Home News Local news New V.I Millionaires Might Not be Happy About It

New V.I Millionaires Might Not be Happy About It


Aug. 10, 2004 – While the Virgin Islands may be filled with "instant millionaires" as the tax assessor reassesses real estate in the next few years, it will take an act of the U.S. Congress to keep tax bills from rising beyond what many property owners can pay, said Sen. Almando Liburd Tuesday.
"Houses in St. John now worth $400,000 will be worth a million," Liburd predicted.
And he suggested property taxes will go up as much as 300 percent because assessments are based on the value of the houses around them.
On St. John, those property values have escalated at astonishing rates.
Liburd said that some St. John properties are now worth five times what they were 15 or 20 years ago. He said property values and property taxes in St. Thomas and St. Croix would also rise.
St. John resident Doug Ehle called the possible increase absurd. "You're going to kill people. People could lose their homes," he said.
He acknowledged that more and more wealthy people are moving to St. John, but questioned what would happen to the middle class that makes up the backbone of St. John's economy. Ehle and his wife Sharon own an auto parts store.
Tax Assessor Roy Martin said residential properties would be reassessed in 2006. Commercial properties will be reassessed in 2005.
The problem begins with the fact that in 2000, U.S. District Court 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.
"That's good for commercial properties, but not for residential," Liburd said.
Moore's ruling also eliminated the cap that prevented the value of residential properties from rising more than 10 percent each time they were assessed. Liburd said the cap, in place since 1988, has prevented taxes from rising beyond many resident's ability to pay.
He said that without the cap, many residents would have to sell their homes or lose them because they can't pay their taxes.
The senator said that relief would have to come from the Congress because Moore based his ruling on a 1936 law passed by Congress. It says that all real estate must be taxed at an equal rate no matter what its use.
"It was to encourage development," Liburd said.
Times have changed. The territory is now facing over development. Its green spaces are evaporating. And residents are about to be hit with stratospheric tax bills.
He said that 38 states have laws limiting property tax growth. Of those 38, 19 have limits on assessments similar to the one struck down by Moore. Others have lower assessments for open space and agricultural land.
Liburd said the public mistakenly thinks that the Legislature can do something about this problem.
He said he's written to Delegate Donna Christensen to ask her help in getting the law changed.
Her aide, Brian Modeste, said he hadn't seen the letter so he wouldn’t comment.
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