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COMMERCIAL PROPERTY TAXES ON HOLD FOR A FEW

Aug. 26, 2002 — Property tax payments may be due in less than a week, but not for the commercial property owners who have a suit pending against the government. District Court Judge Thomas Moore ruled Friday that the plaintiffs do not have to pay taxes by Aug. 30, pending their receipt of tax bills and the Court's determination of whether those bills are proper.
Moore's rulings in previous, similar cases are expected to cost the government millions of dollars in past and future collections.
The crux of the issue is that the government has been assessing property on replacement value rather than on actual or market value. The tax due is a percentage of the value the government assesses. The law says there are nine different criteria that should be considered in making assessments. Replacement value isn't one of them.
The current case, a consolidated action involving about 25 property owners, follows a landmark 2000 suit brought by Gary Berne in which he charged that the government was overvaluing his commercial property.
The ruling Friday was narrow and came out of a status conference, according to David Bornn, one of the plaintiffs' attorneys.
The plaintiffs are seeking an injunction that would prevent the government from collecting their property taxes until the Court determined whether they were being properly assessed. In effect, Moore signaled that it is too early to rule on that motion.
By law, taxes are due Aug. 30. Bills are supposed to go out in June.
But, the administration says it hasn't issued all the tax bills yet. Although technically the Aug. 30 deadline is the law, regardless of when a taxpayer receives his bill, historically the government has frequently extended the deadline for payment when it has issued bills late. There are reports that Gov. Charles Turnbull will order a last-minute extension next week and that would apply to all taxpayers. But whether he does or not, the commercial property owners who are plaintiffs in the consolidated suit will not have to meet the Aug. 30 deadline.
Bornn said it is not too late for commercial property owners to join the suit.
Not many residential property owners have come forward to challenge the government. Apparently, in most cases, the dollar difference in the types of assessment for residential owners isn't large enough to warrant the legal fees, Bornn said.
But for commercial property owners, "it's no small matter." And it is no small matter for the government either.
When Berne first brought his case, he said the average independent appraisal he had on his Charlotte Amalie property was $1.3 million, in contrast to the government's $6 million assessment.
In 2000, the government assessed the three hotel properties of Equivest St. Thomas, Inc. – Bluebeard's Castle, Bluebeard's Beach Club and the Elysian Resort – at $98.4 million. But the property had been appraised independently in 1999 for $38.2 million and actually sold that year for just $22.5 million. Equivest took its case to court, and in June Moore ruled largely in favor of Equivest.
In testimony at a July legislative budget hearing, tax assessor Roy Martin said recent Court determinations about the assessment process could cost the government about $3 million in collections. That presumably, referred only to the cases already settled or concluded.
Meanwhile, the government is relying on what appear to be inflated projections of property tax collections to help balance the budget. In 2001, collections were $50.7 million. The administration's projection for 2003 is $62.4 million.
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