Steel mills in northern Indiana might not be paying their fair share of property taxes. That means the communities near these plants get less revenue for things like schools and fire departments.
Residents in Gary are already paying to host U.S. Steel with their health — some local officials say they shouldn’t have to pay twice.
The cost of sharing Gary with U.S. Steel
Wanda Royal Torres brushes her hand across the roof of her husband’s car to show the fine, black soot that settles on her neighborhood from U.S. Steel Gary Works across the street.
“We wash these cars, we rinse them off almost every day — especially this one cause this is like his little sports car — but it gets right back on it,” she said.
When she grew up in Gary, the steel industry was the glue that held the community together.
Torres's dad worked at a mill. She remembers going to picnics and Christmas programs with other steelworkers and their families.
When thousands of workers got laid off, everything changed. Families moved, businesses closed — the benefits of living near a steel mill went away.
But the heart and lung problems, the cancer risks from the plant’s pollution are still there. Torres said her daughter has asthma, but she only needs her inhaler when she comes to visit.
“Every time she hits Gary — she stays a whole day, she has to use that pump," Torres said.
Dirtier air isn’t the only cost of hosting U.S. Steel. An investigation by Lake County Assessor LaTonya Spearman shows the company might not be paying its fair share of taxes. She said the steel mill’s property value has stayed about the same for the past two decades. Generally speaking, the higher your property value is, the more you pay in taxes.
“It hasn’t changed where we’ve seen appreciation for residential properties and for homeowners around 30 percent over the last few years,” Spearman said.
Four years ago, steelmaker Cleveland-Cliffs sold some of its Indiana Harbor property for more than $200,000 per acre. Based on those numbers, Spearman estimates the real land value of Gary Works should be about seven times higher.
“Well I feel kind of angry," said Wanda Royal Torres. "I mean, they tell me if I don't pay my taxes, they taking my house.”
Lawmakers let steel mills estimate costs, set high bar for tax appeals
How did this happen? In the early 2000s, Indiana lawmakers argued local assessors didn’t know the steel industry and couldn’t determine the value of something like a decades-old blast furnace.
So they allowed steel plants and oil refineries in northern Indiana to estimate the cost of their own equipment and give it a value based on its age.
Instead of local governments checking that math, lawmakers gave the job to the Indiana Department of Local Government Finance. Spearman said if you want to appeal an assessment by the agency:
“The bar is pretty high — it’s almost impossible to clear actually for assessing officials," she said.
Before she can even petition for an appeal, Spearman said she has to estimate how much that appeal would cost and get it approved by the county council. She also has to present evidence that the appeal is likely to succeed.
“If you’ve not had an opportunity to actually visit the property, you have no personal knowledge of the facility because you’re not charged with assessing it — how would one be expected to have this information?" Spearman said.
Lake County managed to clear that high bar last year, but ended up withdrawing the appeal. This year, Lake County discussed U.S. Steel's property tax value with the DLGF before it was finalized to see if there was an opportunity to change it, but Spearman said that effort wasn't successful either.
Spearman said the county will continue to weigh its options to ensure U.S. Steel is assessed fairly.
How higher taxes for U.S. Steel could help the city of Gary
Cities that host steel plants like Gary could be missing out on that extra revenue. Gary Common Council President Lori Latham said there’s a lot the city could do with that money.
“Road improvements, improved city services, drive by one of our parks, more code enforcement officers, police, fire improvements, technology improvements — the list goes on and on," she said.
Even if U.S. Steel’s assessed value goes up, it’s not clear how much money would actually flow to cities like Gary.
Scott Schmal is the finance director for the Lake County Council. He said if U.S. Steel already pays close to its property tax cap, that higher value won’t end up adding that much to city budgets.
Still, U.S. Steel would make up a bigger slice of the taxable pie.
“It wouldn't necessarily mean U.S. Steel would end up paying more. It would mean that the rates would be lower, and potentially homes would pay less. Residents would pay less," Schmal said.
Residents, local officials look to the future under U.S. Steel sale
Wanda Royal Torres said U.S. Steel should offset the cost of its pollution by setting up centers for kids who have autism or learning difficulties.
Torres said people are starting to buy property in Gary, but if the city doesn’t have a strong foundation — with more businesses than U.S. Steel alone — she worries the community will fracture again.
“That’s what I won’t want us to do anymore. I don’t want to depend on the steel mill anymore. I want to depend on us,” she said.
Japanese steelmaker Nippon recently acquired U.S. Steel for more than $14 billion.
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State Rep. Ragen Hatcher (D-Gary) said Indiana has become welcoming for businesses — and that brings in jobs and tax revenue. But, she said it also has to take the health and financial risks of these businesses into account.
Hatcher pointed to recent layoffs at a steel operation owned by Cleveland-Cliffs in Illinois, close to the Indiana border.
“I just think we have to take all of these things into consideration, especially in the state, when we decide who to support," Hatcher said. "Should we be supporting the people or should we be supporting these businesses? And I think we have to take into account for Cleveland-Cliffs, for U.S. Steel, BP in Whiting. I mean, they're all along our coast line on Lake Michigan. We have to start taking greener production more seriously and the health of the people who live in this area more seriously.”
Hatcher said Gary needs a corporate partner that will "help the city stabilize and grow."
Whatever Gary’s future holds, city and county officials agree U.S. Steel should pay its fair share. County Assessor LaTonya Spearman said it may be time for Indiana lawmakers to reconsider the way it assesses property like Gary Works.
U.S. Steel said it has “fully cooperated” with the Department of Local Government Finance on the property valuation for Gary Works and will continue to do so. The DLGF declined an interview.
Rebecca is our energy and environment reporter. Contact her at rthiele@iu.edu or on Signal at IPBenvironment.01. Follow her on Twitter at @beckythiele.