Virgin Islands Real Estate Trends

Fans of Herman Wouk chuckle at the latest uproar on the property tax issue!

As reported in the Virgin Islands Daily News:

"The U.S. 3rd Circuit Court of Appeals ruled in an opinion published Tuesday that the V.I. government is prohibited from sending out property tax bills - causing thousands of property tax bills sent out last month to be immediately rescinded and making the territory's already strained budget situation more tenuous.

In the opinion written by Chief Judge Anthony Scirica and agreed to by judges Thomas Ambro and D. Brooks Smith, the high court upheld the September 2008 order from Chief V.I. District Court Judge Curtis Gomez that said the government has no authority to send out property tax bills right now and the government is in contempt of court.

"We find no clear error in the District Court's underlying findings of fact, and we agree with the District Court's application of fact to law," the opinion states.

The opinion invalidates all of the 2006 property tax bills sent out last month. In a statement sent out by Government House on Tuesday night, Government House spokesman Jean Greaux Jr. said that tax bills that have been sent out will all be rescinded, and the executive order setting July 1 as the due date for the tax bills will be vacated.

According to the statement, the lack of taxes will represent about a $28 million loss in revenues.

Several months ago, Gov. John deJongh Jr.'s financial team had pegged the territory's projected financial shortfall at $188 million for the current fiscal year. It is not clear where property tax revenues fit into those projections.

Government officials who were hoping to use their interpretation of the laws and previous court rulings to justify sending out property tax bills had little to say about the 3rd Circuit's opinion on Tuesday. Government House did not wish to comment beyond a short statement released Tuesday evening, and Greaux did not return telephone calls seeking more information.

Attorney General Vincent Frazer declined to comment on Tuesday. Justice Department spokeswoman Sara Lezama said that Frazer and other top-level officials needed Tuesday to fully understand the ruling and decide what comes next.

Tax Assessor Bernadette Williams could not be reached for comment.

This is the newest twist in the territory's long and convoluted journey to arrive at a fair and equitable property tax system. Litigation about the fairness of the territory's property tax valuations and assessments has stretched back almost a decade, after a group of commercial property tax owners sued the government in District Court because they believed the system of assessing property taxes was unfair and unconstitutional.

Three years of property taxes have gone uncollected because of the legal quagmire.

Last August, the government sent out tax bills for 2006 using newly assessed property valuations and a new formula for calculating the taxes based on use of the property. Because the court had not yet given the government permission to send out the property taxes, Gomez held the government in contempt of court.

Gomez ordered all new tax bills to be rescinded and imposed a $5,000 daily fine against the government until it complies with the order directing the government to pay plaintiffs' attorneys' fees and other costs and ordering the creation of a new government account - the Property Tax Contempt Expense Fund - to satisfy payments the government must make.

The V.I. government immediately appealed the contempt ruling to the 3rd U.S. Circuit Court of Appeals. The government also requested that the hearing be expedited and that the high court postpone enforcement of the contempt order. In October, the 3rd Circuit granted the government's motion.

At that time, government officials saw the stay as a green light to reissue tax bills. Government officials reasoned that since the contempt ruling invalidated the new tax bills, it followed that a stay of that order allowed the government to issue valid tax bills.

In January, the government and attorneys for the property owners who initially brought the property tax litigation in 2000 argued the legitimacy of Gomez's contempt ruling before the 3rd Circuit in Philadelphia.

While waiting for the ruling from the 3rd Circuit, the V.I. government last month again sent out 2006 property tax bills and the governor issued an executive order mandating that they be paid by July 1.

At the time, Frazer said that the government's fiscal situation was "quite dire," and that the government must be able to get the money it needs to operate.

No information was available on Tuesday about how many people had paid those bills to date.

In the 20-page opinion, the 3rd Circuit judges reaffirmed several decisions they had made during the lifespan of the litigation. The appellate court agreed with Gomez's ruling. The court order prohibiting new tax bills is still valid, the 3rd Circuit's opinion states, and Gomez correctly ruled that there are still benchmarks the territory must reach to have a fair and equitable tax system.

"We see no abuse of discretion," the opinion states.

James Derr, the lead attorney for the property owners who brought the initial lawsuit, said that the opinion was what the plaintiffs expected. No new legal ground was broken in the opinion, and the 3rd Circuit basically reiterated legal points it had made before.

"Unfortunately, the government put itself in something of a quandary," Derr said. "The government needs money, and the government sent out tax bills. People paid their taxes, and now the government has to recall them. It will be a real problem for the government."

Derr said he hopes all of the attorneys involved in the case can come together before Gomez soon for a status conference to reaffirm where things stand and what should be done next. "

Stay tuned for more island insanity...

As reported in the USVI Daily News:

"First-time home buyers in the Virgin Islands are eligible for a tax credit of up to $8,000 that is being given to other new homeowners in the mainland United States under the American Recovery and Reinvestment Act.

