Dominican Republic, he’s been in Rhode Island for five years and feeling down on his prospects in America. “I thought it was going to be better, but it was feo,” he said. Ugly, nasty, foul.

He surveys the street from the steps of a social services agency, surrounded by stores that promise to take food stamps and WIC. The last mayor “took all the money and left,” Perez said. 

Fredy Garcia, 42, paints a building along Broad Street on May 26, 2014 in Central Falls, Rhode Island.

It’s a feeling that haunts old factory towns across the country: The sense that the U.S. has already seen its best days, and that our political leaders are more interested in helping themselves than anyone else. As a town of new immigrants, however, with a majority Hispanic population, Central Falls is also a glimpse into America’s future.

Unlike neighboring mill towns, where grey-haired retirees and veterans are the few to be found on Main Street, Central Falls’s main drag is filled with backpack-strapped kids and giggling teenagers after school lets out.

There are still a few relics from Central Falls’s heyday: Stanley’s has been serving hamburgers on Dexter Street since 1932. But they’re now surrounded by Guatemalan bakeries, Salvadorian pupuserias, Mexican taquerias, and Colombian restaurants—including the one Diossa’s great-uncle opened in the 1970s. 

Diossa is not only town’s youngest mayor, but also the first Hispanic to hold the office. He knows the symbolism of it all matters. “With me being so young, it’s allowed people to say there’s fresh, new young blood,” he says.

But there are decades of bad decisions to be undone.


Rhode Island, the nation’s smallest state, has a long track record as the dark underbelly of capitalism—and a reputation for corrupt leaders who’ve tried to profit from it. 

Once the northern hub of the slave trade, the state’s mills and factories spawned “a commercial aristocracy that corrupted the American stock in Rhode Island and laid the foundation of the present financial and political System of corruption in the State,” muckraking journalist Lincoln Steffens wrote in 1905.

Corruption scandals, big and small, have defined political life ever since. Former Gov. Ed DiPrete pled guilty to bribery and extortion in the late 1990s. Former Providence Mayor Buddy Cianci was forced out of office twice, most recently handed a five-year sentence for a racketeering conspiracy; he’s now hinting at another run for the office.

In 2011, three North Providence council members pled guilty to accepting bribes to green-light a supermarket development. And just this year, Rhode Island state Rep. Gordon Fox resigned as House Speaker after the FBI raided his home and office.

Central Falls, Rhode Island is seen from Jenks Park.

Many insist Rhode Island isn’t as crooked as people think, pointing to an analysis last year showing the state has the country’s strongest ethics and transparency laws. When it comes to convictions of public officials per capita, the state is almost on the bottom of the list in a 2008 study; a more recent analysis put it in the middle of the pack. 

But word travels fast in this tiny state, where residents joke that a trip that takes more than 10 minutes means you should pack a bag. By reputation, Rhode Island ranked as the most corrupt state in a 2003 survey of statehouse reporters. 

“There’s a half a degree of separation in the whole state—we’re only one media market,” said Scott Wolf, executive director of Grow Smart Rhode Island. That means that any scandal tends to be amplified—and the players may seem all too familiar members of the old political machine.

“There seems to be a lot of our politics being personal and transactional, not ideological, a battle of ideas,” says John Marion, president of Common Cause Rhode Island, a good government advocacy group. “People seem to be drawing on the same recurring cast of characters—the same person, the same deal.”

Both the perception and reality of a corrupt, self-dealing, dysfunctional government has made it even harder for Rhode Island to pull itself out of the hole. 

“There’s no question that corruption costs communities,” says Rep. David Cicilline, a Democrat who represents Central Falls in Congress. “It cost communities in terms of lost opportunities. It costs communities in terms of public moneys. And most importantly it has an impact on the investment environment.”

“It makes somebody go ‘hmm’—nobody wants to move their business to a den of iniquity,” adds John Gregory, president of the Northern Rhode Island Chamber of Commerce. 

A boarded up home on Sylvania Street in Central Falls.

