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South Shore

Passengers board a westbound South Shore Line train earlier this year in Michigan City.

The state is preparing to take over the role of herding reluctant Lake County officials onto the South Shore West Lake Corridor expansion train.

State Rep. Ed Soliday, R-Valparaiso, last week amended Senate Bill 128, to override the Town of Merrillville's recent vote to reduce its contribution for the construction of a 9-mile track extension between Hammond and Dyer.

Lake Station has yet to pay any of its pledges, and Gary city council members debated last week whether to reduce or totally opt out of their previous commitment.

Hammond Mayor Thomas McDermott Jr. suggested on his WJOB radio show Friday that the county council should abolish Lake's 0.25 percent  CEDIT (County Economic Development Income Tax) to starve the South Shore of that revenue source.

While others have talked, the Merrillville Town Council voted March 14 to actually cut its contribution.

U.S. Rep. Pete Visclosky, D-Merrillville, who began pushing local government in 2013 for contributions, said the courts would overturn Merrillville's reduction.

Lake County Attorney John Dull recently issued an opinion that while Merrillville had no authority to make a South Shore reduction, it likely would fall on county officials to enforce Merrillville's full payment.

Merrillville Town Council President Richard Hardaway said Friday council members believe the interlocal agreement isn't binding, because not all of Lake County's cities and towns have signed it.

Elected county officials, many of whom face voters next year, don't appear eager to fight with Merrillville.

Lake County Councilman Jamal Washington, D-Merrillville, said, "At this moment, Lake County isn't looking at any lawsuits against the Town of Merrillville."

Possible 'interceptor tax'

This budding revolt against the South Shore expansion has triggered the proposed Senate bill, which would intercept local government money for the South Shore, even from unwilling communities.

If the General Assembly passes Senate Bill 128, the State Treasurer could garnish any shortfall from the government units' future tax revenues — a so-called interceptor tax.

Soliday said the "interceptor" language assures municipal bond market investors that Indiana will meet its debt obligations without the need for a lengthy court battle over who owes what in Lake County.

State and local funding is needed to cover half the $615 million in construction cost, and $290 million in debt service for the next 30 years.

The county and 14 municipalities over the past three years signed an interlocal agreement to set aside part of their local income tax revenues for three decades. Their combined contributions this year total about $4 million.

State government will contribute $6 million annually for 30 years, and the Northwest Indiana Regional Development Authority will give $10.5 million annually for 30 years to West Lake construction.

The RDA also is making a one-time $20 million payment for the engineering to get the project ready to submit to the federal government.

Second thoughts

Cedar Lake, East Chicago, Griffith, Hammond and St. John have yet to join the South Shore agreement and some that did now have regrets.

Merrillville town officials were among the first to get aboard three years ago, pledging 22 percent of their annual CEDIT to the South Shore.

But last month, they voted to decrease that to 8 percent, which would reduce the town's contribution this year to $65,225 from $179,368, denying the South Shore more than $3 million over the next three decades.

Merrillville Town Council President Richard Hardaway said he doesn't believe the promised benefits of the commuter train expansion would justify the expense.

He has written an open letter to Lake County's legislative delegation asking them to vote no on Senate Bill 128.

The City of Lake Station's commitment to pay 20 percent of its CEDIT funds was signed in 2014 by former Mayor Keith Soderquist, who now is serving federal prison time for misusing his campaign fund and the city’s food pantry account.

The voters replaced him with Lake Station Mayor Christopher Anderson who said last week he has inherited a dilemma.

"I'd love to see this project happen, but the majority of our residents were against it. There are no plans for this to come through our city," he said.

"Our problem is that we are broke. We haven't been able to make our (South Shore) payments, because we haven't been able to afford it.

"We have talked with our attorneys about whether we are legally able to get out of this commitment. With Merrillville doing it and others talking about it, maybe this will end up in litigation, and we get a definitive ruling from a court," Anderson said.

Washington said the South Shore project wouldn't benefit Merrillville. He said he also would like to reduce county government's $2.5 million annual contribution and let others do the same.

"I'm looking to sponsor a resolution going out to every municipality who are part of the interlocal agreement to agree to modify the agreement," Washington said.

Councilman David Hamm, D-Hammond, said he can't support Washington's proposal. "You don't make a commitment you cannot live up to," Hamm said.

Hammond's Mayor McDermott, who has yet to sign the interlocal agreement, said the RDA or the State of Indiana, should pick up all local costs of the rail expansion, since they intercept $3.5 million in casino fees from Lake annually.

Other suburban officials said last week they have no second thoughts about their pledges.

Highland Town Councilman Dan Vassar said, "It's a binding agreement. We are looking at this as something that is good for Northwest Indiana."

Hobart Mayor Brian Snedecor said, "This isn't about the present, but about the future and our competitiveness with the Chicago market. It doesn't benefit the city of Hobart now, but when a Hobart-Valparaiso line gets constructed later, that will have a direct impact on our community."

The West Lake Corridor project is one of two major South Shore improvements. The other is the Double Track NWI project to add a second set of tracks between Gary and Michigan City at an estimated construction cost of $290 million.

The South Shore also is facing trouble on the federal funding side of its projects, since President Donald Trump proposed deep cuts in the Department of Transportation grant program.

Visclosky responded last week with this statement: "I have complete confidence that the United States Congress will reject the ill-conceived elimination of all funds for new Capital Investment Grants as proposed by President Trump. ... The policy espoused by President Trump is inconsistent with his many tweets on wanting to invest in infrastructure."

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Lake County Reporter

Bill has reported in Lake County since 1972 after graduating from Indiana University. He has worked for The Times since 1997, covering the courts and local government during much of his tenure. Born and raised in New Albany, Ind., he is a native Hoosier.