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Christensen's Bill Would Repeal Property Tax Law

Sept. 17, 2004 – Delegate Donna M. Christensen is asking her colleagues in the U.S. Congress to repeal a 1936 federal law mandating that V.I. property taxes be calculated on the assessed property value.
"It is the view of the V.I. government that if this law isn't repealed our EDC and Homestead exemptions could be jeopardized," Brian Modeste, an aide to Christensen, said Thursday.
He was referring to the property tax exemptions granted to companies that receive Economic Development Commission benefits and the Homestead tax exemption available to V.I. residents for their primary residences.
Sen. Almando "Rocky" Liburd got the ball rolling when he asked Christensen to initiate this legislation, but the problem began in 2000 when U.S. District Judge Thomas K. Moore ruled that the local government was incorrectly assessing commercial properties. He ordered the government to begin assessing real estate based on market value rather than replacement cost and to tax all properties at the same rate regardless of whether they were used for residential or commercial purposes.
While Moore's ruling put the territory in line with the 1936 law, it threatens to raise taxes for residential property owners. Christensen estimated they could go up 40 percent.
After Liburd brought this problem to light in early August, St. Thomas attorney James Derr contacted the Source with a different opinion. He said the Legislature has the power to change the rate at which property tax payers are charged.
He could not be reached Thursday for further comment due to an "all circuits are busy" message.
Derr explained in August that Congress set what is called the millage rate at 1.25 percent, which means that property taxes are paid at 1.25 percent of the fair market value. Since Congress gave the Legislature the power to adjust the millage rate, the senators in 1982 decided that the 1.25 percent rate would be levied on only 60 percent of the fair market value.
Derr said senators could change the 1.25 percent figure and the 60 percent of the fair market value figure to whatever they deem necessary. (See Lawyers Say Senate Can Change Property-tax Rate).
Liburd agreed that the Legislature can change the "multiplier," but said the change would apply to both commercial and residential properties.
"I don't think that's fair," he said on Thursday.
He said he's seeking relief for residential property owners similar to that done by some states.
Christensen said she understands the ruling could be applied retroactively to 1957, which she said would have grave consequences for homeowners across the territory.
Modeste said Christensen's bill was unlikely to see action until next year.
Christensen introduced the bill on Monday.
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