In other words, you both will continue to share the economic benefits of your inheritance, as in splitting the $20k income, while telling the government and the lenders that it is not the case.

You get cheaper labor because they aren't paying taxes, so thusly the government assumes that is enough benefit to you to not give you a tax break on top of it.

Was successful in helping the equipment company enter the government contracting space.

Mortgages are recorded by county recorders office.Here's an example - Montgomery county in Ohio:FAQ - https://www.mcohio.org/government/elected_officials/recorder/faq_s.phpActual database you can search -http://public.mcrecorder.org/external/User/Login.aspx?

I spoke with an agent today with strong ties to the city government.

I can't tell if you're pro or anti government regulation.

But you may owe a good portion of that back to the government after selling.

In this case the tenant happens to receive financial support from the government. 

Another plus for the area is that the two big employers in the area are government and health care.

Counties and states have different laws governing it but that seems off by quite a bit it could be a local law or it could be a mistake in that they assessed the land only and not the property as a whole, many times even if there is a law limiting increases in assessed value it resets when the property is sold.