Property Tax Hearing Hashes Out Issues to be Settled

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More than 50 St. John residents showed up at District Court on St. Thomas Wednesday for what they thought was to be a decision hearing on a court battle that’s been waging for almost a decade between the government and a group of local commercial property owners.
What happened, however, was a brief status hearing on some outstanding issues that attorneys for both sides have until August 15 to flesh out. After that, an evidentiary hearing to address them will be set, said District Court Presiding Judge Curtis Gomez. At that time, the government might also get some idea on how it can bring in some much-needed property tax revenue, which could help bridge a multi-million dollar shortfall anticipated for fiscal year 2010.
The commercial-property owners took the government to court in 2000, alleging that commercial properties were being assessed based on replacement rather than actual property value — a method, they said, that resulted in inflated assessments. Thomas Moore, then the sitting U.S. District Court judge, agreed, and in 2003 ordered the government to conduct a thorough revaluation of commercial and residential properties.
Meanwhile, property-tax values were frozen at 1998 levels until the project was complete and a new assessment system — which had to be certified by a court-appointed special master — was established. The court case has kept bills from being issued for fiscal years 2006, 2007 and 2008.
The St. John Unity Day Group — whose members packed into the courtroom Wednesday — also filed suit last April, essentially asking the Tax Assessor’s Office to start over with its property-revaluation process and not assess or collect taxes until the matter was resolved.
While the injunction was still in place, property tax bills for FY 2006 went out last August, prompting attorneys for the commercial-property owners to file a motion to find the government in contempt of the court’s 2003 order. In a memorandum opinion issued last September, Gomez granted the motion and ordered the government to pay $5,000 a day — and rescind the recently issued 2006 property-tax bills — until it came back into compliance with the 2003 settlement agreement. He also ordered the government to pay the property owners’ attorney fees, along with other costs racked up during the "litigation of the contempt issue."
But the story doesn’t end there. The U.S. 3rd Circuit Court of Appeals subsequently granted a government motion to stay Gomez’s order, which officials have said gave them leave to send the bills out once again. The stay was in place pending an official ruling on the appeal of Gomez’s decision, which the Third Circuit handed down last month.
The court upheld Gomez’s order and rendered the re-issuing of the bills null and void. But it was up in the air Wednesday whether the government still has to pay the $5,000 a day for the period of time in which the stay was not in effect along with the legal fees for the appeals process. Government attorney Carol Thomas-Jacobs said no contempt fees were incurred after the latest Third Circuit ruling came down, because the government "immediately" issued a press release saying the bills would be rescinded.
A press release may have gone out, but there has been no executive order from the governor, argued attorney James Derr, representing Berne Corp., one of the original plaintiffs in the case. Thomas-Jacobs said later than the order has to be "attested" by the lieutenant governor before it could be filed with the court.
The question was also raised Wednesday about where the case will go from here, and whether there would soon be a resolution. The government has already filed a motion to modify the conditions of the injunction, and wants a hearing "as soon as possible because the government is in need of collecting property taxes," Thomas-Jacobs told the judge.
But there are some things that still need to be ironed out, Derr said later. There has been no ruling as yet on the special master’s report, which was discussed during a court hearing held almost a year ago, he said.
In March 2008, special master Joseph Hunt sent a favorable report to Gomez, saying the new tax assessment system was "acceptable." He added, however, that a functional tax review board, one of the conditions of the 2003 settlement agreement, needed to be put in place to ensure that "fairness and uniformity" play an integral role in the appraisal process.
While Hunt appeared at the July 2008 hearing, he did not testify and attorneys for the commercial property owners were unable to ask him questions. Attorneys need a chance to examine the special master and ask him about the work that he did, Derr said Wednesday. Such a hearing would also look into how the appeals are being tracked, and what happened to certain appeals prior to and after 2005, he added.
Meeting with Unity Group members after the hearing, Derr — also the group’s attorney — explained that Gomez had given both sides 45 days to get all the information they need, which includes finding residents who have had property tax appeals pending since 2000.
"Then he’s going to have a hearing to determine whether the Board of Tax Review is actually functioning," Derr said. "We’ll see what he decides."

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