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Commercial Property Tax Case Inches Forward

June 20, 2008 — A lack of expert testimony and documents requested from the local Tax Assessor's Office cut short arguments Thursday for attorneys representing commercial property owners who are challenging the fairness and accuracy of the government's property valuation and appraisal system in District Court.
Eight years ago, the group of property owners took the government to court, alleging the government was assessing commercial properties based on replacement rather than actual property value — a method, they said, that resulted in inflated assessments. Thomas Moore, then the sitting U.S. District Court judge, agreed, and in 2003 ordered the government to conduct a thorough revaluation of commercial and residential properties.
Meanwhile, property tax values were frozen at 1998 levels until the project was complete and a new assessment system — which had to be certified by a court-appointed special master — was put in place. While no final decision has been made, a temporary agreement ironed out in May by attorneys for the property owners and the V.I. government will allow one set of tax bills — put on hold while the court case moved forward — to be issued this year.
The bills, which are estimated to be worth nearly $60 million in revenue for the government, will reflect newly assessed property values and a rate structure signed into law months ago by Gov. John deJongh Jr. (See "V.I. Government Finally Gets OK to Issue Old Property-Tax Bills.")
Attorneys for the government have continued to press the court to dismiss the case and lift the injunction barring the government from issuing property tax bills. In another hearing held last month, government attorney Carol Thomas-Jacobs said the government has completed its revaluation, and received a favorable report from the special master.
Attorneys representing the property owners disagreed, however, and said during an evidentiary hearing Thursday that any certification from the special master hinges upon the government being able to set up a functioning Tax Review Board that would be able hear appeals from residential and commercial property owners within 120 days.
The attorneys also said previous reports from the special master dating back at least four years question the government's data collection and mapping systems, which have caused problems with identifying local properties, said attorney Jim Derr, representing Berne Corp., one of the original plaintiffs in the case.
"Letters from 2005 say that studies on this thing need to be done, and that the data isn't accurate," Derr said. "And the reports from 2007 and 2008 don't say that any of the problems were fixed."
The special master's duties are limited to certifying the operations and procedures used by the Tax Assessor's Office during the appraisal process, and have nothing to do with the Board of Tax Review, Thomas-Jacobs argued.
"At no time were his responsibilities expanded to include the Board of Tax Review," she said. "That was just a comment made on the side, and I don't think the court should take this into consideration when determining whether to adopt the special master's findings that the appraisal system is credible."
Attempts to get special master Joseph Hunt on the witness stand were shot down by District Court Presiding Judge Curtis Gomez. Derr said that if Hunt had been put on the stand, he would have testified that the government withheld information and that he was forced to work only with reports and information given to him by the company hired to do the revaluation.
Hunt's position as a court-appointed special master gives him a "quasi-judicial status" that would prevent him from taking the stand, Gomez said.
The inability to correctly identify local properties has resulted in a number of "glaring" errors and inconsistencies in the reassessment process, Derr argued later. Lots marked on property assessment sheets as vacant parcels on St. John with a zero total assessment or building value actually contain multimillion residences or rental properties, he said, showing the court several assessment sheets pulled off the Tax Assessor's website.
While St. John resident and independent appraiser Elissa Runyon said many of the properties mentioned by Derr were "significantly undervalued or overvalued" during the revaluation process, she could not be used as an expert witness during Thursday's hearing. Attorneys for the property owners had not properly notified the government of their intention to use Runyon as an expert on the appraisal of St. John properties, Gomez said.
The judge added that he would take the property owners' objections and attorneys' arguments "under advisement."
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