EAST CHICAGO | Construction of a new oil refinery unit on the far north side now can proceed, but the city is requiring some special conditions for the project.
BP Products North America Inc. plans to build a $43 million crude oil coking facility on land the refinery owns just north of the Marktown neighborhood at Dickey Road and 129th Street.
The City Council on Monday approved a seven-year tax abatement for the plant but negotiated terms with BP to ensure continued revenue for the city from its operations.
In 2010, when a 2 percent cap on industrial property taxes is scheduled to become law, the refinery agreed it will pay a flat $3.5 million to the city, rather than the $900,000 that would be expected under both the abatement and tax cap.
The company also agreed not to seek abnormal obsolescence or accelerated depreciation on the facility, typical business accounting practices that have stripped millions of dollars in tax revenue from the city of Whiting in recent years.
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"This will help us immediately," said Council President Richard Medina, D-at large. "And when the abatement expires, they'll be paying much more than $3 million."
Construction of the plant -- which will refine high-sulfur crude oil from Canada into fuel for industrial furnaces -- should begin in 2007 and take about four years to complete, said Tom Keilman, BP director of government and public affairs.
"This is part of a $1.4 billion investment in East Chicago" that will require some 2,400 contractors to build, and result in 74 new high-paying full-time jobs in the city, he said.
The abatement was approved without an expected public hearing on the measure, which irked at least one neighbor of the proposed refinery.
"There are some unanswered questions," said Paul Myers, a longtime Marktown resident who works for the city's housing and redevelopment department.
"If not a public hearing, at least a public meeting to explain for people what's happening in their neighborhood would have been nice," Myers said.
Public hearings are not required before approving tax abatements in East Chicago, as the entire city is classified as an economic revitalization area.
Legislation passed in 1999 determined that conditions of urban decay, blight and vacant industrial property in the city qualified it as an economic revitalization area, which removes a number of legal restrictions on potential economic development.
In 2003, the economic-revitalization-area classification was amended to last until 2012 through an ordinance sponsored by former Councilman Frank Kollintzas, now a fugitive felon believed to be living in Greece.
