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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.

(24) comments

MamaBear20

They also own my apartment. We just receive our lease renewal letter that they will be increasing our rent starting June 1st from $600 to $920 plus we have to pay them an extra $25 for a "water reimbursement". That is like a 57% increase on our rent for only a 2 bedroom/1 bathroom 800 square foot apartment. We might as well be living in one of the nicer downtown lofts for that price because these apartments are not worth it at all, especially being so poorly maintained.

jean b

No, Mr. Aim, I'm pretty sure it was trump's book, The Art of the Deal, AKA The Art of the Steal. As far as I know Biden hasn't filed for bankruptcy, but trump has 6 times, he's not paid carpenters and construction workers, etc several times, more than a dozen cities are trying to get him to pay for the services they provided him during his nob-stop rabble rallies, and he's had to refund over $122 million dollars to his supporters because he was grifting them for more than they were wanting to contribute. So, PLEASE, no more lies about our honest and decent President Biden.

Rationa1

Then candidate Trump said that bankruptcy and stiffing contractors and subcontractors was the smart thing to do.

Ma Barker

Mr. Eucalyptus must have read that book - what was it - something about art?

Aim_High

Was it maybe Joe Biden's "The art of the steal"?

Lterrill

This is not a good business plan. The company could borrow the money at an interest rate far better than what is accruing on the delinquent tax. The county will actually come out better if the taxpayer continues down this road because of the interest. It will be a gain ... just delayed.

The proposed legislation is a very bad idea. Be wary of any government program that lessens the time in which they must wait before they can foreclose for taxes and take your home.

Ma Barker

Read again what Mr. Goodman says about "losing" two years' worth of taxes. Either he doesn't understand, or he's just saying it wrong.

create

On top of everything else, I'm told that the people who live in these properties never get their complaints taken care of. Now what?

bubbadleroy

CHINA FINANCED.

create

I know you are probably being facetious here, but I would seriously like to know who financed these purchases. There must be shareholders. Who are they? Might some of them be local? We need a relentless investigative reporter for all this. In the meantime, just get used to being robbed and shutting up about it. They're hoping that this too shall pass.

Aim_High

So for example, if I skip paying 2013 and 2014 taxes, but then I pay 2013's taxes in 2015, I no longer have to pay 2014 and 2015? Because the 3 year clock starts over in 2015 meaning no action can be taken until 2018?

This still doesn't make sense to me... " 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."

How does someone only pay up every 3rd year? The treasurer won't let you pay the current year if the previous two are still owed... and if they pay the full amount every 3rd year, the county isn't really swindled since its gaining late penalties...

Chitty Chatterer

How I read it is, if you don’t pay 2013 or 2014 taxes, now it is 2015 taxes are due. If you don’t pay anything your properties go up for auction, so you pay the 2013 taxes. You are good again until next year, Now it is 2016, you have to pay 2014 or property goes up for auction.

My thought it’s original intent was so property couldn’t be taken away to people having a hard time paying property taxes. However, it’s obvious in this case this business owner has totally taken advantage of Lyon County (& Sedgwick County).

Aim_High

This makes sense, but the county isn't being swindled out of 2/3's of the taxes in your scenario, they're just being paid late. I'm sure there are quite a few people who pay last minute to avoid a tax auction, what makes me curious is that Goodman says no one else in the county has exploited that loophole. He makes it sound like this company is somehow getting 2 out of every 3 years free...

Rationa1

I wonder if one could transfer the property to a different LLC at 2 years and 11 months and avoid triggering the enforcement mechanism.Then 2 years, 11 months later transfer it to a third LLC, and just keep circulating the properties among various LLCs....

Chitty Chatterer

I look up a couple articles about their time in Wichita. I am still sticking with how I believe the system works, the reason initially states its lost money is how government budgeting works. (This is just my opinion -hopefully the Gazette can help clarify this to us readers with another article)

I believe when a property is auctioned the person buying property has to payoff the back taxes or if buying a property that owes 1 million in back taxes, the sheriff auction has to get 1 million and one dollars? But then comes into budget as auction income, and it should be put back into the account of taxes but I don’t know if it is actually is or if it was already written off? Maybe I should take a class in government budgeting?

A few started talking politics left or right, how about instead of blaming both sides. WASHINGTON DC wins when we fight, be grateful that the city attorney is looking into this right now. My guess most people in general want better landlords, better places to live, and better working conditions.

Hardheaded2

I don’t think it’s a Republican/Democrat thing. It’s a City Government thing. The Code services should get there and Enforce the Codes. The City Attorney needs to Go after these Dead Beat owners.

cyberspace

He must have taken lessons from tRump.

Gary Lukert

This is entirely the fault of Republicans, who control everything in the State. Republicans have total Veto power over all Governors! You can't blame any Democratic Governor or State Representative or Senator. You see, Republicans care, first and foremost about Rich People and Rich Corporations, and anyone owning a business. Thus, they write in Loop Holes FOR THEMSELVES! However, Republicans always PROFESS God, Flag, Anti-Abortion and Guns...as their leading attack weapons on Democrats! Anyone, and I am sure there are thousands of good, hardworking Republicans...all are suckers for GUNS, FLAG, Anti-Abortion....thus, Republicans "lead" with those things to get the "Republican Rank & File to vote for them! What is it, 7.25 an hour for the State Minimum wage? Yes, it is. Thus, those many Republican people making that or slightly more, they VOTE AGAINST THEMSELVES....for GUNS, THE FLAG, ANTI-ABORTION. Keep in Mind, too...Republicans KEEP the Sales Tax up there, including on FOOD! You see, they get you to pay that tax, so they can keep the Rich business owners and Rich Republicans happy! Think about that...when you Support those phony politicians calling themselves Christians! The last people most of them think about, care for...IS YOU!

Rationa1

Gary, I think it has more to do with neoliberalism than party ideology.

Comment deleted.
Aim_High

Wow Gary, you've triggered another Republican snowflake. Keep up the good work!

Hollowed Ground

What's the news here? Not paying taxes is the norm for businesses. That's why they whine all the time about how high their taxes are and how expensive regulations are. Long past time to call BS on them all.

create

So very true. Now for the City of Emporia to do their jobs and get our money back. We face so much infrastructure in disrepair while this OK dude gets to skate. This whole thing smacks of fraud in many more ways than just tax evasion. Who financed all those purchases?

Blueheeler

Create ,,.. I know for a fact these people are billionaires ,.. so in answer to your question cash was paid for all properties . My wife worked for them for 5 business days and promptly quit ,...based on her interactions and observations she said the owners are mentally ill and probably could not take care of a houseplant.

Rationa1

President Trump called tax avoidance "being smart."

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