Chesterton Tribune

Mittal tax abatement extension fails on 4-1 Burns Harbor vote

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Ten months after a public hearing on the request was held, the Burns Harbor Town Council rejected ArcelorMittal’s petition for 10 more years of tax abatement.

Vote Wednesday was 4-1 with member Mike Perrine voting no. Mittal’s current abatement on new personal property investments ends on March 2, 2013.

The company had estimated annual capital expenditures of $10 million to $20 million or more in the coming decade to install, upgrade and modernize equipment.

In return for an extension, Mittal would have paid approximately $2.5 million to retire the town’s outstanding sewer bonds and reimburse payments already made in 2011/12.

There was no preliminary discussion as council member Gene Weibl moved to reject the six-page abatement agreement and Greg Miller seconded. A vote immediately took place with Jim McGee and Jeff Freeze joining the majority. Both Weibl and McGee are employed by Mittal.

As the meeting was concluding, Weibl said the council is not looking to close the door on the town’s largest taxpayer, instead wanting to establish a partnership. “Please come and sit down with us. We just don’t feel this agreement was the best for the people of Burns Harbor.”

Weibl also cited the inexperience of himself, Freeze and Miller as new council members for thinking they could rescue the proposal but understand now a decision could have been made in February.

Mittal filed last spring for the abatement extension under the former Town Council, which opted in October to do nothing and let the new council deal with the matter after Jan. 1.

Perrine, a council veteran, was asked why he voted no. “You watch what happens in the town in the future and everybody will figure it out.” He previously warned that if Mittal can’t remain competitive, the international company would have little reason to remain in Burns Harbor.

He also noted the steelmaking plant has had tax abatement for several years and it hasn’t destroyed the town, and that Mittal gave Burns Harbor its sewage treatment plant and operates it for the town at no charge.

As for calls to renegotiate the agreement, “Do we have the ability to go back and talk to them? We’ll find out,” said Perrine.

After the meeting Miller released a lengthy statement. He said it wouldn’t make sense for the town to have recently raised its tax rate for the cumulative capital fund to make street and infrastructure improvements, then undercut a portion of that potential revenue by allowing Mittal to pay less taxes.

Granting the abatement also shifts the levy-controlled tax burden to other town property owners, said Miller, and impacts taxpayers in affected taxing units like Duneland Schools. “(D)iverting revenue streams from the schools should be viewed with caution. Fortunately, revenue replacement for the schools can be negotiated as part of a new deal.”

Another problem with the proposed agreement, said Miller, was its blanket waiver of annual filings with the town, denying elected officials their oversight responsibilities.

In 2003 when the initial 10-year abatement program was approved for then-owner ISG following the Bethlehem Steel bankruptcy, there was an overriding benefit for the tax breaks, said Miller, but nine years later the cost vs. benefit equation for the town has changed significantly.

“Although I believe the town of Burns Harbor remains open to a mutually beneficial abatement agreement, we require a reset in our relations with ArcelorMittal and a fresh start on negotiating a deal” as equals and partners going forward, according to Miller. “The days of dictating terms to us are over.”

From the audience during public comment, former Town Council member Cliff Fleming supported reaching out to the company as a valuable member of the community.

Town financial advisor Dan Botich of Cender & Company was present Wednesday. After the meeting he said, based on Porter County tax records, for the years 2007 payable in 2008 through 2011 payable in 2012 alone, Mittal realized $9,612,613 in total tax savings due to the current abatement.

Assessed valuation deductions at the Burns Harbor plant ranged from a low of $83,014,910 for 2007 to a high of $131,904,590 for 2010.


Posted 5/10/2012