This year's list of the state's 25 distressed municipalities provided a surprising switch for officials in Groton and Norwich when it was released by the state Department of Economic and Community Development late last month.
Norwich was not on the list for the first time since 1999 while Groton appeared on it for the first time since 2000. New London remains among the distressed.
"It's certainly not a list I would aspire to be on," Groton Town Manager Mark Oefinger said. "But we are potentially eligible for a little bit more support. The state has come up with this category in order to help direct investment for communities that need the help."
He said the immediate impact appears to be minimal but he plans to further investigate how Groton may be eligible for certain urban development grant programs.
Groton ranked 13th overall on this year's roster, which takes into consideration nine categories and compares all of the state's 169 cities and towns. Keys to Groton inclusion were a flat population - a 0.5 percent increase over the past decade - and a 0.9 percent net loss in jobs between 2000 and 2010.
Norwich officials were equally unsure whether to cheer or protest their new position. City officials were puzzled at the removal, saying per capita income of residents remains low and the city's need for social services funding remains strong.
This year, Norwich ranked 34th among all the state's cities and towns.
Kolie Sun, a senior analyst at the Department of Economic and Community Development, said the changes reflect new data obtained from the 2010 census along with ongoing data gathering by the American Community Survey of the U.S. Census Bureau.
The new census data "has changed the landscape," Sun said.
She said it appears Norwich dropped off the list mostly based on a jump in population and employment.
"It appears people are moving there for the jobs," Sun said, "That's a strong point for Norwich."
The city saw a big boost in population, a 12 percent increase in the 2010 U.S. Census over the 2000 Census, and a 28.7 percent jump in per capita income over the 10-year census period. The city saw an employment jump of 12.9 percent - 10th highest in the state.
A sharp increase in Norwich's Asian population, from 2.1 percent to 7.7 percent of the city's new total of 40,493 residents, helped elevate Norwich to the status of largest municipality in New London County in the 2010 Census.
Local economic development officials, Asian community leaders and some new residents said Asians were attracted to Norwich for jobs at the region's two casinos. Apartment houses and condominium complexes have been built or renovated along walking or bus routes to the casinos.
But Norwich still ranks among the lowest in the state when it comes to per capita income - $26,702 - and unemployment rate - 9.6 percent.
"We're doing a careful analysis of this," Norwich City Manager Alan Bergren said. "Is this a good thing? A bad thing? Something in between? We're looking into other programs, such as the enterprise zone, and how that affects our grants."
If Norwich remains off the list, the city still wouldn't have to worry about losing distressed municipality grant money for the next five years, state officials said. Towns removed from the list remain eligible for grants for that period to help ease them off the programs, officials said.
And Norwich does count on those grants. With the distressed municipality designation, the city was eligible to charge a higher real estate sales conveyance tax, for example, and could lose half its conveyance tax income after the five-year grace period ends. The current city budget estimated $390,000 in real estate conveyance tax revenue.
Norwich Human Services Director Beverly Goulet said she cites the distressed municipality listing in "every grant application we file," including funding for job training programs. She said the needs are still there and worried that the city could slip again if services are not provided.
"We still get the benefits for five years, which is very, very important," Goulet said. "We have a large number of people at or below the poverty level, and we have a great many people who have been foreclosed upon."
Norwich Comptroller Joseph Ruffo said he is researching the statistics provided by the state and checking the city could lose by being removed from the list. He said city officials were especially puzzled to see that the town of Deep River made the distressed municipalities list, while Norwich did not.
"It's a formula and we're trying to get some weights on the formula," Ruffo said. "We should say we're happy we're off the list, but we don't know why."
Groton also uses its status as a targeted investment community because of its enterprise zone to charge a higher real estate conveyance tax, which is one of the benefits of being labeled as a distressed municipality.
The enterprise zone offers incentives for businesses, such as tax abatements, corporate business tax credits and real estate conveyance tax exemption, according to the state.
Michael J. Murphy, Groton's director of planning and development, said Groton was designated as an enterprise zone municipality by special legislation in the wake of defense industry downsizing and severe cuts at Electric Boat in the 1990s.
Oefinger said he is exploring possible benefits for the town at the request of the town council.