The sprawling U.S. Steel Gary Works is seen along the Lake Michigan shoreline. Lake County Assessor LaTonya Spearman is preparing to file an unprecedented appeal of the state-calculated assessment of the property. Staff file photo by Kale Wilk
The sprawling U.S. Steel Gary Works is seen along the Lake Michigan shoreline. Lake County Assessor LaTonya Spearman is preparing to file an unprecedented appeal of the state-calculated assessment of the property. Staff file photo by Kale Wilk
CROWN POINT — The Lake County Council unanimously authorized Assessor LaTonya Spearman Tuesday to pursue an unprecedented appeal of the assessed valuation of the real property of U.S. Steel Gary Works.

A 2001 Indiana law requires the state's Department of Local Government Finance (DLGF), instead of the relevant township or county assessor, to calculate the value of large industrial properties in Lake County for property tax purposes.

Spearman said she believes the U.S. Steel assessment of $109 million calculated by DLGF for 2024 pay 2025 property taxes significantly undervalues the seven miles of Lake Michigan shoreline in Gary that's home to the largest integrated steel mill in the United States.

Indeed, Spearman contends Gary Works has been undervalued for property tax purposes for decades, since it was valued at $270 million prior to the state taking charge of its assessment and immediately dropping the value to $90 million for the 2001 tax year.

"Unlike other property classes across the county, U.S. Steel's real property values have largely remained constant during the past 20 years — hovering around the $100 million range," Spearman said.

Spearman told the county's financial governing body that the pending $14.9 billion acquisition of U.S. Steel by Nippon Steel, as well as the sale of the former Plant 4 on Dickey Road at Cleveland-Cliffs Indiana Harbor in East Chicago, also suggest Gary Works is undervalued.

Specifically, Spearman noted Cleveland-Cliffs in 2021 sold an abandoned building on 92 acres for approximately $21.5 million, or $234,000 per acre.

At that valuation, Spearman said the 3,100 acres comprising Gary Works would be worth $725.4 million for the land alone — or nearly seven times the DLGF's assessment of U.S. Steel's land and buildings in Gary.

"We're not seeking a $14 billion value, although that's the purchase price, the acquisition cost. But we do believe that they should pay their fair share and certainly the current assessment doesn't reflect the property's market value in-use. So I think that it's reasonable for us to at least attempt to challenge that value and see where it gets us," Spearman said.

The same 2001 state law that made the DLGF responsible for industrial property assessments in Lake County also sets up a complex appeal process that begins with the county assessor calculating the likely cost of the appeal and receiving the county council's consent to pursue it.

In this case, Spearman estimated the appeal potentially could cost $500,000. However, she said Gary tentatively has agreed to cover 93% of the expense since the Steel City would receive that share of any additional property taxes paid by U.S. Steel following a successful appeal.

"This is uncharted territory as this would be the first time a challenge of this nature has been brought," Spearman said. "But the city of Gary is 100% supportive of this endeavor and is willing to pay their pro rata share of the expenses."

Spearman now has until Friday to submit an appeal petition to the Indiana Board of Tax Review stating what she believes is the correct assessed value of Gary Works, along with "substantial evidence" in support of her conclusion.

If the three-member bipartisan tax review board finds the assessor's evidence lacking then the appeal immediately is over with no further recourse.

Otherwise, it will hold a hearing within 30 days to determine whether the assessor has established "a reasonable likelihood of success" concerning her assessment. U.S. Steel also would have the opportunity to testify at the hearing, cross-examine witnesses, and present evidence relating to the valuation of Gary Works.

"If we are unable to clear this first hurdle, which requires us to show a reasonable likelihood of success, then this matter dies," Spearman said.

According to the statute, the losing party at the hearing can appeal the outcome to the Indiana Tax Court and the Indiana Supreme Court. After that, assuming the appeal still is pending, the board has one year to decide whether to sustain or reject the appeal.

Spearman declined to specify how much additional revenue Gary and other local taxing districts potentially could receive following the appeal.

She said the appeal simply is a matter of fairness, since residents of Gary's Miller neighborhood, located on Lake Michigan near U.S. Steel, as well as other Lake County property owners, have seen the assessed value of their homes and businesses increase at a much higher rate in recent years compared to the state-assessed Gary Works.

"Although U.S. Steel's assessment has long been believed to have been undervalued it has not since been challenged," Spearman said. "I actually believe it would be irresponsible for us not to do this."

The two county council members representing Gary, Democrats Ron Brewer and Charlie Brown, both said they "wholeheartedly support" Spearman's appeal of the Gary Works assessment.

"I sat on the city council for over 12 years there (in Gary) and I saw the impacts of us getting shrinking dollars from U.S. Steel," Brewer said. "I think the eyebrows went up when the sale came out and we saw how much U.S. Steel was really worth. I don't think none of us had the idea that those type of dollars were sitting among us."

Brown likewise said he's well aware of "the negative impact" the state valuation "has had on Gary and other large communities by virtue of not having those potential tax dollars available."

In contrast, Councilman Randy Niemeyer, R-Cedar Lake, expressed some misgivings about the speed at which the appeal process is moving — due in part to deadlines set by state law. He also wondered, prior to voting in favor of filing the appeal, if it will open a Pandora's box and potentially subject all the large industrial properties in Lake County to future challenges of their DLGF assessments.

"You see a lot of industry that moves into industrialized areas seek tax abatement and other sorts of benefits, and this is kind of the opposite of that. I'm not saying that they deserve tax breaks, but... it's a major employer here in the Region and I think we want to try to find ways to protect those steel jobs and not put them in jeopardy," Niemeyer said. "There's always a ripple effect to these sorts of things."

Councilman Ted Bilski, D-Hobart, was considerably less restrained as he contemplated the homes of Miller residents being assessed more per square foot than a nearby integrated steel mill.

"They pollute our water, our air, they should at least pay their fair share in taxes," Bilski said. "And if they don't want to, I mean they could always restore the beach to its pristine condition as when Andrew Carnegie first went in there."
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