Four southeastern Connecticut municipalities have made the latest list of 25 distressed municipalities by the state Department of Economic and Community Development based on nine economic and demographic factors.

The designation allows Montville, New London, Norwich and Preston to use the designation to boost scores in certain state and federal grant applications. Officials in the listed towns had mixed reactions to the designation.

Preston was a surprise addition this year — town officials also were surprised when the town made the list in 2014 and 2015 — and questioned the state factors that led to the town’s designation as distressed.

Norwich routinely uses the designation to help the city’s chances on state and federal grants for utilities, education and city projects, officials there said.

Kolie Sun, DECD senior research analyst, said nine factors are used for the distressed municipalities list: per capita income, percent change in per capita income, poverty rate, percent of population change, unemployment rate, percent of employment change, age of housing stock, percent of residents 25 and older who are high school graduates and equalized grand list per capita.

Sun said Preston moved back onto the list based on a few factors. Preston saw a 13.7 percent drop in the percentage of employment from 2007 to 2017, ranking the town 155th of the 169 towns in the state in that category.

“That was heavy weight pulling the town down,” she said. Preston’s equalized grand list per capita also dropped from $38,123 last year to $37,020 this year, a drop from 118th to 120th in the state.

“For the distressed municipalities, we are comparing towns to the rest of the towns, not the state overall,” Sun said. “In 2017, Preston per capita income change ranked 81st place. That means Preston’s per capita income change was lower, and a lot of other towns are doing better than Preston.”

First Selectman Robert Congdon questioned the ranking and income changes. He said he knew of no large employment or income loss in recent years.

“With the hospital development, we’ll be off,” Congdon said, referring to plans by Mohegan Gaming & Entertainment for a $400 million to $600 million development project at the 393-acre former Norwich Hospital property.

Norwich City Manager John Salomone said even though Norwich is doing better economically, some criteria would make it difficult for Norwich to get off the list. Norwich and New London both have older housing stocks and many rental units that house working-class families and transitional workers. Salomone said Norwich is on sound financial footing.

“We’re an old community,” Salomone said. “Some of the homes that are pre-1939, these homes are not necessarily in bad shape. People need to realize it doesn’t mean we’re not doing things that are fiscally sound. Our bond rating is AA. We just got Fitch’s ratings that reaffirmed that. The indicators we can control, we do well at.”

Norwich does take advantage of the distressed municipality designation to apply for government, utilities and education grants.

Norwich Public Utilities spokesman Chris Riley said distressed municipalities are given an additional “priority point” in applying for highly competitive grants and low-interest loans through the Drinking Water State Revolving Fund and the Clean Water Fund for upgrades to the city’s sewer and drinking water systems.

Since the 2015-16 fiscal year, NPU has received $601,110 in grants and $5.3 million in low-interest loans from the Drinking Water State Revolving Fund and another $125,466 in grants and $861,611 in loans from the Clean Water Fund.

School Superintendent Abby Dolliver said the school district uses the designation as a contributing factor in its numerous grant applications. She said the city’s ranking “verifies who are kids are,” an indication that Norwich has many families who are struggling financially.

Groton was not included on the distressed municipalities list for the fifth year in a row. Groton was on the list in 2012 and 2013 but dropped off in 2014.

“It shows that Groton has improved economically, and I believe continues to be on track to be one of the best places in Connecticut to do business or to live,” said Town Manager John Burt.

Burt named the stabilizing factor and now growth of Electric Boat as a major reason for the economic improvement. He also gave credit to city and town leadership and to the Office of Planning & Development Services "for promoting Groton and creating an atmosphere where people want to do business.”

Cities and towns that drop off the list still are eligible to use the ranking in grant applications for five years following removal, Sun, the DECD analyst, said.

Sun said a few factors contributed to Montville’s continued designation as a distressed municipality. The town’s relatively lower per capita income, negative growth of employment from 2007 through 2017, and lower growth of per capita income. Montville dropped off the list in 2015 but has returned since then.

“The towns that are on the border lines come on and off depending on how the other towns perform, relatively,” Sun said.

c.bessette@theday.com

Day Staff reporter Kimberly Drelich contributed to this story.