Even when they’re genuinely trying to act in the state’s best interest, public officials have made it hard for residents to trust them with the purse. In 2010, then-Gov. Don Carcieri spearheaded a disastrous investment in a video game company owned by baseball legend Curt Schilling, putting taxpayers on the hook for $75 million after the startup failed. 

“It just reinforced the idea that we can’t shoot straight,” says Saul Kaplan, former executive director of the Rhode Island Economic Development Corporation.  

The biggest casualties of Central Falls’s bankruptcy also believe failed leadership is to blame. By the time it declared insolvency, the city had racked up $80 million in unfunded pension and health-care liabilities. Under a court-approved plan, more than 130 retired city employees will have their pension cuts as much as 55%.

Bruce Ogni, president of the Central Falls Police Retirees Association, said city workers had long worried about the state of their pensions, but City Hall refused to release the actuarial estimates—or to raise taxes to ensure benefits were funded adequately.

“Every year they were in office, since they wanted to win their next term, they didn’t want to [raise taxes],” says Ogni. “To save themselves, they hung us.”

Central Falls Mayor James Diossa joins VFW Post 1271 for their annual Memorial Day ceremony at Quinn Square in Central Falls.

Diossa was a member of the city council at the time—a seat he decided to run for while interning for Democratic Sen. Sheldon Whitehouse and spotted a news story about the race. When Moreau sued the state for stripping him of power after the city entered receivership, Diossa was the sole council member who refused to back him. 

“The prior administration didn’t do a great job as far as keeping the community informed, and the community really lost faith,” he told The New York Times in 2011.

In a town of newcomers, the scandal was especially disheartening. “There’s a large Latino population that came over from different countries, they already had this notion of corruption, and seeing this here didn’t help,” Diossa says. 

But he also believes Central Falls’s troubled years were a necessary, even inevitable step in helping it move forward.

“It had to happen in a city where transparency and access was so hard,” he said.  

Diossa recalls struggling to get basic budget numbers from City Hall when he was a council member. “It opened up the books, so we could really know what was on the books. It filtered out the corruption,” he said.

In the mean time, however, ordinary Rhode Islanders have continued to lose their jobs and their unemployment benefits. Despite months of lobbying by Democratic Sen. Jack Reed, who frequently mentions his state’s economic woes, House Republicans have refused to renew the federal jobless benefits that expired in December.

Soon Diossa’s own father, Bernando, will be joining their ranks: The factory in Central Falls where he’s worked for thirty years is closing its doors in September.


Bernando Diossa moved from Medellin, Colombia to Central Falls in 1983, joining family members who had already come years earlier. In the early 1960s, workers from Medellin had been recruited to help fill a labor shortage at the city’s mills, joining earlier waves of Irish, French-Canadian, Portuguese and Polish immigrants. 

Even after the factory jobs started to dry up, immigrants continued to come from all over Latin America to look for work and unite with their families in Central Falls. About 60% of the city’s 19,000 residents are now Hispanic. But like so many other industrial American towns, the engine for Central Falls’s economy has been slowing for decades.

When giving directions in Rhode Island, Providence Mayor Angel Taveras explains, “We talk about the places where things used to be.”

In Central Falls, there’s the place in where they used to sell ice cream by the river; the defunct railway station where the trains used to stop; the abandoned mills that used to make chocolate, brooms, shoelaces, and toys; the shuttered VFW hall with two cannons left out front that were apparently too unwieldy to discard.

For decades now, Diossa’s family has worried Bernando might lose his job at Osram Sylvania, the lighting manufacturing plant where he’s worked as a machine operator since he first came to Central Falls. “It was slowly dwindling down—there were always conversations that he wasn’t going to have a job anymore,” the mayor said.

That day finally came this March, when Osram Sylvania announced that was shuttering three U.S. plants. That meant 88 workers laid off in Central Falls—including the Bernando Diossa.

The mayor quickly jumped on the phone and convened a meeting at City Hall a few days later, gathering local business leaders and officials to come up with a game plan to help the laid-off workers and find another tenant for the factory.

Diossa’s message: “Let’s take care of the people first—we can take care of the building later,” recalls Gregory, the local Chamber of Commerce president, who attended the meeting.

