Senators revising bill to change how property tax is calculated for St. John

The Senate Committee on Government Operations, Energy and Veterans' Affairs met on St. John on Thursday to consider two bills related to the territory's property values.

The bills, both of which are sponsored by Sen. Craig Barshinger, were held in committee.

The first bill mandated that the values of St. John properties must be determined by using an average of St. Thomas and St. John properties that are similarly situated.

The committee passed an amendment in the nature of a substitute that completely replaces the original bill to address some of the legal problems the bill had.

The amended bill then was held in committee.

Committee chairwoman Sen. Alicia Hansen said the revised bill will be heard on St. Thomas as soon as possible.

The second bill would require the government to offer real estate appraisal classes and training to V.I. residents prohibit the government from hiring nonresidents to do property valuations.

An amendment in the nature of a substitute was offered, but it failed and senators voted to hold the bill in committee.

"I saw a serious effort on the part of the testifiers and the senators to move ahead with property tax reform," Barshinger said after the meeting. "We started to make progress tonight, and we will continue."

During testimony from V.I. Finance Commissioner Angel Dawson Jr., the chairman of the V.I. Board of Tax Review, senators learned about a law that they decided needs changing. According to the V.I. code, if a property owner appeals a property tax bill to the board, the property owner still must pay the equivalent of the last tax bill plus half of the difference between the new bill and the old bill.

"That's foolishness, and we're going to fix it," Hansen said.

She said she would put in a drafting request to legal counsel to amend the law to have the taxpayer only pay the amount of the old bill until the appeal is heard and a decision is made. A number of the senators present at Thursday's hearing said they would sign on as co-sponsors of the legislation.

St. John is at the center of the property tax debate because when the court-mandated property revaluations were done by contractor BearingPoint in 2005, St. John property values - and ultimately taxes - skyrocketed.

Critics of the revaluation say that the methods used were unfair because it painted all St. John properties with the same brush - valuing modest homesteads on the same scale as multimillion-dollar vacation villas.

B.J. Harris, the recent past president of the V.I. Territorial Association of Realtors, testified at Thursday's meeting. She said St. John has a population of about 6,000, and only about 25 homes and about 25 vacant lots are sold on St. John each year.

"Of the homes which have sold, most were second homes or investment properties because there is a minimal turnover of homes belonging to long-term residents of St. John," Harris said.

It was inappropriate to determine the value of all homes on St. John from the sale of a handful of vacation homes, she said.

BearingPoint was hired, and ultimately was paid $8 million, to assess all property in the territory at fair market value. The revaluation came out of a lawsuit filed in 2000 by a group of property owners asserting that the territory's tax system was unfair and unconstitutional. A settlement agreement was reached in 2000, but after three years of inaction by the government, the plaintiffs returned to court.

In 2003, the court ruled in the property owners' favor, issuing an injunction freezing property tax valuations at 1998 levels, which is the last set of values the court deemed fair.

The court also ordered the government to revaluate all property in the territory using fair market value and demonstrate that it has a functioning Tax Review Board.

The injunction was lifted in January 2011 after a settlement agreement was signed by both sides.

In 2007, a law was passed setting up a new tax structure to go with the new property values, but it has not yet been used. Instead, the government has continued to issue bills at the 1998 rate.

Because no bills were sent out for four years during the injunction, taxpayers now are expected to pay at least two years' of bills each year to get caught up.

- Contact reporter Aldeth Lewin at 714-9111 or email alewin@dailynews.vi.

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