Tax Exempt Real Estate

Often owners of tax exempt real estate ignore bills which are received as a result of drainage assessments. Drainage assessments must be paid by all landowners, even if the owner is exempt from real property taxes.

Taxes & Drainage Assessments
While the drainage assessments are listed on the same form as tax bills, they are not "taxes" as the term is normally understood. Drainage assessments in the State of Indiana are imposed by the County Drainage Board Pursuant to Indiana Code 36-9-27-86. Those assessments are user charges for the maintenance, and / or reconstruction of regulated drains which directly or indirectly serve a parcel of real estate. Those drains could be either subsurface pipes or open ditches.

The assessments were imposed after notice of a public hearing was served on the owners of real estate within the drainage shed served by the regulated drain, as required by statute. The factors used in determining the benefits to each parcel of land are set out in Indiana Code 36-9-27-112.

Drainage Assessments & Public Utility
Drainage assessments are substantially similar to any other public utility user fee such as electric bills, water bills, sewage bills, and gas bills. They are user fees to pay the costs of construction and maintenance of ditches and tiles to provide for drainage and / or detention of stormwater. The only difference between drainage fees and other user fees are the means of collection.

Drainage Fee Collection

Under Indiana Code 36-9-27-86, drainage fees are collected semi-annually in the same manner as taxes. Therefore, unpaid drainage assessments become a 1st lien against the property, superior to all other liens including mortgages.

Unpaid Drainage Assessments
Unpaid assessments continue to accrue a 10% penalty after the due date. Drainage assessments can be collected by selling the real estate in the County tax sale. Therefore, all entities which receive bills for drainage assessment must pay those bills.