Chesterton Tribune

Burns Harbor ArcelorMittal tax actions could have huge impact on Duneland Schools

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“Is this good or not good for Burns Harbor?” asked Jim McGee, the Town Council president.

Replied Indianapolis financial consultant Ted Sommer, “Yeah, for Burns Harbor it’s great.”

But according to speakers for the Duneland School Corp., the projected loss of tax revenue to them --- under one scenario a potential $1.3 million a year --- is unacceptable.

Questions over whether the town should extend for an additional 10 years current tax breaks for steelmaker ArcelorMittal USA went unresolved Wednesday following a lengthy public hearing attended by at least 20 people including Mittal representatives who made only brief introductory remarks.

At the request of member Cliff Fleming, the council voted 5-0 to meet with Mittal representatives, those of affected taxing units and their respective financial consultants to determine whether a compromise is possible.

While it’s a new round of tax breaks on future Mittal personal-property improvements now on the table extending benefits set to end in 2013 to 2023, Fleming said granting such long-term tax abatement would bind the next Town Council’s hands; he suggested negotiating shorter-term abatement on a project-by-project basis or even placing Mittal in a tax-increment-financing or TIF district with negotiated tax disbursements to Duneland and other taxing units at Burns Harbor’s discretion.

Commented Sommer of the London Witte Group, “I’ve never seen a TIF district parcel funds to other entities.”

Under the terms of Mittal’s pending request the town agrees not to TIF the steel plant during the new abatement’s term in return for Mittal paying off almost $3 million in municipal sewer bonds as those payments come due.

Typically, a TIF captures all property taxes on new improvements in that district for the unit alone that creates it.

District 4 State Sen. Karen Tallian, D-Ogden Dunes, told the council, “You have a grave responsibility that obviously goes way beyond the Town of Burns Harbor. Take a county-wide perspective on what you’re doing.” Mittal’s 3,500 jobs and $200 million annual payroll have a regional impact, she emphasized.

Duneland School Board member Ralph Ayres said a possible $1.3 million annual loss to the school system is substantial, especially in light of the fact it doesn’t receive supplemental revenue from option income taxes, casino revenue, Major Moves money or lottery proceeds like non-school government units do.

Dirk Baer, Duneland Schools superintendent, said, “Abatement is a four-letter word in education. We will be impacted directly, more so than anybody else.” No amount of bake sales or school fundraisers could ever make up the projected lost revenue, he added.

Under the same scenario based on $20 million in new Mittal improvements per year, Burns Harbor’s tax revenue from the plant would go from $1,391,348 to $929,514 with abatement and for Porter County from $1,984,444 to $1,325,742.

Porter County auditor Bob Wichlinski said county officials were there neither to endorse nor oppose Mittal’s tax abatement; he urged council members to remember that what one jurisdiction does affects other taxing units, too, under the state’s circuit-breaker property tax caps.

After the meeting Porter County assessor Jon Snyder confirmed that the Porter County Council granted tax abatement for the new Porter hospital on U.S. 6 in Liberty Township.

Records show in 2009 the council approved a 10-year term that will reduce the hospital’s total tax bill over that period from an estimated $29 million to $16.7 million. At the time Duneland Schools opposed the hospital abatement as well.

James Bennett of JM Bennet & Associates, financial advisor to the Porter County auditor / treasurer / assessor, said Duneland Schools’ debt service must be paid first at the expense of other funds setting up a potential cut in services or a voter referendum seeking to raise more money.

Bennett also noted as a local taxpayer that while Mittal is proposing about $10 million to $20 million in annual improvements to be abated, the actual number could be $100 million giving the steelmaker carte blanche.

At one point McGee defended the town. “It gets me when everybody’s beating up on the council,” he told the audience. “We have not lost control. We are doing due diligence.”

Public comment was divided whether the town needs to offer inducements to help keep the Mittal plant operating here, thereby protecting jobs and taxes, or whether its up to the steelmaker to devise a successful business strategy on its own.

“Let’s cut to the chase,” said town resident Brad Enslen. “What we’re talking about is corporate welfare. If this (abatement) will make or break the mill in Burns Harbor, then I think they need to get a different business plan. A town of 1,000 people has no business subsidizing an international company.”

Councilman Mike Perrine said residents like Enslen who weren’t here in 2001 when Mittal’s predecessor, Bethlehem Steel, went bankrupt didn’t live through more than 80 percent of Burns Harbor’s revenue disappearing overnight resulting in town-employee layoffs and service cuts.

Resident Bernie Poparad said, “We’re not the only game in town for (Lakshmi) Mittal. He’s global and you could end up getting nothing on nothing. He could let this plant dry up. If we don’t do something, somebody else will.”

Resident Gene Weibl said that won’t happen. “Burns Harbor will run and Mittal will shut back other steel operations. In North America, this is the best place to be. It seems like we’re giving up an awful lot and the schools will be hurt.” He suggested possibly capping the improvements eligible for annual abatement.

Perrine said Burns Harbor is in serious financial straights and has to look to its own interests first. Nevertheless, councilman Louis Bain said, “The town has always been neighborly and not always thought of ourselves.”

“It’s a risk which ever way you go,” said resident Beverly Sutton. The less the town helps its businesses, the more likely they’ll go someplace that will. “If we want to stay small, pull in the reins (but) if we want to grow, we have to open up our hands.” She suggested Mittal may want to help offset Duneland’s tax losses.

Resident Jeff Freeze expressed concerns that a 10-year abatement with strings attached would tie the town’s hands, especially when new tax laws with unknown consequences could be enacted in Indianapolis.

Freeze and resident Jim Constantine prompted a discussion exactly how and where the $1.3 million in Burns Harbor TIF funds on hand plus approximately $500,000 in new TIF revenue raised each year could be spent.

Clerk-treasurer Jane Jordan said generally that money has to be used within the town’s TIF district south of U.S. 20 but there are exceptions allowed.

With Mittal paying the sewer bonds, previously paid with town TIF funds, that typically frees up money for capital improvements but not to supplement operating expenses. Perrine said Burns Harbor has a $200 million wish list of needed improvements, and Fleming said the industrial town needs retail amenities for its residents.

Resident Gayle Van Loon said she regularly attends town meetings and the Mittal abatement “seemed to come out of the blue.”

The application was introduced and preliminarily approved at a June 27 meeting where council members said they received paperwork two days prior; last night, members didn’t have copies of final documents emailed at 3 p.m. that afternoon.

Fleming said if the current abatement term doesn’t end until 2013, what’s the rush now? “I’ll do everything in my power to help Mittal, but not to the detriment of my town.”

Council member Toni Biancardi said there’s room for more negotiation. Sommer told the council, “A stipulation that works for all is one that leaves everyone a little unhappy.”



Posted 7/14/2011