Tax Court denies exemption to owners of lakefront property partially controlled by feds

A lakefront property owner who claimed the government’s partial use of her land entitled her to a property tax exemption failed in her bid for relief at the Indiana Tax Court.

Petitioner Thelma Jean Hatke and her husband, Richard, owned lakefront property in Rockville that was subject to a U.S. Army Corps of Engineers flowage easement. The easement allowed the Corps to flood a little more than half of the Hatkes’ land to manage the water levels on Raccoon Lake and required the Hatkes to seek approval from the Corps to add most structures to the property.

In the 2019 tax year, the land subject to the flowage easement was assessed at $17,400. The Hatkes filed for an exemption, arguing that portion of the property should be exempt because its use was controlled by the federal government, but the Parke County Property Tax Assessment Board of Appeals disagreed.

The Hatkes appealed the denial to the Indiana Board of Tax Review, which also denied their exemption application, finding no provision in Indiana law allowing a property tax exemption due to a flowage easement. Also, the board ruled that the Hatkes failed to demonstrate they owned, occupied and used the land subject to the easement for educational, literary, scientific, religious or charitable purposes that would qualify for an exemption under Indiana Code § 6-1.1-10-16(a).

The Hatkes next took their case to the Indiana Tax Court, which also affirmed the exemption denial in the case of Thelma Jean Hatke v. Katie Potter, Parke County Assessor, 20T-TA-18.

“On appeal, Thelma Jean Hatke argues that because the Corps ‘completely controls’ .38 acres of her land, the Indiana Board erred in determining that the land did not qualify for an exemption. Hatke, however, misunderstands the law applicable to her exemption claim,” Judge Martha Blood Wentworth wrote in a Tuesday opinion.

Specifically, Wentworth wrote, there was no evidence in the administrative record that the land was used for educational, literary, scientific, religious or charitable purposes. Without that evidence, the judge held, Hatke failed to demonstrate that the portion of her land subject to the easement was entitled to an exemption.