Should Flood Buyout Properties Be Taxed?

By Gordon HopkinsThe question of what constitutes “governmental purposes” is at the heart of a tax dispute between the City of Fairbury and Jefferson County.Property used for governmental purposes are tax-exempt. At a meeting of the Jefferson County Commissioners on Tuesday, April 17, Jefferson County Assessor Mary Banahan raised the question, can properties designated open spaces to prevent building on those properties be considered governmental purposes? Banahan told commissioners, “We sent out Intent to Tax letters for properties that we do not believe are being used for governmental purpose.”Laura Bedlan, Development Services Director for Fairbury’s Planning and Zoning Department, disputed that claim.“So, we are using these for governmental purposes,” said Bedlan. “It’s protected green space and that’s filed in the deed of each of these.” In 2020, the Fairbury City Council approved a resolution to accept a grant application between the City, NEMA (Nebraska Emergency Management Agency) and FEMA (Federal Emergency Management Agency) for a Hazard Mitigation Grant Program (HMGP), the goal of the HMGP is to acquire and permanently remove all at-risk structures from flood-prone properties.In March of 2019, the state of Nebraska was hit by severe flooding. On March 21 of that year, President Donald Trump declared Major Disaster Declaration DR-4420, which included Jefferson County.The HMGP mitigates flood-prone properties through various methods, including the acquisition of the properties in flood-prone areas by the city. The city acquired seven properties through this program. The purpose of the program is to prevent development in flood-prone areas, so no building is allowed on these properties. Instead, they can be used as outdoor recreation, such as parks; wetlands management; natural reserves, such as cultivation, grazing and camping; unimproved, unpaved parking lots and buffer zones.Banahan noted that two of the properties are not in the floodplain, “Our analysis of the FEMA map and the city’s floodplain map says two of them are not.”However, Bedlan said a property does not have to be in the flood plain, it must simply be in a flood-prone area, “We surveyed properties to determine whether they were in an interior flooding area.”A hydrology study determined those properties were at risk of flooding.Bedlan said these properties should not be on the tax roll, “So, in my opinion, it should not be on the roll because it is a property that will be in green space. So, whether or not it’s in a floodplain, it’s essentially a park or green area.”Banahan said, “I have reached out to the property tax administrator to determine whether or not green space is a qualified governmental purpose. I have not heard back, yet.”

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