Central Falls, R.I., with its bond ratings still junk-grade after going through bankruptcy, is seeking donations online for a park project with help from a so-called crowdfunding platform.
The 19,000-population city that exited Chapter 9 in October 2012, hopes to raise just over $10,000 to buy five steel trash cans and recycling bins for Jenks Park, adjacent to City Hall, and fashion the bins as art pieces.
"We look at Jenks Park the way New Yorkers look at Central Park," said Mayor James Diossa.
The fundraising drive began Sept. 27. The city is teaming with Citizinvestor Inc., a platform that includes East Providence, R.I., attorney Tony DeSisto, who co-founded the company to provide alternatives to civic projects while working on the Citizen Advisory Committee of Tampa, Fla.
Other Citizinvestor projects posted on the company's website include an enclosed dog park in Framingham, Mass., a community garden at Philadelphia's Rivera Recreation Center and fire rings at Memorial County Park in San Mateo, Calif.
Central Falls is also working with Providence nonprofit Steel Yard on design details.
As of Tuesday, the city has raised $1,125, with 45 days remaining to attain a goal of $10,044. "Citizens only pay their portion of the project if other citizens step up to the plate and commit to fund 100% of the stated cost," Citizinvestor said on its website.
Central Falls, which covers but one square mile, became the first bankrupt Rhode Island community to file for bankruptcy in August 2011, citing an $80 million unfunded pension liability in its Chapter 9 filing.
It exited without defaulting on its bonds, thanks to a state law passed one year earlier that gave bondholders priority in a bankruptcy filing.
While under Chapter 9, Central Falls restructured its pension debt, resulting in cuts of up to 55% for police and fire retirees. The city emerged from bankruptcy protection with a six-year balanced budget.
Although Central Falls' bond rating has improved, borrowing still looms as costly. Moody's Investors Service rates Central Falls B1, and Standard & Poor's rates the city BB.
"The bankruptcy process left the city short-staffed and left many municipal projects unfunded," said Diossa, whose aides pitched the idea. "We're looking for ways to be innovative. I'd like to see this project serve as a model for other cities in Rhode Island."
Diossa, who turned 28 in August, won a special election last year after Rhode Island officials restored local control. He will run unopposed in November and serve a three-year term. He is a Central Falls native and the son of Colombian immigrants.
Central Falls "has been among the local government 'outliers' as we have been referring to them over the past few years which have received a considerable amount of attention from the media, investors and the general public," said Janney Capital Markets director Tom Kozlik.
"Traditionally, local governments have accessed capital through the bond markets. That avenue is cost prohibitive for Central Falls as it exits bankruptcy protection due to the city's below-investment grade bond rating," Kozlik said.
"While this is an innovative way to raise smaller amounts of donated funds for specific local projects, we do not see it as an alternative to the almost $4 trillion municipal bond market," Kozlik said.