Norwich — City leaders made a plea Monday to U.S. Rep. Joe Courtney, D-2nd District, and federal officials to reverse a ruling that the city cannot use federal community development block grant funds to help residents pay utility bills, saying the assistance is vital to keep people from becoming homeless.

Courtney and three officials from the Department of Housing and Urban Development met with several city and Norwich Public Utilities officials who recently had learned that CDBG money couldn’t be used to help people pay NPU bills because NPU is a city-owned utility. HUD likened the assistance to a double payment if the utility is owned by the same government agency as the grant recipient.

During the nearly hourlong meeting at City Hall, city officials stressed that NPU is under a separate governing entity and that the City Council has no authority over its financial decisions, other than to receive the utility’s $100 million budget each spring. City charter requires NPU to pay the city 10% of its gross revenue for electricity, water and natural gas divisions each year.

HUD New England Regional Administrator David Tille and Hartford office Field Office Director Suzanne Piacentini and Director of Community Planning and Development Alanna Kabel requested a written explanation from the city and NPU, and promised a quick decision on whether NPU customers can be assisted.

To date, Norwich has received two CDBG coronavirus relief grants, $506,569 in April and $544,143 announced Sept. 11 but not yet allocated. The City Council approved a plan to use the first grant to provide assistance to small businesses and nonprofit agencies to serve their clientele safely during the pandemic and $200,000 to Norwich Human Services to help residents facing economic hardships with rent, utility bills, car payments and emergency needs.

Mayor Peter Nystrom said city leaders have not decided how to use the new CDBG coronavirus grant, but the same priority needs still exist. Norwich Community Development Supervisor Kathryn Crees said she will advertise soon for grant proposals from potential recipients of the second grant, which makes it urgent to resolve the issue over whether utility bills can be paid with the grant.

“It’s treated as an arms-length transaction,” Crees told Courtney and the HUD officials. “We’re not giving money directly. We’re paying the utility bill for the person that can’t pay their bill, that quite frankly, could end up homeless, because they don’t have power and a lot of landlords require that you have services or you're evicted, and the eviction prevention is only until December.”

NPU spokesman Chris Riley told the group that NPU has taken several steps to help customers, making special payment plans with nearly 800 NPU customers, sharply reducing interest owed on back bills, and extending shut-off moratoriums through the summer.

"We want to make sure we are as transparent and as aggressive as we can be in advocating the need for our customers,” Riley said. “We see firsthand day after day after day people having real difficulties paying their bills, and we’ve done everything we can to work with them.”

Riley said with more flexibility in the CDBG coronavirus grant, “we could make a real difference in the lives of thousands of people right here in Norwich.”

Norwich Human Services Director Lee Ann Gomes said her office has received more than 500 applications for rent and utility assistance. She said many families have short-changed or stopped paying utility bills so they would have enough money to stay current on rent. But she said that is becoming more and more difficult with the prolonged COVID-19 shutdowns and job losses.

“I think the wheels are about to come off,” Gomes said.

City officials estimated about 4,000 of the city’s 40,000 residents work at the region’s two casinos, which furloughed nearly all their employees when they shut in March for more than two months. In mid-August, Mohegan Sun said it had brought back more than 3,800 employees, about 75% of those furloughed, and would lay off those not called back to work by the end of September. At the end of July, Foxwoods said it had brought back about 1,900 employees — slightly less than half its pre-coronavirus workforce.

In addition, the Freeport McMoRan copper products plant in Norwich shut down permanently, and Atlantic City Linen Supply has temporarily shuttered its Norwich facility. The laundry company announced last week that 123 employees furloughed since March were being laid off.

Other service sector employees, including restaurant workers and bartenders, have lost income during the pandemic, city officials said.

“I think we’re going to be able to work this out,” Courtney said.

c.bessette@theday.com