Chesterton Tribune

Burns Harbor ArcelorMittal trade tax breaks for sewer bond payments

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By PAULENE POPARAD

Burns Harbor and ArcelorMittal USA, the town’s largest taxpayer, tentatively have struck a deal extending the steelmaker’s current tax breaks through March 2, 2023 and in return Mittal will pay off almost $3 million in outstanding municipal sewer bonds as they come due.

That will free up at least $500,000 a year for other town uses and capital projects, and also could make available $1.3 million now held in reserve for bond payments.

Meeting Monday, the town Redevelopment Commission and Town Council --- both comprised of the five council members --- met for three hours discussing the tax plan with Mittal attorney Larry Stroble of Barnes & Thornburg and town attorney Bob Welsh.

Despite reservations and questions from board members Louis Bain, Toni Biancardi and Cliff Fleming, divided votes led to adoption of required abatement paperwork that later can be approved, modified or rescinded, according to Welsh.

An advertised public hearing will take place July 13 at 7 p.m. on the abatement extension for future installation of new manufacturing equipment, which is set to expire in 2013. Mittal estimates annual capital expenditures of $10 million to $20 million or more in the coming years to retain both its competitive edge globally and its employment base of 3,500 to 3,900 workers at the plant.

Also agreed Monday by the Town Council was to hire an Indianapolis attorney who specializes in tax law to try to get in writing from the state Department of Local Government Finance how it will deal with the $1.3 million. Town clerk-treasurer Jane Jordan said that could range from letting the town spend it to making the town apply it toward the 2012 budget and levy only a small amount in property taxes next year.

Redevelopment Commission member Jim McGee asked non-voting commission member Ralph Ayres of the Duneland School Board, formerly an Indiana state representative, to help cut through DLGF red tape. Ayres said the School Board is closely studying the Mittal proposal and may comment at the public hearing.

Welsh told Ayres he sees no negative repercussions for the schools if Mittal’s abatement extension is approved.

By unanimous vote the council authorized Welsh to engage a financial consultant to assess the impact to the town of granting the Mittal abatement extension. “They could find something we’re not seeing,” said Bain. Fleming said the proposal could bring wonderful benefits but the town needs to be sure there isn’t a hidden downside.

A key part of the abatement agreement is that Burns Harbor pledges for at least 10 years not to place the entire Mittal plant in a tax-increment financing allocation area where property taxes paid within that area would remain with the town instead of being shared by about nine other taxing units including Duneland Schools, Westchester Township Public Library and Porter County.

Porter County assessor Jon Snyder and his attorney, Chris Buckley, attended Monday’s meeting.

Fleming noted by prohibiting the town to TIF the steel plant, that takes away potential tax dollars that could be used to develop town infrastructure called for in the Burns Harbor comprehensive plan to fund general operations and promote the community live/work/play concept.

The hope is that all consultant reports will be in hand for the July 13 council meeting as well as answers fielded through Welsh to multiple questions asked last night. The next $58,796 bond interest payment is due July 15 and the $633,796 principal payment Jan. 15, 2012. The bonds are paid off Jan. 15, 2016.

The council/commission apparently has been discussing the Mittal proposal for some time although not publicly until Monday. The Redevelopment Commission hasn’t met since October, 2010. Fleming said members just received their copies of the Mittal documents Friday. “We should move as quickly as possible on an opportunity that could be in our best interest, but it should be based on an informed decision.”

McGee called the proposal a win-win situation. Councilman Mike Perrine described it as Mittal’s show of good corporate citizenship; he also said if the DLGF balks at the town’s plan, maybe Mittal could place the intended bond payment money in a non-reverting donation fund instead.

Bain said no one was saying tax abatement is bad, but things were being too rushed. Welsh said copies of the Friday documents already had been amended and he pointed out those changes.

Biancardi had several questions, including what will happen to the $1.3 million, but she voted to advance the abatement proposal on the understanding any votes taken Monday can be undone, partially undone or reaffirmed July 13 or even continued with no decision following the public hearing.

Perrine said despite the fact some people feel Burns Harbor has a God-given right to have Mittal dump tons of money in taxes and pay 85 percent of the town’s bills, that won’t happen unless the town works with Mittal to help it remain competitive and stay here.

McGee opened the Town Council portion of the meeting stating he is an hourly Mittal employee on medical leave and in his nine years in public office he’s worked with all local businesses. “All my interest is toward the town.” As council president McGee signed the previous abatement documents in 2003 for then-owner ISG Burns Harbor.

 

Posted 6/28/2011