By Gene Meyer | Kansas Reporter

Urban land owners reap big tax savings ‘harvesting’ undeveloped property. Some may qualify for drought relief, too.

Really, they’re making hay — cut, dried grass.

In Kansas, hay pays.

Under Kansas tax laws, harvesting a crop – any crop – from empty lots where subdivisions or shopping strips might crop up will save owners thousands in potential property taxes, state audits say.

A 2-acre plot along a busy stretch of Metcalf Avenue in Overland Park was appraised at $440,000. That appraisal was dropped to $120 for tax purposes after someone cut and baled the grass, auditors found in a 2005 report.

Things haven’t changed much since, says Roger Hamm, Kansas Department of Revenue’s property valuation division chief. For two decades, he worked as a dairy farmer.

“Land in Doniphan County, which usually is among the highest in the state, that sells for thousands of dollars an acre, is valued at $75 an acre under our agricultural use rules,” Hamm said.

The reduction in tax revenues compared to what higher valuations would produce “is significant,” Hamm said.

“In Kansas, agriculture is golden,” says Johnson County Appraiser Paul Welcome, who for years has unsuccessfully argued against applying Kansas agricultural usage law to urban land development.

But the law is the law and in Kansas,  “as long as they (property owners) harvest a crop, it’s legal,” said Janis Lee,  a Kensington ranch owner chief hearing officer of the Kansas Court of Tax Appeals.

But wait, there’s more.

U.S.  Agriculture Secretary Tom Vilsack on Wednesday declared a drought disaster in upscale-suburb-dominated Johnson County. The fiercest drought in decades has consumed the near entirety of Kansas, including its biggest urban centers in Kansas City and Wichita.   

The U.S. Department of Agriculture wants to extend help to all producers affected by the dry weather — including the real estate developers who cut and bale tall grass — to qualify for tax reductions as agricultural producers, and maybe donate their crop to a horse shelter or other charity.

That’s just wrong, says State Sen. Rob Olson, R-Olathe.

Typically, Olson says, he’s not of fan of higher business taxes. But under Kansas agricultural usage laws, “it’s the regular taxpayers who are getting ripped off because they are subsidizing these guys.”

Allowing developers to ask for federal help after the failure of a crop planted to avoid higher taxes is over the top, Olson said.

“Once again, these guys are taking advantage of the system.”

Developers may have thousands of undeveloped patches of ground in Johnson County, and the owners could qualify for disaster help. Some are small, maybe an acre or two. Others are larger, such as the 20 acres or more needed for a Walmart Superstore or a modest strip mall.

Under USDA guidelines, “they all may be eligible for some assistance,” said Myron Stroup, USDA’s Farm Service Agency chief for Johnson and Miami counties.

But how much help for which developers might qualify is impossible to forecast, Stroup said. Some have individual harvesting contracts with commercial farmers that specify who gets disaster help, if offered. Some of the relief for which they might be eligible – such as a loan to buy livestock feed – wouldn’t seem that useful for suburban developers, he said.

Olson in Olathe said he won’t take chances.

“We can write legislation with language that’s clear enough to say who is a real farmer,” he said. “I’m going to contact the governor’s office tomorrow.”