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OTHER LITIGANTS JOIN SUIT AGAINST TAX ASSESSOR

In the wake of a favorable initial ruling for taxpayers, the ranks of litigants contesting the V.I. tax assessor's system of determining tax obligations are swelling.
St. Thomas attorney David Bornn confirmed his client, Twenty-One Queens Corner Inc. (better known as the C & M Caron building) "is in the process of joining the (Gary) Berne suit." Bornn's client had already been working on its own case.
Attorney James Derr, who is representing Berne, expects the numbers of taxpayers taking the government to court will grow significantly.
"I have been approached by a number of other large commercial property owners" to possibly join Berne's action, he said.
The crux of the case is Berne's contention that the government has been overvaluing his-and possibly other property owners'-property by assessing taxes based on the replacement value rather than actual value. Two of his companies, Berne Corp. and B & B Corp., are the plaintiffs listed in the case, which involves office and retail space he leases in a section of downtown Charlotte Amalie popularly known as "Berne Alley."
District Judge Thomas K. Moore has set Dec. 4 to hear the case on St. Thomas.
Moore issued a preliminary injunction late last week saying the government and the tax assessor "are enjoined from collecting property taxes unless the property or properties are assessed in accordance with" the V.I. Code section that Berne seeks to enforce. Moore heard initial arguments Aug. 15.
Tax Assessor Roy Martin said Wednesday he has not yet received any instruction from the Justice Department regarding that portion of the order but he noted that deadlines both for payment and for appeals of this year's property taxes are already past. Appeals had to be made by Sept. 15. He declined to comment on the case, but did say that his office "relies heavily" on replacement costs in determining commercial property values, though it also looks at rental income and market value.
According to Moore's ruline, "Mr. (Roy) Martin (tax assessor) admitted that his office used the replacement cost of the buildings in arriving at his assessed value of the properties. Replacement cost is not equivalent to 'actual value,' nor is it one of the 10 factors listed in section 2404 (of the Code.) It is merely the number of square feet multiplied by a replacement cost per square foot. Further, the plaintiffs' evidence that the tax assessor's valuation was several times the properties' appraised value under generally accepted methods would likely persuade a trier of fact that the tax assessor did not use 'actual value' in assessing plaintiffs' properties. Plaintiffs have shown that they are likely to succeed on the merits."
Moore also indicated the case may apply to other Virgin Islands property owners. "As appropriate, a plaintiff may bring suit under section 80 (of the Code) on behalf of all similarly situated taxpayers. … The violation of law alleged by plaintiffs is presumed to harm all payers of the property taxes whose properties have also been illegally valued."
Berne contends the government assessed his combined properties at $4.1 million in 1994, but at $5.9 million in 1999-despite the fact that they were severely damaged in 1995 by Hurricane Marilyn and have not been fully repaired. He also says the government has not considered such things as a softening rental market.
The 10 factors the law says the government should use in assessing property taxes are 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.
Derr said Berne's case is limited to recent years, but "there's nothing to prevent somebody moving to file a case to recover past overpayments … and I suspect people will be doing that."
The movement could expand in other ways, too.
"I'm just waiting for the appropriate case to come along to expand this into residential property," Derr said.

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In the wake of a favorable initial ruling for taxpayers, the ranks of litigants contesting the V.I. tax assessor's system of determining tax obligations are swelling.
St. Thomas attorney David Bornn confirmed his client, Twenty-One Queens Corner Inc. (better known as the C & M Caron building) "is in the process of joining the (Gary) Berne suit." Bornn's client had already been working on its own case.
Attorney James Derr, who is representing Berne, expects the numbers of taxpayers taking the government to court will grow significantly.
"I have been approached by a number of other large commercial property owners" to possibly join Berne's action, he said.
The crux of the case is Berne's contention that the government has been overvaluing his-and possibly other property owners'-property by assessing taxes based on the replacement value rather than actual value. Two of his companies, Berne Corp. and B & B Corp., are the plaintiffs listed in the case, which involves office and retail space he leases in a section of downtown Charlotte Amalie popularly known as "Berne Alley."
District Judge Thomas K. Moore has set Dec. 4 to hear the case on St. Thomas.
Moore issued a preliminary injunction late last week saying the government and the tax assessor "are enjoined from collecting property taxes unless the property or properties are assessed in accordance with" the V.I. Code section that Berne seeks to enforce. Moore heard initial arguments Aug. 15.
Tax Assessor Roy Martin said Wednesday he has not yet received any instruction from the Justice Department regarding that portion of the order but he noted that deadlines both for payment and for appeals of this year's property taxes are already past. Appeals had to be made by Sept. 15. He declined to comment on the case, but did say that his office "relies heavily" on replacement costs in determining commercial property values, though it also looks at rental income and market value.
According to Moore's ruline, "Mr. (Roy) Martin (tax assessor) admitted that his office used the replacement cost of the buildings in arriving at his assessed value of the properties. Replacement cost is not equivalent to 'actual value,' nor is it one of the 10 factors listed in section 2404 (of the Code.) It is merely the number of square feet multiplied by a replacement cost per square foot. Further, the plaintiffs' evidence that the tax assessor's valuation was several times the properties' appraised value under generally accepted methods would likely persuade a trier of fact that the tax assessor did not use 'actual value' in assessing plaintiffs' properties. Plaintiffs have shown that they are likely to succeed on the merits."
Moore also indicated the case may apply to other Virgin Islands property owners. "As appropriate, a plaintiff may bring suit under section 80 (of the Code) on behalf of all similarly situated taxpayers. ... The violation of law alleged by plaintiffs is presumed to harm all payers of the property taxes whose properties have also been illegally valued."
Berne contends the government assessed his combined properties at $4.1 million in 1994, but at $5.9 million in 1999-despite the fact that they were severely damaged in 1995 by Hurricane Marilyn and have not been fully repaired. He also says the government has not considered such things as a softening rental market.
The 10 factors the law says the government should use in assessing property taxes are 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.
Derr said Berne's case is limited to recent years, but "there's nothing to prevent somebody moving to file a case to recover past overpayments ... and I suspect people will be doing that."
The movement could expand in other ways, too.
"I'm just waiting for the appropriate case to come along to expand this into residential property," Derr said.