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Steel town on the rebound.


Gary is number one in steel, but imagine a marina, casinos, resort hotels and a huge airport to get there.

With abandoned buildings and boarded-up storefronts, downtown Gary is faced with the grim reminders of its current economic woes.

Block after block of dingy brick buildings that were once home to Sears, Roebuck & Co. and other retail stores now stand empty. A handful of remaining businesses survive with sophisticated alarm systems, bars on windows and steel gates across their storefronts. From the alleys, the view is even more forsaken. Graffiti cover the walls, and vacant parking lots glisten with glass from broken beer bottles and shattered car windows.

It is impossible to ignore the harsh economic conditions that surround this northwest Indiana steel city. With a population of 135,000, Gary is struggling to survive. The annual per capita income is between $7,500 and $10,500. The unemployment rate is 13 percent, but is a marked improvement, down from 24 percent just five years ago.

Despite its overwhelming problems, there is a crusade to revitalize the city. Along the deserted sidewalks of downtown, there are placards that read, "Gary is stressing the positive." Symbolically, the signs mean much more. Gary's image as a dirty, crime-ridden, economically depressed city is being overhauled.

From public employees in City Hall to low-income families trapped in decaying ghettos, there is a feeling of hope that Gary can be brought out of its economic doldrums. And that hope rests squarely on the shoulders of Thomas V. Barnes, a Gary lawyer who was the Calumet Township assessor before becoming mayor two years ago. There is a belief that Barnes, the man who unseated incumbent Mayor Richard Hatcher and his Democratic machine of 20 years, can turn Gary around with a fresh perspective.

But Barnes knows revitalizing Gary is a colossal undertaking. "It takes monumental vision, monumental work. But this is a manageable city," he says. "It's like all cities. All of them are a wreck. Some of them have more resources than others. We're probably fortunate that it (Gary) is not a larger city than it is," adds Barnes.

From his executive window, the mayor overlooks the Lake Country Superior Court Building, the Genesis Convention Center and a mass-transit hub, the Adam Benjamin Jr. Transportation Center. But those attractive buildings are a startling contrast to abandoned structures in the background. City planners calculate that more than half of downtown is boarded up. "The biggest one is right next to us," says Barnes, indicating the 300-room, 13-story Sheraton Hotel next door.

The Sheraton was closed five years ago. In most estimations, it was an albatross, a reminder of the previous Hatcher administration's broken dreams. During the 1968 ground-breaking for the hotel, Hatcher was quoted in the Gary Post-Tribune as saying, "It is the first in a series of moves in downtown Gary development. It holds real promise." But four years later, the hotel was shut down. Although it reopened in 1979, it closed again in 1985.

Interestingly, the Sheraton was sold in the fall of 1989 for $1 million to a group of Gary and Illinois investors who plan to turn it into an office and shopping complex. Projections show that the renovation will cost between $5 million and $10 million.

The mayor believes the sale of the Sheraton is a significant step in his revitalization efforts. But at the top of his economic development agenda are airport development and casino gambling. The latter is creating statewide controversy.

On Nov. 4, 1989, 60 percent of the voters in Gary passed an advisory referendum for casino gambling. But according to statistics, only a third of the city's registered voters turned out for the vote. An advisory referendum, however, does not bind any of Indiana's 150 legislators to legalize casino gambling in Gary.

Barnes says his next step is to take the matter downstate and to lobby the 1990 Indiana General Assembly when it convenes this month. State Rep. Earline Rogers (D-Gary), who will author a casino-gambling bill and who is expected to be its major promoter in the state legislature, says it will be "an uphill battle all the way, but I think it's a fight that can be won." While Rogers feels there's always moral opposition to gambling, she quickly points out that "Hoosiers have shown through the lottery that they like the idea of taking a chance."

Rogers' bill would restrict casino gambling to Gary. "We look at casino gambling as not necessarily a 'nice to do' but a 'need to do' in the absence of any money coming from the federal government. Certainly that's why Indiana went into the lottery business--because they needed to replenish their coffers," she maintains.

With neither federal nor state assistance and with depressed economic conditions, Gary needs gambling regardless of the controversy, Rogers believes. "There are people in Gary suffering on a daily basis. Many homes are without utilities," she says.

Meanwhile, Gov. Evan Bayh has expressed reservations about permitting casino gambling in Indiana. "The governor doesn't want Indiana to become the Atlantic City of the Midwest," says Fred Nation, Bayh's press secretary.

At the same time, the governor realizes that Gary has very serious problems. Though he is opposed to casino gambling, Bayh is keeping an open mind on the subject, says Nation. He wants to hear all the facts before he makes a decision--if and when a bill comes to his desk. "Now that the people up there have expressed their opinion, we're all interested to see how our legislature deals with it," Nation adds.

Anti-gambling forces are gearing up for the battle. In northwest Indiana, the Rev. William Booth, a Baptist minister, is leading the fight. Along with his followers, he will organize support from other clergymen throughout the state. Regardless, Mayor Barnes remains unfalteringly optimistic about the bill's passage. "I would not be putting the work into it if I didn't think that each of these steps was going to lead to another step that could be successful," he says.

