A management company which owns several rental properties in Emporia is two years and approximately $1 million behind in paying its taxes according to Lyon County Attorney Marc Goodman.
Eucalyptus Real Estate is an Oklahoma City-based property investment firm that has quietly purchased the Four Seasons, Bluestem, Parkview, State Street Apartments, the Riverview Condominiums and more in Emporia over the past few years.
In 2019, The Gazette published an article detailing the company’s alleged neglect of its properties. Goodman believes the company has been cheating the county out of hundreds of thousands of dollars.
Goodman said he had received a trustworthy tip that Eucalyptus was “using loopholes in the law to avoid tax payment” and did some more digging himself.
“I talked to the treasurer yesterday and I went through all these properties and [almost] every one of them … they’re two years behind in taxes,” he said. “ … There’s probably $1 million worth of property tax there if you add all those properties together.”
Goodman said that Eucalyptus is only up-to-date on its taxes on two of its 14 Emporia properties, the reason being that it is receiving a tax benefit that requires taxes to be paid up for those two properties.
As for the other properties that are two years behind on taxes, there is not a whole lot that can be done right now. In Kansas, no action can be taken until a company falls three years behind on its property taxes. As long as the company pays up every third year, the clock restarts and the county is swindled out of two-thirds of its property taxes.
“The three-year question about property tax, that I want to talk to a legislator about, about introducing something next year to get that loophole out of there,” Goodman said. “That’s ridiculous that he can sit outside of any enforcement mechanism and just not pay.”
Goodman stated that no one else in the county has exploited that loophole, but unless it is changed in the state legislature, the possibility is always there.
Eucalyptus is owned by Lew McGinnis, who has a checkered past in the real estate world. In 2011, the Wichita Eagle reported that Macco Properties — another real estate company owned by McGinnis — owed $2.3 million in back taxes on its properties in Wichita and engaged in poor management practices similar to those seen in Emporia.
“When you combine [the delinquent taxes] with the fact that they’re just allowing the properties to fall apart, that just makes it even less palatable,” Goodman said.
Goodman said he would talk with Emporia City Attorney Christina Montgomery about what he’d discovered and what the city could do about the living conditions in the properties, as he suspected that Eucalyptus had violated housing codes. However, because “county jurisdiction doesn’t extend to city housing codes,” he said, it would be up to the city to take action.
He also encouraged the tenants of Eucalyptus properties to approach the city with their concerns as well.
“This guy has gobbled up a ton of properties and he’s just [fleecing] the city and he’s using every loophole he has to essentially promote substandard housing,” Goodman said.