Aug. 21, 2008 — Property tax bills for fiscal year 2006 are scheduled to be mailed by Friday, even though no final ruling has been handed down in a longstanding court case that challenges whether the territory's property tax system is fair and equitable.
In 2000, a group of commercial property owners took the V.I. 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. The court case prevented the government from issuing property tax bills for 2006 and 2007.
Attorneys representing the property owners and the V.I. government attempted in June to iron out a settlement that would allow one set of bills — those for fiscal year 2006 — to be issued this year using the newly assessed property tax values and property tax rate structure signed into law months ago by Gov. John deJongh Jr. However, the government couldn't "come to a resolution" on the details of the agreement, and it failed to be approved by V.I. District Court Judge Curtis Gomez, Justice Department spokeswoman Sara Lezama said Thursday.
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 hearings over the past few months, government attorney Carol Thomas-Jacobs said the government has completed its revaluation, and received a favorable report from the special master. Meanwhile, the federal statute upon which the case and subsequent settlement was based has been repealed, making the court's stay on property tax values moot, Thomas-Jacobs has said.
The 1936 statute prevented the V.I. government from taxing real property — regardless of its classification or use — at different rates.
But attorneys for the property owners have argued that the judge can't lift the injunction until certain conditions in the 2003 settlement are met — including the government's ability to set up a functioning Board of Tax Review that would be able to hear appeals from residential and commercial property owners within 120 days.
The attorneys have 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, attorney Jim Derr, representing Berne Corp. — one of the original plaintiffs in the case — argued during another recent court hearing.
During a Senate hearing Wednesday, V.I. Attorney General Vincent Frazer said he believes the governor's approval of a new property-tax rate structure, coupled with the repeal of the 1936 federal statute, gives the government the authority to issue the bills, which is expected to bring in about $38 million in government revenues by the end of fiscal year 2008.
The government has already filed an "informational motion," alerting the judge and attorneys for the property owners that the bills would soon be in the mail, Frazer said Thursday. Gomez has still not made a decision or set any additional hearings to discuss the matter, he added.
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