In what could turn into a landmark case, Virgin Islands businessman Gary Berne is suing the V.I. government over how it determines taxes on commercial property.
His complaint will be heard Tuesday in District Court on St. Thomas.
At issue is whether the government can use the replacement cost of property in making an assessment or if it must consider the property's actual, current value.
The case stems from assessments made on the buildings known as "Berne Alley" between the St. Thomas Waterfront and Main Street, just west of the edge of the tourist district.
The property, consisting of four parcels, is owned by Berne Corp. and by B&B Corp. "It's been in our family for three generations," Berne said. Right now it houses a Chinese restaurant, a convenience grocery, a small church, a FEMA office and "a couple other small offices."
Over the past two years, Berne said he has had the property appraised three times and the average appraisal was approximately $1.3 million. But for 1999, "the government has it at $6 million."
This is not the first time Berne feels the government overvalued his property. He said he waited five years to have a previous appeal heard by the Tax Appeals Board.
His attorney, James Derr, said the long wait is one of his arguments for bringing the case in District Court rather than in Territorial Court.
In his complaint, he argues that the V.I. Code provides for nine factors to be considered in assessing property values for taxation: location and surroundings; quality or fertility; condition of structures; recent cost to the present owner; recent sale price of adjacent property; recent bona fide offer; accessibility; proximity to public facilities, conveniences and utilities; and rental or income derived directly from the property.
But, he says, V.I. Tax Assessor Roy Martin told the Board of Tax Appeals that the values for Berne's parcels "were calculated based on a replacement-cost estimate determined by multiplying the square footage of the structures erected on said parcels by $110 per square foot."
Berne said the property value has declined in recent years as two neighboring banks and the Virgin Islands Telephone Co. offices moved out, and he has had to lower rents.
The high taxes are the last straw.
"Between that and insurance and what we're getting for rent, they're just driving us into bankruptcy," he said.