The Osram Sylvania Plant in Central Falls will close its operation in September leaving 88 workers without jobs, including Mayor Diossa's father who has worked at the plant for 30 years.

A few new employers have come to town since the bankruptcy, like ESS Solutions, a gun parts manufacturer. But with more advanced technology, such companies need fewer workers. And the remaining jobs haven’t been enough to convince the younger generation to stay here after they’ve finished school. “The hospitality jobs that are available and retail jobs, they aren’t enough to sustain the community,” said Mario Bueno, executive director of Progreso Latino, a social services organization in Central Falls. “We need to have a clear plan.”

When James Diossa was still in elementary school, the city thought it had found one solution to its woes: A privately-run jail, built on the site of a former junkyard. But the Wyatt Detention Center would undergo its own scandal decades later, dealing a blow to the city’s image—and its pocketbook.

In 2008, a detainee died in custody with a fractured spine and advanced cancer that had gone undiagnosed and untreated. An investigation revealed that employees at the jail denied him a wheelchair, dragged him from his cell while he was screaming in pain, and told him to “stop whining.” The case prompted federal officials to end its immigration detention contract with the facility, which had been producing $50,000 a month in revenue for the city.

Like many of the residents in Central Falls, the detainee who died was an immigrant. He was a computer engineer who had overstayed his visa.


Hugo Figueroa, an IT specialist and father of two, sat on Wyatt’s board of directors, hoping to help overhaul the troubled facility. 

"To save themselves, they hung us."'

But at Diossa’s urging, Figueroa gave up the seat to run for the city council last year. Stephanie Gonzalez, 27, whose family came from Colombia, and Shelby Maldonado, 26, were also elected to the council last year. Figueroa, 45, is now the Rhode Island’s first Salvadoran-American elected official, and Maldonado is the state’s first elected Guatemalan-American.

Voter turnout in 2013 was minuscule, and Diossa ran unopposed. But he was heartened to see more Latinos and young people running for office, and successfully ousting the old guard. In the 2012 special election, held after Moreau was arrested, Diossa handily beat a former police chief with close ties to Moreau.

Diossa has kept only one official from Moreau’s administration, replacing the rest with a mix of veteran staff (his chief of staff used to work for Cicilline) along with young blood; Theresa Agonia, his 22-year-old PR coordinator, graduated from college just last year.

Every Monday after work, Diossa gathers young city employees to play pick-up soccer together. He keeps City Hall open late one day a month so more residents can drop by, and picks up the phone when he’s not sure how to proceed on an issue. (“When he doesn’t know something, he asks a question,” said Cicciline.)

Up at 5:30 a.m. most days, Diossa tries to stay focused on the job. His main companion these days is his golden retriever, Ella. “I’m dating Central Falls,” he joked. 

In his off hours, wearing jeans and a baseball cap, Diossa looks like any other twenty-something. He's low-key, almost hesitant; answering questions, he'd rather hold back than risk blundering. But he’s quick to shake hands the moment he’s recognized. He’s working on asserting himself more. “My chief of staff says, you have to be more—not demanding, but to make sure my message gets across,” he said. 

Robert Scappini, a local high school teacher, is encouraged by the town’s youthful revival. Along with all the other teachers in Central Falls, he was fired and rehired in 2010 as part of the school board’s attempt to hit the reset button. The high-school graduation rate has since leapt from 52 to 70%, and test scores are climbing. This year, the school is sending a student to Harvard for the first time in anyone’s memory.

Youths play at a park along High Street on Memoiral Day in Central Falls.

“What Central Falls needs is a middle class—it needs the intelligentsia, the active young people developing websites,” says Scappini.

Scappini himself is working on a proposal to redevelop a long-defunct hydroelectric dam in Central Falls. He’s even turned the project into a class assignment. (“Lighting around the bridge!” reads one proposal. “Every Saturday night different kinds of food!” says another, entitled, “Restoring the ♥ of Central Falls.”)

