Pictured above: Office of the Tax Assessor at the Islandia Building in Cruz Bay, St. John. Residents can walk in to the office to pay their property tax bills. [hr gap=”1″]
If you want to stir up conversation among property owners on St. John, just say the words “property tax.”
Some St. John property owners have been battling the Virgin Islands for the last ten years, claiming that the entire system for assessing property values is flawed and that St. John residents will be forced to sell their land because they cannot pay their property tax bills.
At the heart of the matter is a basic fact: The population on St. John is only about 5 percent of the overall population of the territory, but its property owners pay 23 percent of collected property taxes.
The reason for this is simple: Location, location, location. Property on St. John is more valuable because of its proximity to a National Park. This is not something unique to St. John but is a national trend.
In the last 30 years, property values on St. John have skyrocketed way beyond the reach of the middle class. As prices have risen, so has the number of luxury rental villas on the island.
The method used to determine the value of any particular piece of property is complex and will be addressed in future St. John Tradewinds articles. For now, it’s enough to know that a property’s value is partially based on land values within the neighborhood, so if you live in a plywood shack and a luxury villa is built next door, the value of your property increases. As the value increases, so will the taxes, and this is causing havoc, especially for some St. John families who are “land rich but cash poor.”
Recognizing that there is, indeed, a serious problem, Lieutenant Governor Osbert Potter has convened a task force to address the issue.
“Many Virgin Islanders, especially the people of St. John, are worried about rising property values and want to know how to manage future assessments that are virtually certain to result in higher tax bills,” said Potter in a press release announcing the formation of the committee.
The Real Property Tax Reform Task Force has now met twice since April with the mandate “to develop fair and equitable property tax legislation that balances the Territory’s need to generate revenue, with the need to help people of the Virgin Islands retain their property in the face of increasing tax liability based on increased property value.”
To assure that the issues of St. John residents remain in the forefront, the committee includes three citizen representatives from the island — real estate broker Miles Stair, businessman Jose Penn, and contractor Atlee Connor. The committee also includes two legislators, Senator-at-Large Almando “Rocky” Liburd, who, by law, must reside on St. John, and Senator Myron Jackson, who has been an advocate for cultural and environmental preservation.
Their job is anything but easy. “As we try to bring relief to any group, we must take into consideration the impact on revenues overall,” said Ira Mills, the Tax Assessor for the Virgin Islands and a member of the Task Force.
Historically, the property tax rates in the Virgin Islands have been low compared to other jurisdictions. In 1993, on average, communities throughout the United States relied on property taxes for 65 percent of their revenues, but property taxes accounted for only 10 percent of revenues in the Virgin Islands, according to Verne Callwood Jr., who served as tax assessor then.
For years that number remained fairly constant, but with the closing of HOVENSA on St. Croix, the percentage of overall revenue from property taxes has decreased to 8 percent.
Overall, the property tax burden remains relatively low compared to the rest of the country. On a list of the median property tax values from highest to lowest among the 50 U.S. states, the Virgin Islands ranks close to the bottom, on par with 48 out of 50 states. However, the median values on St. John are closer to the middle, on par with the state ranked at the 27 highest rate.
How Much Tax Does the National Park Pay?
There is actually a great deal of land on St. John that is not taxed at all, and that includes the Virgin Islands National Park. Property owned by governments — federal, state, municipal — are generally exempted from paying property taxes, as is property owned by religious organizations and property owned by corporations that receive Economic Development Authority benefits.
Approximately 60 percent of the land on St. John is within the VINP boundaries, according to VINP Superintendent Brion Fitzgerald. Obviously, this has a significant impact on the total amount of property tax revenue collected by the territory.
However, there is a Federal program to offset some of these losses which is explained on the Department of the Interior website.
“Payments in Lieu of Taxes (PILT) are Federal government payments to local governments (counties) which have certain Federal lands within their boundaries. The purpose of the payments is to offset the losses in property taxes due to nontaxable Federal land. The Department of Interior [DOE] administers the program and is responsible for the calculation of payments according to formulas established by law and distributes the funds appropriated by Congress.”
“Here in the VI, the DOI has issued PILT’s for many years — with the last three years annual PILT running just over $33,000,” said Fitzgerald.
One property owner on St. John scoffed at that number. “There are businesses on St. John that pay more than that,” he said.
The Real Property Tax Reform Task Force has targeted September as a month by which it plans to present its recommendations for legislation to reform the property tax system.
In the coming months, St. John Tradewinds will publish articles which detail the complexities of the issue, including the current lawsuit filed against the VI Government by the Unity Day group which is challenging the system used to assess property tax values.
One website property owners need to know
Give the Office of the Lieutenant Governor some credit for creating a website that can provide valuable property tax information and, for some people, hours of entertainment.
The site is http://www.mapgeo.com/usvi/, and it shows somewhat dated but otherwise excellent satellite photography of the entire Virgin Islands. With a few clicks of a mouse you can expand the photos and hover like a drone over the islands.
Interested in who owns a particular piece of property? You can choose a home or an undeveloped lot, and with just another few clicks you can find out the name of the owner and the owner’s mailing address.