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Lieutenant Governor's Plan Would Rein in Property-Tax Increases

Oct. 2, 2007 — After months of panic on the part of many Virgin Islanders over what some feared would be dramatic increases in their property taxes, a plan unveiled by the Lieutenant Governor’s office Tuesday night actually offers lower average bills to homeowners on St. Thomas, and a slight increase to homeowners on St. Croix.
The big exceptions are property owners on St. John and holders of timeshares.
In addition, the new plan proposes increases in tax exemptions for homestead, veterans, elderly, seniors and the disabled.
The proposed plan would eliminate the across-the-board millage rate of 0.0075 in effect since 1998 and would replace it with a differentiated millage rate based on four types of property: residential, land, commercial and timeshares. The differentiated system is designed to mitigate the effect of a court-ordered property revaluation, which resulted in an average increase of 85 percent in property values in the territory. The proposed new millage rates are: 0.0036 residential, 0.0065 commercial, 0.0046 for landowners and 0.0110 for timeshare holders.
If enacted, the total revenue increase this system brings to the territory would be approximately $10 million more than the $46 million it currently receives from property taxes. That compares to $96 million that would have been generated had the old assessment rate been applied under the revaluation. That rate would have been unsupportable, said Lt. Governor Gregory R. Francis.
“There is no way that we are going to tax people out of their property,” he said. “It’s not going to happen.”
Nevertheless, St. Johnians have cause to wonder. Because market values on St. John have risen so dramatically, even under the proposed differential system the average residential taxpayer on St. John would see his or her taxes more than double from $1,542 to $3,831. The average landowner’s bill would go from $812 to $2,607; commercial property owners would see their bills go from an average of $2,559 to $4,445; and timeshare holders would see their average bill escalate from $229 to $335.
“An additional circuit breaker is going to be proposed to mitigate the increases on St. John,” said Tax Assessor Roy Martin. Specifics of the plan are being worked out, but will be included in the final proposal when it gets sent to the legislature for review in approximately two weeks, he said.
On St. Thomas, the average residential property tax bill under the differential system would drop from $945 to $927; the average landowner would see a decrease from $577 to $475; the commercial bill would drop from an average of $4,544 to $4,374; and timeshare holders on St. Thomas would see an increase from $225, on average, to $300.
The average residential property tax bill on St. Croix would increase from $554 to $596; the average landowner would see a slight drop in taxes from $287 to 281; commercial property owners would see their bill go from $2,209 to $2,455, on average. No timeshare figures were listed for St. Croix.
When rates for all three islands are calculated together, the average tax bill increases across the board, from $820 to $981 residential; $447 to $631 for landowners; $3,414 to $3,468 commercial; and $225 to $355 for timeshare holders.
Averages were calculated based on numbers of properties in each category, as opposed to what might be regarded as an average profile of properties per category, Martin said.
Timeshare holders are being targeted in this plan because their out-of-pocket expense, given the nature of the property, is relatively low, Martin said. “Each unit can generate up to 52 weeks out of the year, meaning 52 different property owners or taxpayers for each unit,” he explained.
Another feature of the proposal is increases in annual exemptions that property taxpayers are eligible to receive. The homestead exemption would rise from $250 to $400 for primary residence homeowners. Qualified veterans would see their exemption increase from $312.50 to $450, the disabled would see their exemption double to $500, and exemptions for the elderly and for seniors — previously two separate exemption categories — would be combined into one and would rise to $500 from $375 and $250, respectively. The exemption is the equivalent of a flat reduction in a property tax payer’s annual bill.
People with concerns about the method used to revalue their property now have until the end of October to protest under an extended deadline. After that, anyone wishing to contest a property revaluation will have to go through a formal appeals process. The government has received approximately 1,400 inquiries or protests to date.
Anyone who has not yet received a notification about the change in their property value should call or go to the tax assessor’s office, located behind the hospital on St. Thomas. However, notification to owners of vacant or improved properties of two acres or more is being mailed out this week, Martin added. Notices to all other residential property owners were issued in July and to commercial property owners last year.
Approximately 30 people attended Tuesday’s public-information session at Bertha C. Boschulte Middle School. The plan will now be presented at three more public-information sessions before going on to the legislature for review. If approved, it must then pass muster with the federal government, which imposed an injunction on V.I. property taxes in 1998, pending a revaluation.
The feds ordered the territory to revalue all property based on market value, prompting the hiring of the Virginia-based firm Bearing Point, which has been conducting property-by-property assessments as well as implementing new computer and property-evaluation systems in the territory.
The tax assessor’s office can be reached at 776-8505.
Taxpayers are encouraged to visit vipropertyrevaluation.com for more information about the revaluation of their property.
The remaining public information sessions will be held Wednesday at the Rotary West Community Center on St. Croix; Thursday at the Cruz Bay Ballroom, Westin Resort, St. John; and Friday at the David C. Canegata Multi-purpose Recreation Center, Christiansted, St. Croix.
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