U.S. Senate panel to consider repeal of 1936 statute on V.I. property tax

From the VI Daily News:

V.I. government officials will testify today before the U.S. Senate Energy and Natural Resources Committee on legislation to repeal a 1936 federal statute that prohibits the territory from setting its own real property tax policy.

Lt. Gov. Vargrave Richards and Tax Assessor Roy Martin are expected to begin testimony at 10 a.m. The hearing will be webcast live at www.energy.senate.gov.

In 2003, U.S. District Court ruled that the method the V.I. Tax Assessor's Office used to calculate property taxes was unfair and violated federal law and ordered the government to reassess all real property in the territory. A complaint against the government was brought by 11 plaintiffs whose commercial properties assessments were based on estimated replacement costs, not the estimated actual value.

The court ruling is based on the 1936 federal statute that imposed severe restrictions on the local government regarding property taxes.

Without the repeal, the V.I. property revaluation could result in a significant increase in residential property taxes, Delegate to Congress Donna Christensen said in a prepared statement released Monday.

According to Richards, the ruling prevents the offering of homestead, veterans, agriculture and all other property tax exemptions. It also struck down a local law that provided that no residential tax bill can increase more than 10 percent over the previous valuations.

"It ties the hands of the government of the Virgin Islands with respect to property taxes," Richards said Monday. "This has become an increasing concern for local property owners, especially on the island of St. John," where property values have skyrocketed in the last several years.

In mid-July, data collectors began visiting estates on St. Croix and St. Thomas. Data collectors must visit every property in the Virgin Islands - some 50,000 residences, which will include condominiums and timeshares.

Commercial property assessments were completed in May, and impact notices were issued in June. About 2,100 commercial properties in the territory were assessed.

The largest increases were: Cruz Bay, central, 297 percent; Cruz Bay, outlying, 266 percent; Coral Bay, 36 percent; general commercial, 56 percent, on St. John; and Red Hook, 58 percent, and Tutu, 33 percent, on St. Thomas.

Tax Assessor's Office representatives have said that only after a detailed analysis of real estate sales between 2002 and 2005 could tax assessors be able to determine how new homes will affect property values.

For more information about the property revaluation project, visit www.vipropertyrevaluation.com.