I attended the town meeting on Thursday night, October 4, at the Westin St. John and was impressed by the attendance and clarity of the St. Johnians there. I have been thinking about all that was said, by individuals, the Bearing Point representative and our government officials. A few things come to surface as one ponders the matters.
First, I believe we are on the right track of defining multiple types (land, commercial, residential and time share) of property and that further qualifiers based on building size (if not vacant land), number of bedrooms/bathrooms/kitchens, number of stories (not sure this is as important as total sq. ft.) and lot size. These are all definable, measurable and quantifiable.
Things such as view, location desirability and fair market value are subjective matters. Beauty is in the eye of the beholder and it is very dangerous ground for the government to project their perceptions upon a landowner. Look at the clouds in the sky; I see a duck, you see a bunny. True market value is only realized at the time of sale of individual properties. It is an elastic thing and trying to stay exactly current when using a model based on the past is dart throwing at best.
View is even more subjective — you get pigeon holed into a tax rate based on view and a Sirenusa project (just used as an example) goes up in front of you and now you have to appeal your tax rate based on what? Good luck at that tax appeal hearing.
I believe a fairer plan would be to use the definable criteria such as lot size, building size, number of bedrooms and so forth. The government has a target for property tax revenue. Take that number and project that across the properties using defined rates for each property type. It is the most fair approach that all share equally in taxation. The arguments from the government now are twofold: “we have been mandated to use fair market value as a criteria;” and the second would be that “tax rates would be higher because of lost revenue from not properly taxing the high value properties.”
The answer for both is to use a special tax or if you want to stay within the court mandate, call it a deferred land tax which would come into play only when the property is sold — the only time the true market value is realized. This in essence protects the person who wants to live in their house for their whole life.
Additional monies to keep taxes lower would come from this deferred tax, put upon the seller who is realizing this value at time of sale. Investors in for a quick buck would pay their share every time a property flipped.
Yes this may slow development and maybe that isn’t what the government or realtors want, but in times of a perceptual change to a sustainable existence versus an ever-expanding one, is it so bad to tax a real revenue rather than a potential or imaginary one? If the government wants to be in the guessing game, let the government bear the burden of their projections of home sales and not tax the individual until true market value is realized. If a bank wants to loan someone money on perceived value that is between the bank and the borrower — they will still do business as usual.
As a sidebar I want to comment that we were told at the town meeting that the government was showing they “don’t exist in a vacuum.” Fine, so let us be more aware of how our money is being spent and of any significant tax rate increases (it seems this revaluation will increase taxes from real estate by about 20 percent, a $10 million increase). I wonder how the lieutenant governor would feel if he opened his next credit card bill and it read that “by the way, we will now be charging you 20 percent more for your balance.”
Secondly, I know Bearing Point went through an RFP process to become “our” company, but I am sure this is the beginning of a long-term arrangement between Bearing Point and the U.S. Virgin Islands and I don’t deny them profit. But I wonder if there was any economic incentive to get these appraisals correct the first time or are the second and third visits generating billables for the company? (It seems from the stories the discrepancies were gross).
We were encouraged to make them aware of these problems so they can have a better computer program and give us better guesses. Do you think that anyone who felt they were being undervaluated will come forward? Are we only correcting part of the problem? It will still only be a calculated guess versus a true, realized value.
Chocolate Hole, St. John
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