Senator at Large Reports: Property Tax

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By Senator at Large Craig Barshinger
St. John Tradewinds

St. John residents are concerned about property tax. Many received exorbitant tax bills for 2006 that they could not possibly pay.

The Lieutenant Governor’s office has been slow to acknowledge the distress this has caused. The situation is complex, but at the root it is simple. In 2003, the

District Court told the government of the Virgin Islands that the property tax system was a mess and needed to be revamped.

That triggered the “re-valuation,” done by the Bearing Point contractor. Bearing Point did not get accurate values. They were way off. Therefore, the tax bills we received on St. John were unreasonable. For example, on St. Thomas property improvements were valued at $93 per square foot while on St. John the improvements were valued at $360 per square foot.

This means that a St. John resident was to pay four times as much tax as for a similar house on St. Thomas. There is no way to maintain cultural continuity under such a system.

I have told the Governor, the Lt. Governor and his entire cabinet: St. John residents want to pay their tax, but only their fair tax. St. John cannot, and will not, pay property tax based on incorrect values or an unfair tax system.

The Unity Day Group has filed a lawsuit asserting that the Bearing Point revaluations were inaccurate. I believe that the cause is just and that they will prevail. But it could take 5 to 10 years to resolve this lawsuit.

Therefore, I am introducing legislation to bring relief to St. John residents. This will in fact be good for all Virgin Islanders, because no property tax can be collected anywhere in the V.I. until the District Court determines that the problems with the property tax system are corrected.

This bill, No. 28-0078, along with amendment No. 28-506T, will be heard on Tuesday, August 11, in St. Thomas during the day. Please call Beverly or Catherine at my office at 693-8061 for more information and help arranging transportation if you would like to attend the hearing. I have asked that subsequent hearings on this bill be hosted on St. John.

A copy of my property tax bill is available from 8 a.m. to 5 p.m. Monday through Friday in my office at the St. John Legislature building.

Some of the specific reasons we are bringing this legislation follow.

The small number of sales on the island of St. John during the revaluation period 2004-2005 was only 15. It is insufficient to accurately measure St. John’s property value. This is a statistical problem that is not easily remedied.

Furthermore, the kind of homes sold in St. John during this period was heavily biased toward high-end rental properties and the average homes in which residents live were not represented.

St. Thomas/St. John is one district, in which the costs of construction is intrinsically similar, and therefore a similar value should be used for the per-square-foot values of improvements and structures on St. Thomas and St. John; the values used by the  Bearing Point contractor of $93 for St. Thomas and $360 for St. John are an aberration.

The Bearing Point contractor never shared its “model” used determining values on the island of St. John with any competent authority.

There was a “bubble” of economic activity during the evaluation period that has burst; the valuations from this period are intrinsically flawed and cannot be used as a basis for taxation because they reflect speculative investment value, rather than the value that a potential resident would pay for the privilege of living in the property as a lifelong resident.

The intent of the Legislature is for property tax to be levied on the stable value, and to affirm the principle that no Virgin Islander should be driven from their home by property taxes that rise much faster than inflation.

The blistering condemnation of the Government’s property tax system by the United States District Court and the string of lawsuits have created a situation in which the Virgin islands cannot collect property taxes.

By remedying the cited problems, it may be possible to settle the lawsuits and resume the collection of fair and reasonable property taxes.

Failing that, we may just as well abolish property taxes as there is no end in sight for the court battles.

For the foregoing reasons, The sum of $150,000 is appropriated in order to hire certified appraisers to form a basis for calculating the correct real property tax in the Virgin Islands, particularly on the island of St. John.

Furthermore, the real property located on St John must be valued by using the values of property on St. Thomas and St. John similarly situated and using the resulting valuation for property tax purposes.

Please let use hear from you, either by calling our office at 693-8061,or by emailing to senator@barshinger.net.