Pictured above: Attorney Dolace McLean (left), who chairs the Property Tax Reform Task Force, and Tax Assessor, Ira Mills (right). [hr gap=”1″]
Property owners hoping to see an overhaul of the property tax system in the next few weeks will have to wait awhile longer.
At a meeting on St. John Monday night, the Senate Finance Committee voted to hold in committee a bill to redress inequalities and inconsistencies in the property tax system.
Monday’s Finance Committee meeting was called to give residents from St. John an opportunity to share their concerns as senators considered Bill 31-0234. Sponsored by Senator Janette Millin Young and co-sponsored by nine other senators, the bill seeks to rectify the problems in several ways, including:
- Setting a cap on tax increases for people who live on their land and have not sold or developed it.
- Basing the property tax rate on the actual sales price of properties sold since 2013.
- Establishing penalties for the Office of the Tax Assessor if appeals to property tax bills are not resolved in a timely manner.
- Requiring that a mass appraisal be certified as accurate (in accordance with the standards set by the International Association of Assessing Officers) and be verified by independent experts.
The problem with property taxes is not unique to St. John, but it has become a crisis here partly because of the the presence of the Virgin Islands National Park which attracts upscale development.
In the past 30 years, the construction of luxury villas on St. John for vacation rentals has driven up the property values for neighboring homeowners who are unable to afford steep increases in their tax bills. Real estate experts estimate that nearly 750 homes—more than half the homes on the island– are on the short-term rental market.
“I’m here to protect property owners from extinction,” said Myrtle Barry, a St. John property owner who cautioned that St. John could become a community like Aspen, Colorado, where ordinary people have been forced out of their homes by skyrocketing property taxes.
The situation became evident during the housing bubble in 2006-7 when property owners saw their bills soar following a revaluation conducted by BearingPoint, a government contractor.
The tax increases brought to light inconsistencies and inequities in the tax revaluation system and led to court challenges. As a result of those cases, the property tax rates were rolled back to the 1998 levels which stayed in effect through 2012.
In 2013, tax bills from a new revaluation were issued, but the same problems persisted, according to members of the Unity Day Group, a community organization that has spearheaded some of the court challenges and continues to file appeals on behalf of hundreds of individual property owners.
The Unity Day Group says that climbing taxes are leading to gentrification and forcing local people to sell their land in order to pay their property tax bills.
At the Tuesday night meeting, Tax Assessor Ira Mills was the first to present comments about the proposed bill and stood up to criticism from both senators and community members. “It is not our intention to treat anyone unfairly,” said Mills.
St John residents who were asked to testify at the meeting included Myrtle Barry, who chairs the Unity Day Group; Pam Gaffin, an accountant and data collector for the Unity Day Group; Elissa Runyon, a certified real estate appraiser; and Elvis Marsh, a businessman and property owner.
The Senate Finance Committee voted unanimously to hold the bill in committee until September when a report is scheduled to be issued by the Lt. Governor’s Property Tax Reform Task Force. The task force, which includes St. John residents Jose Penn, Miles Stair, Atlee Conner and Senator-at-Large Almando “Rocky” Liburd, began meeting in April to look at ways to overhaul the property tax system. At Tuesday’s meeting, the task force came under criticism for not including a local appraiser.
Senators are tasked with finding revenue to balance the territory’s budget, but the residents who spoke at Tuesday’s meeting were far more concerned with the immediate problem of trying to pay alarming tax bills which become delinquent on September 30.
Among those testifying was Rafe Boulon who lives in a modest home he built on land purchased by his grandfather 90 years ago. Boulon said his land assessment had increased by 236%.
The method used to determine the value of any particular piece of property is complex, but Boulon’s situation exemplifies the problem.
Under the present mass appraisal system used by the Office of the Tax Assessor, property values are assessed by determining comparable sales within a neighborhood. However, there are no comparable sales for Boulon’s home which is surrounded by the Virgin Islands National Park on one side, and by the mega-mansions of Peter Bay, a luxury gated community, on the other side.
Under the mass evaluation formula, each time a house in Peter Bay sells–and at least one has sold for $14 million–Boulon’s property increases in value, and so can his tax bill.
But it’s not just the formula for assessing the value of property that came under fire at Tuesday’s meeting. It’s also the flawed data used by the Office of the Tax Assessor that contributes to the problem, according to Gaffin. That data, which hasn’t been substantially updated since 2010, is rife with inconsistencies.
Gaffin said that in one case, a 3,495 square-foot concrete home in excellent condition was assessed at the rate of $365 per square foot, while a 144 square-foot wooden shack was assessed at $824 per square foot.
Mills, who said his office is understaffed, regretted the inconsistency. “That’s why you need to do inspections. If it needs updating, we’ll do that.”
When asked if he could provide an interim report from the Property Tax Reform Task Force, Mills declined, saying consensus has not been reached.
Senator Jackson, who is a co-sponsor to the Senate bill as well as a member of the Property Tax Reform Task Force, said that although members of the task force were not always in agreement about ways to overhaul the system, “We all agree that St. Johnians should be able to retain their property.”