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