An order in the Berne property tax case issued Thursday by U.S. District Judge Curtis Gomez lifts a 2003 injunction but mandates that the territory send out property tax bills for 2007, 2008 and 2009 at the 1998 rate, according to attorney Jim Derr, who represents litigant the Berne Corp.
The 2007 property tax bills will be issued in early February, said Shawna Richards, spokesman for the Lieutenant Governor’s office. “And the 2008 bills will go out later this year,” she said.
There is no timetable set yet for the 2009 bills, Richards said.
Gomez’s order allows the government to issue tax bills from 2010 at rates other than the 1998 rate, but what that rate will be remains unknown because properties are slated to be revalued.
Since the last revaluation done by BearingPoint, Inc. consultants happened in 2005, Derr said the territory was required to have another revaluation in 2010 because they have to be done every five years. No date has been set for the latest revaluation.
BearingPoint filed for bankruptcy in 2009.
However, Derr said he doesn’t think a revaluation will help St. John, which in many cases had its properties valued at far more than they were actually worth during the 2005 revaluation.
“There are big mansions on the beach taxed as vacant land, and shacks at $375,000,” Derr said.
Additionally, many valuations didn’t include the furnishings that are sold along with the house, and Derr said the limited number of sales on St. John made it difficult to do an accurate valuation.
Derr said that unless the revaluation starts over completely instead of basing the revaluations on the flawed 2005 values as expected, St. John’s properties will still be valued too high.
“Garbage in, garbage out,” Derr said of revaluations based on old data.
A suit filed by St. John’s Unity Day Group to fight the flawed valuations will be heard in District Court starting Feb. 7, Derr said.
In July 2000, a group of commercial property owners on St. Thomas filed suit because they claimed their properties weren’t valued the same as residential properties. The case came to be known as the Berne case because Berne Corp. headed the list of those who filed suit.
A settlement in December 2000 mandated that the local government revalue properties. The government didn’t comply and in 2003, the court ordered them to comply with the revaluation order and to send out the property tax bills at 1998 rates until a new property tax system was approved.
The case has lingered in the courts since then. In 2008, the territorial government sent out the 2006 property tax bills using the new valuations, but the court ruled that they were in contempt for not obtaining approval to send them out. Finally, in July 2010, the government sent out the 2006 bills using the 1998 rates. Property owners had until Nov. 15 to pay them, with a six-month waiver of penalties and interest given if they didn’t make their payments on time. This means those bills must be paid by Feb. 16.
Derr said that before the 2007, 2008 and 2009 property tax bills can be issued, the Legislature will have to act to include the same six-month penalty and interest waiver. He said this is necessary because property owners are faced with paying multiple tax bills in one year.
“It’s going to be a hardship trying to get caught up,” Derr said.
However, Richards said in a press release issued Jan. 10 that a waiver already exists for years 2006, 2007, and 2008.
The settlement also includes a provision that helps taxpayers who appeal to the Board of Tax Review. If the board doesn’t hear the case in the required 120 days, the taxpayer wins the case.
“At least we now have recourse,” Lorelei Monsanto of the Unity Day Group said, adding that it will help St. John residents. She declined to comment further because the Unity Day Group’s case is still in the court.
The settlement also gives the taxpayer the right to see a hearing examiner’s report and the right to appear before the board.
The settlement was finalized Jan. 7 by visiting U.S. District Judge Timothy Savage, but Gomez only lifted the injunction Thursday, Derr said.
