Dec. 26, 2001 — The owners of the Wyndham Sugar Bay Beach Club and Resort have sued the Virgin Islands government and Tax Assessor Roy Martin in the latest of a series of lawsuits by property owners who claim their properties were grossly overvalued in assessments for tax purposes.
The Sugar Bay lawsuit, filed in District Court on Dec. 19, claims that the property was purchased for $4.2 million in cash after it was severely damaged by Hurricane Marilyn in September 1995.
Before the hurricane, the government assessed the value of the property for tax purposes at $45.4 million; a year later, after the hurricane, the assessed value was reduced to $41 million – nearly 10 times the actual purchase price, the lawsuit states.
The discrepancy between the selling price and the assessed value is so large that the V.I. government has refused to record a deed for the sale of the property, the lawsuit claims, and this in turn has made it impossible for the Sugar Bay owners to obtain certain operating permits or to obtain a mortgage on the property.
Without the deed, Sugar Bay also cannot apply for tax benefits from the Economic Development Authority, the lawsuit states. The inability to get a mortgage, tax breaks and certain permits has cost the owners hundreds of thousands of dollars, according to the lawsuit, which was filed by attorney Edward Reynolds.
Like the other lawsuits filed by commercial property owners against Martin, the Sugar Bay complaint notes the V.I. Code states that property assessments must be based on "actual value" as determined by sale price, the value of surrounding properties, the ability of the property to produce income and several other specific criteria.
The Sugar Bay owners claim that the government has produced no documentation as to how the Tax Assessor's Office arrived at the $41 million assessment. A court settlement reached last year between the owners of several Charlotte Amalie commercial properties and the Tax Assessor's Office mandates that the government make new assessments of all commercial properties in the territory using nationally recognized standards. An independent court master was assigned to review those assessments and report back to District Court Judge Thomas Moore.
Government officials and the owners of Sugar Bay have been in negotiations but have not been able to reach agreement on the value of the property, the suit claims. Attorneys for the V.I. government have not yet filed a response to the Sugar Bay lawsuit.