Central Falls has already begun to repurpose some of its old factory buildings and has touted a five-year tax credit for redevelopment, but the early results have been mixed. A refurbished thread factory spanning the border with neighboring Pawtucket owes $410,000 in back taxes to Central Falls, according to the Providence Journal. A local indie band rented the space to record an album in 2011, but it’s struggled to attract permanent tenants. 

Another, more successful redevelopment turned an old Central Falls mill into a luxury condo complex. The developer was nearly forced to sell the building in 2011 when he owed $262,000 in back taxes, but the project managed to survive the recession and recently broke ground for a $13 million expansion—with Diossa, among others, in attendance.

But a scattershot approach to development won’t be enough to save Central Falls—or any other distressed factory town. “If you have the right pieces in place, it’s easier to attract businesses to use these refurbished buildings,” says state treasurer Gina Raimondo, who’s running for governor this year. “The problem is the overall economy is so depressed, and the political culture is a deterrent for business, the only way to get folks to go into old buildings is to give them a one-off tax deal.”

Ogni, the retired police officer, says that he’s hearing the right things from the new mayor, but doesn’t know whether any of it will be enough to save Central Falls. “It seems like he wants to do the right thing, it might be a city that’s too small to survive on its own,” he says.


Even when it comes to the city’s trash, there’s only so much Diossa can do on his own.

A federal judge allowed Central Falls to exit bankruptcy only after the city agreed to an austere budget and mandatory annual tax hikes through 2017. That’s left Diossa relying on private donations to help move the city forward.

"... nobody wants to move their business to a den of iniquity."'

Actor Alec Baldwin is headlining a fundraiser for the city library this week, having first come to its rescue in 2011 when the library’s closure made national news. Actress Viola Davis, who grew up in Central Falls, recently gave $60,000 to the high school, which is one of the lowest performing in the state. Another private donor is pledging $100,000 to help buy a decrepit Victorian mansion across the street from the school and turn it into a tutoring center.

“If a person can donate $100,000, they trust what’s going on,” said Diossa of his efforts to revitalize the city.

Diossa has even used crowdfunding to help fill in the gaps: The city raised $10,000 online last fall to install new trash and recycling bins in Jenks Park outside of City Hall. The old plastic bins kept toppling over, spilling trash all over the yard. The mayor proudly tweeted photos of the new bins this week. 

Even minor changes have caught the residents' attention. “Business is not great like before,” said Sun Han, who runs a clothing shop in a building she bought twenty years ago for more than it’s worth now. But, she added, the streets are different. “It’s clean. I can notice.”

Diossa is pursuing other, less appealing plans to help the town recover: He’s lobbying authorities to bring those held in federal custody, including immigrant detainees, back to Central Falls. 

“It’s been a priority because of the role it plays in terms of producing revenue,” he said. “I’m not a really big fan of having a prison in Central Falls, but we have to deal with the prospect of it going again.”

Central Falls Mayor James Diossa joins neighboring town, Lincoln, for their Annual Memorial Day Parade on May 26, 2014.

In the absence of broader action, towns like Central Falls will continue to remain vulnerable whenever the economy goes south. “An entity so small lacks the resilience to shocks, with no diversity of resources, and very little margin of error for their decision-making,” said Matt Fabian, managing director for Municipal Market Advisors.

Rhode Island’s gubernatorial candidates are promising a turnaround—for real this time. Raimondo and Taveras, both Democrats, warn against the kind of quick fixes that led Rhode Island disastrously astray in the past. “We’ve had this philosophy that if we just bring in the right company, it’s going to save Rhode Island—that needs to change,” Taveras said.

To get Rhode Island going again, “we need a strategy,” said Raimondo. “It’s not spending money—it’s wisely investing.” But the kind of investments that both Raimondo and Taveras are looking for—in infrastructure, education, and tourism—will take real public dollars. Central Falls can't even fix its main commercial drag by itself, since Dexter Street is a state road. And the city could only afford to repave its side streets after striking a deal with the local water supply board to cover most of the cost.

Diossa’s father, for his part, still doesn’t know what he’s going to do after the factory closes in September, and neither does the mayor. But at 52, he’s not ready to retire.

“He’s still very young, he feels young, he’s healthy,” said Diossa. “He’ll look to find another a job.”