New shine in the `rust belt'. `Home, sweet home' in Gary, Mayor Barnes is turning heads. After years of industrial decline, Northwest Indiana is making a comeback. Businesses and workers see fresh opportunities.

WHEN Mayor Thomas Barnes headed to Gary's City Hall in January for his first day of work, he found his predecessor had cleaned out all the files. The flap caused a political stir; it also symbolized what is beginning to happen in this large, industrial city on the southern shore of Lake Michigan. Gary is trying to make a break with its past.

``We are fully on a course in a different direction than what we have seen in the past,'' Mayor Barnes says. ``My election gave people a fresh opportunity.''

The most dramatic evidence of change is the mayor himself. In contrast to his sometimes isolationist predecessor, 20-year incumbent Richard G. Hatcher, Mr. Barnes is making a pronounced effort to reach out beyond the city, observers say.

``Barnes is more open,'' says Jim Ranfranz, executive director of the Northwestern Indiana Regional Planning Commission, a council of local governments. ``A lot of people are saying this is too good to be true.''

In his first three months in office, the new Gary mayor has visited area business groups, talked with the city's largest employer, USX Corporation, about cooperating on waste disposal, and even visited Taiwan to find out about economic development possibilities. When he began attending Mr. Ranfranz's regional council, other mayors followed the lead and joined the group too.

Local businessmen are eager to foster cooperation between Gary and surrounding communities. The hope is that together the local governments can clean up the region and project a more unified, positive image to outside investors. ``All of us want these potential investors to feel good about the total area; and the area can only be perceived as favorably as its weakest link,'' says Bill Joiner, senior vice-president of Gainer Bank, based in nearby Merrillville.

Even state leaders, who have traditionally maintained a hands-off stance toward the region, notice a difference.

``For the first time since I've been involved in the government of Indiana, northwest Indiana has begun to speak with one voice,'' says Lt. Gov. John Mutz.

But improving Gary will not be easy, Barnes says, especially since Gary is short of money to improve city services and facilities, which are in disarray.

The downturn in steel has eroded Gary's tax base significantly. The city also owes $3.8 million in past-due bills to the local power company; a landfill appears to be getting an unusually lucrative city contract; and roughly $50,000 in new fire department equipment can't be accounted for. When he took office, Barnes had to renege on promises of raises to city employees made by his predecessor. Instead, he imposed a 5 percent across-the-board cut in department budgets.

Another problem is the city's continual political wrangling. The divisions are sharp. When a pro-Hatcher supporter opened a Gary campaign office recently for presidential contender Jesse Jackson, an anti-Hatcher faction opened its own Jackson office on the same block. And unless the factional fighting dies down, political observers say, Barnes's initiatives may be blunted.

Last month, for example, Hatcher supporters on a local airport board hired his former deputy mayor as a consultant. Barnes balked at the move and fired three of the board members. ``I have accepted a lot of abuse from the previous administration,'' Barnes says. ``But this airport development is far too important to the future of this community.'' The firings now appear headed for court.

Gary's airport is a focus of activity because it represents one of the city's major opportunities to diversify its economic base beyond steel. Barnes wants to resurrect regular commercial airline service to the city by year's end, and several Indiana officials hope to develop the facility into the third regional airport for metropolitan Chicago.

But some Gary politicians worry that control of the airport will be wrested from the city. ``Gary has paid such a high price for self-determination,'' says state Sen. Carolyn Mosby. ``There is a very strong feeling in the community ... that we don't want to give away any right to be self-determining.''

Barnes, however, brushes off such trepidation. ``We are going to have to recognize that we are all big boys and girls and that we can protect our interests just as others want to protect theirs,'' he says. ``We are going to have to cooperate.''

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