A regular Source feature, Undercurrents explores issues, ideas and events as they develop beneath the surface in the Virgin Islands community.
Does the individual citizen have any power to control government beyond the ballot box?
That question is at the base of a complaint filed last week on behalf of condominium owners at Sapphire Beach, attempting to force the Virgin Islands Government to auction off 13 empty condo units and eight marina slips.
The case also highlights a problem routinely faced by condominium associations which are not-for-profit organizations whose primary or sole source of income is regular payments by members.
Unit owners who fail to pay common charges frequently also default on their mortgage and neglect to pay property taxes. An association that places a lien on a delinquent owner’s unit typically finds the lien is subordinate to a mortgage-holder and/or to the V.I. government. The association can’t foreclose and resell the unit(s) unless and until the other lien-holders get their due or until those liens are removed.
While the foreclosure is in limbo, the association’s other unit owners, those in good standing, have to take up the slack for the delinquent member(s), either by paying extra in common charges or by postponing maintenance and/or improvements to the common property.
In the Sapphire case, attorney James Derr said the association is losing roughly $250,000 a year in uncollected condominium and marina slip fees.
“Each month, that’s money out the door,” Derr said. “It’s really not fair to the other owners to ask them to absorb this.”
With so much at stake, and with requests for action falling on deaf ears, Derr said it was decided “to do something creative.”
Derr filed a complaint last week in Superior Court on behalf of SBRMCOA LLC, the company that acts as the association for unit owners at Sapphire Beach Resort and Marina Condominium. The complaint states that an entity called Bayside Resort Inc. is the owner of record for the units and marina slips in question and that the entity owes real property taxes stretching back to 1999. He estimated each unit owes between $35,000 and $40,000.
Relying on a little-used section of the V.I. Code, Derr is asking the Court for a Mandamus action – a directive ordering the executive branch to act, in this case, by auctioning the delinquent slips and units, as is required by the law. Named as defendants are Lt. Gov. Gregory Francis and Tax Assessor Ira Mills.
Derr was quick to note that the case was well in the works before a scathing audit report was released last week, criticizing the Lieutenant Governor’s Office for its handling of real property auctions in 2012 and 2013. (See Inspector General: Questionable Practices Invalidate Property Auctions)
The condo owners association is bringing the complaint as a taxpayer, pursuant to 5 Virgin Islands Code, Subsection 80, which says that any taxpayer may sue to force the government and its officials to comply with a specific law. In this instance, the law is one that provides for the public auction of real property to satisfy outstanding, delinquent property taxes.
Normally, in order to be considered a party with standing, a person bringing suit has to show that he is directly harmed by the action (or inaction) that he is seeking to change. But under 5 V.I.C. Subsection 80, any V.I. taxpayer is effectively considered a person with standing.
Derr cited that section in another well-known case, the Berne property tax case, back in 2000. That case wended its way through District Court for years and forced a years-long moratorium on tax collections, finally lifted a few years ago.
Only a few jurisdictions have laws similar to Subsection 80, and critics argue that it is too broad.
In the Berne case, the District Court never actually ruled on the appropriateness of using the law, Derr said. It dealt with other issues in the case.
However, Derr said, the section has received judicial support in the past.
Former Sen. Adlah Donastorg Jr. brought an action using the section in 1999, attempting to force the government to comply with a law stating it must keep 10 percent of income tax withholdings in a separate fund to be available for paying tax refunds.
In a June 2003 ruling in the case – denying the government’s motion to dismiss it – then Territorial Court Judge Brenda Hollar ruled that Donastorg had standing to bring the action.
“Here, the plaintiff has invoked jurisdiction pursuant to V.I. Code Ann. Tit.5, Ss 80, alleged he is a Virgin Islands taxpayer; requested declaratory relief to mandate the government to perform its statutory duties; and alleged wrongful disbursement of territorial funds. Accordingly, the plaintiff has standing to bring this action,” Hollar wrote.
In the Sapphire case, the complaint says, “The COA has previously made demand on defendants to collect property taxes with respect to said condominium units and slips, or to take appropriate action to attach said real properties and offer them for sale in accordance with Virgin Islands law …
“The failure of former lieutenant governors, of Defendant Gregory, of former tax assessors, and of Defendant Mills, and their predecessors in office, to take any action to attach and offer at auction said condominium units and slips for over 15 years is unreasonable and constitutes an abandonment of, and a failure to perform mandatory duties imposed on them by Virgin Islands law.”
Derr said he believes that, if the units would go up for auction, they would attract “a long line of bidders.”