Delegate to Congress Donna Christensen said in a press release that there had been concern about the tax credit's availability in the territory because language in the stimulus bill states that people who are residents of the 50 states and Washington, D.C., are eligible for it.

Internal Revenue Bureau Director Claudette Watson-Anderson said the territory's residents are eligible for the tax credit because the territorial tax code is exactly the same as the federal tax code.

The tax credit is not expected to affect the territory's revenues. Watson-Anderson said the credit should be covered by funds from the federal government to reimburse the Virgin Islands for several tax reductions.

"It should be coming out of the $50 million that the federal government is going to give us to pay out credits," Watson-Anderson said.

The credit is available to qualified people buying their first primary residence this year, and will be applied to 2009 income taxes. For information, contact the IRB at 773-1040 on St. Croix, 715-1040 on St. Thomas, and 777-1446 on St. John."

Is this advertising exciting enough to bring visitors to our lovely paradise?

Excerpt from the US Virgin Islands aily News:

ST. THOMAS - The V.I. Tourism Department showed off the territory's new brand, slogan and advertising campaign Tuesday at the USVI Hotel and Tourism Association's 16th annual Destination Symposium.

The new ads feature the slogan, "You, Unscripted." The slogan embodies the new brand, which focuses on the visitor's desire to create their own, unique vacation experience, Tourism Commissioner Beverly Nicholson-Doty said.

The ads show people who have "lost" their everyday identities and "found" a new one through their Virgin Islands vacation. For example, one print ad shows a woman swimming in turquoise waters. It says, "lost: multi-tasker, found: mermaid." A mermaid tail has been drawn on top of the photograph to illustrate the fantasy of the vacation experience.

Sebastian Benjamin is the USVI account director at JWT, the Atlanta-based advertising agency contracted by Tourism to develop the territory's new brand and create the new ads. The agency holds a $10 million contract with the department, $1.2 million of which was used to develop the new branding for the territory. The funding for the contract comes from the Tourism Advertising Revolving Fund.

Benjamin said the idea is to appeal to travelers who want a diversity of experiences.

"It invites you to lose the label of who you are when you're back home," Benjamin said about the new campaign.

The tourism industry professionals at Tuesday's meeting were impressed with the new campaign.

"It's really fantastic what they've done," said Sharlene Brenkus, Wyndham Sugar Bay director of sales and marketing.

Her colleague Arianne Valentino, global sales director for the Wyndham Hotel Group, agreed.

"You take our everyday lives and you allow us to escape," she said. "I'm blown away."

Since the 9-11 terrorist attacks, the department has pushed the fact that the islands are under the U.S. flag with the slogan "America's Caribbean." Nicholson-Doty said the idea behind that branding strategy was to make Americans feel safe and comfortable with travel to the territory.

The fears following 9-11 have faded and to compete against other Caribbean destinations, Tourism has expanded its reach to new, international markets that do not respond to the "America's Caribbean" theme.

To develop the new platform, Tourism's marketing team talked to a wide range of people in the territory's key markets. Through interviews and focus groups, the department was able to get a better feel for what today's traveler is looking for in a Caribbean destination - an authentic experience of a destination and a trip that goes "off the beaten path."

The $6 million campaign will consist of 30-second television spots, magazine, newspaper and Internet advertising. The ads will target a range of market segments including bridal and romance, culture and heritage, sailing and yachting, meetings and incentives, divers and African-American travelers.

The national print and television ads started running Monday. Nicholson-Doty said they will do a short, six-week run now, then hold off until the fall when marketing will ramp up in preparation for the coming tourist season.

The new ads were shot on all three islands in February using local actors recruited through open casting calls. The soundtrack for the radio and television ads was recorded by the Rising Stars Steel Orchestra. 

Tourism officials said JWT worked with local vendors including caterers, casting, scouting, make-up artists, wardrobe and production services - contributing about $1 million to local economy, according to Tourism.

Samples of the print ads and a 30-second television spot can be viewed at www.usvimarketing.com.

The new brand and advertising campaign is the final piece of the department's overhaul. In December, the new logo - a multicolored moko jumbie juggling three stars - was unveiled. Benjamin said that while many Caribbean islands have moko jumbies as part of their culture, no one has used the image as a logo before.

In January, the new $250,000 website - www.visitusvi.com - was launched. Benjamin said it is receiving about 63,600 visitors a month and each person is spending about five minutes looking at the site. Visitors to the website can plan their trip, link to local businesses and view maps of the islands.

Soon, additional features will be added to the site including a full translation into Spanish, a travel agent education section and the ability for businesses to respond to requests for proposals sought by the department.

For those of you who are looking to buy in the U.S. Virgin Islands and may qualify as a "first time home buyer",  please be advised that the tax credit that is being offered nationwide is currently NOT applicable to the Virgin Islands.

Our VITAR leadership is working with Delegate Christensen and top NAR personnel to address this situation.

We will post when this situation is resolved. Hopefully this does not deter you from exploring real estate opportunities available in our beautiful U.S. Virgin Islands.

Our motto remains - "We love paradise and it shows!"