Using a well-developed marketing approach, Barnes intends to show off his city's amenities. Gary is in Chicago's backyard and is poised on prime Lake Michigan frontage. It is not surprising, therefore, that one of the mayor's redevelopment plans includes building lakefront residential housing and a 1,200-slip marina.

Surrounded by sand dunes, Gary seems a likely site for resort hotels with casino gambling. According to Taghi Arshami, the city's director of development and planning, casinos would generate at least 20,000 new jobs. Moreover, the resorts and casinos would generate $40 million to $50 million a year in tax revenue for the city. Thus far, several casinos have expressed interest publicly.

Under the city's plan, four or five casinos would be built on a still-undetermined site along the lakefront. Although there are a few sites under consideration, officials hope the casinos would be built on remote, unused industrial land removed from any existing residential or business areas.

Interestingly, one possible location under consideration is the proposed marina site, says Arshami, who heads up the Gary Lakefront Development Project. The project is trying to develop approximately 350 acres of lakefront industrial land owned by USX Corp. (formerly U.S. Steel Corporation) for tourism, recreational and residential use. The city is in the process of negotiating with the steel company.

The 1,200-slip marina would be the largest on the southern shores of Lake Michigan and would cost between $26 million and $28 million to build. The first phase will involve 250 slips and cost $6 million. Development will continue over the next five years. At least 2,000 apartments and condominiums are planned, along with 250,000 square feet of commercial and retail space. A 150-room hotel is projected for the marina village area. Also on the drawing board is a small water theme park.

With Chicago looking to supplement its already overcrowded airports, the development and expansion of the Gary Municipal Airport is another key factor in the city's revitalization efforts, says Arshami. "The Loop is only a 30-or 45-minute drive, depending on how you drive," says Arshami. Travel time into the Loop is less from Gary's airport than from the Chicago O'Hare International or Midway airports. With a network of major highways, including the Indiana Toll Road, Gary is accessible to Chicago and its suburbs.

Arshami and other city planners have devised a series of short-term and long-range plans that will turn Gary Municipal Airport into a 3,500-acre complex. His department has talked with Allegheny Commuter, USAir and a handful of other airlines. The problem Arshami has encountered is a reluctance among the carriers to be the first to commit.

Other revitalization efforts include a $615,000 grant from the U.S. Department of Housing and Urban Development that was awarded last year to a community group, the Horace Mann Ambridge Neighborhood Improvement Organization, to provide low-cost loans to low- and moderate-income families who want to purchase and rehabilitate homes in the downtown area.

Of all the revitalization plans, however, the concept of resort hotels with casino gambling is taking the limelight as the Indiana Statehouse gears up for an interesting session. Gambling is no stranger to the "Magic City," so named after the way Gary's economy flourished as the steelworks developed. Historically, the city's largest industry was steel. But vice was its second-largest commercial enterprise.

While the monthly payroll for 45,000 steel employees in northwest Indiana was $17 million in 1949, an estimated $1 million a month was collected from gambling, prostitution, drug dealing and bootlegging alcohol to minors. There were as many as 500 brothels, some of which were open 24 hours to indulge the three shifts of steelworkers.

As organized crime from Chicago fought with local mob bosses over Gary's gambling territory, the city--and its citizens--were thrown into turmoil. Homemade powder bombs known as "pineapples" were tossed into gambling parlors. From homicides to thefts, the crime rate began to climb.

Then in 1968, Richard Hatcher was elected mayor. It was an election that garnered national media coverage because Hatcher was one of two black mayors at that time to be elected in a major U.S. city.

Despite Hatcher's promises to get a handle on the city's problems, crime seemed to escalate. Economic chaos also was brewing. In the '60s and '70s, retail businesses had left Gary as it followed "white flight," the exodus of white families from urban neighborhoods that were undergoing racial integration. Just 10 miles south, Merrillville was becoming the new financial and commercial center. Gary was left with a boarded-up downtown and worsening unemployment picture.

Overseas steel, produced at lower costs, eroded Gary's steel industry. More than 30,000 workers lost their jobs in the early '80s. In short, 50 percent of the steelworkers or 12 percent of the area's labor force was unemployed.

Today, however, the steel industry is again a major employer in northwest Indiana. According to 1989 figures, it accounts for more than 35,000 jobs and has an annual payroll of $1.6 billion.

Last August, USX Corp. hosted a two-day conference for 300 of its suppliers to sell them on the virtues of relocating in northwest Indiana. (The event was co-sponsored by the city of Gary, Northern Indiana Public Service Company and Gainer Bank of Gary.) The purpose of the event was to expose vendors to the benefits of doing business in Gary and to remind them that USX purchases approximately $1 billion annually in goods and services for its Gary operations.

But if multifaceted development efforts pay off, the steel town's smokestacks will be cast in the shadow of a more glittery Gary, replete with upscale apartments, a marina, hotels, casinos and a large, new airport to get there. If legislation enabling casino gambling passes the General Assembly, Indiana will be home to the tinsel town of the Midwest.

Bring Your Business to Gary

Gary isn't going to have to go it alone.

That message came through loud and clear at Opportunities '89, an economic development conference that was held at Gary's Genesis Convention Center last August. The pitch was made to the executives of companies that supply goods and services to the area's steel producers. The support came from the conference's co-sponsors: USS division of USX Corp., Gainer Corporation, Northern Indiana Public Service Company and the city of Gary.

"There is a pressing need to build partnerships between the industry and its suppliers to meet the competitive challenges of the steel market in the 1990s," Thomas C. Graham, president of USS division, explained to the more than 300 conferees who attended the two-day meeting.

"Northwest Indiana banks are healthy and safe," Bruce Dahltorp, Gainer Corporation president, speaking on behalf of the area's 15 commercial banks, assured the group. "We have money to lend and we want to lend it to you. And," he added, "we're not inexperienced."

"We want to do all we can to support the efforts of the communities we serve in attracting new jobs," avowed Edmund A. Schroer, NIPSCO's chairman and CEO, in announcing the Hammond-based public utility's energy incentive plan to give rebates on their electric charges to industrial customers who locate in enterprise zones. The company, Schroer promised, also will give advertising assistance to promote new business and financial help to businesses that install new energy technologies.

The conference represented an opportunity for these corporate executives to see, first-hand, how much Gary has to offer thriving businesses, Gary Mayor Thomas V. Barnes said. Among those incentives, Barnes cited enterprise zones that offer tax abatement, the city's central location, lakefront amenities, proximity to Chicago, a skilled labor force and an abundance of sites and facilities available for commercial and industrial use. "This is a giant step along the way to a partnership, a giant step toward commitment to proactive relationship in building a community," he stated.

Conference keynoter, Gov. Evan Bayh, also pledged the state's cooperation. Summed up Bayh: "Clearly, the steel industry represents a vital sector of the Indiana economy, one with which we intend to maintain strong bonds."

Mister Mayor

His closest friends call him "T," but others address Thomas V. Barnes as "Mister Mayor."

At 53, Barnes has one of the toughest jobs in Indiana, perhaps in the whole United States. As mayor of Gary, Barnes is trying to overhaul the rough-and-tumble image of his northwest Indiana city.

Barnes seems to thrive on challenges. On the November 1987 ballot, he defeated a perennial Republican candidate. But the real battle was unseating five-term Mayor Richard Hatcher in the Democratic primaries.

In 1968, Hatcher became one of the first black mayors in the United States. Ironically, Barnes once had been a campaign worker for Hatcher. But the 1987 Democratic primary was different. Although the Rev. Jesse Jackson had thrown his support to Hatcher, Gary citizens were disillusioned with his administration.

Barnes was a strong contender in the mayoral race. For nine years, he had been the Calumet Township assessor. Before that, he had practiced law in Gary. During his mayoral campaign, Barnes promised to create a new economic era for Gary and to turn it into a safe, clean city.

Today he is trying to live up to those promises.

Indeed, the homicide rate in Gary has dropped since 1985, when, with 54.8 murders per 100,000 population, it was listed by the FBI as the most dangerous city in the country. Detroit was second, followed by Miami. But other crimes--purse snatching, burglaries and thefts--have gone up. Barnes suspects many crimes go unreported because citizens feel a sense of despair and hopelessness.

Admittedly, it is difficult to change people's attitudes overnight--including the attitudes of businesses that dismiss Gary as a potential site for commerce. Barnes, however, seems determined to change those perceptions. The key is "getting people to come here and be in this city," he says, "to look around and to see a Gary that is different from the impressions of the city they have in their minds.

"Gary is not the disaster zone that many people who have never been here would think. They're actually afraid to come to Gary. They don't even realize that there are human beings who live here," says Barnes, a retired colonel in U.S. Army Reserve.

Barnes lives with his wife, Frances, in a modest three-bedroom brick house on the city's west side. Every day, he awakens at 5 a.m. and rides his bicycle through the streets of Gary. Frequently, he peddles upon one of his pet peeves--illegal dumping.

"One morning he stopped at this dump site and went through the garbage to find out who these people were [that were] dumping on us," says Karen Williams, Barnes' press secretary. "He pulled out names and addresses of people in places like Munster and Hammond."

Indeed, neighboring communities were dumping on Gary. To embarass the violators, the mayor wrote letters to them. Many responded with apologies. Others claimed ignorance.

By 7 a.m., he is at work in an office filled with plaques, autographed photos and Japanese momentos, such as a painted fan and a coffee-table book about Hiroshima. "I love light and colors," says Barnes. "I like bright, cheerful surroundings in a city. It adds to your image, it adds to the excitement."

PHOTO : A more glittery Gary: the proposed Indiana Waterfront. Casino proponents estimate 20,000

PHOTO : new jobs and up to $50 million a year in tax revenue for the city.

PHOTO : Gary's 1,200-slip marina would be the largest on the southern shores of Lake Michigan.
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Title Annotation:includes related articles on industry, Mayor Thomas V. Barnes; Gary, Indiana
Author:Murphy, Karen
Publication:Indiana Business Magazine
Date:Jan 1, 1990
Previous Article:A jolly Christmas in Indiana.
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