Update!
Even thought the Marriott board has had more talk on this topic thought I'd post this here---
Litigation will have been commenced both in the Superior Court of the Virgin Islands and the United States District Court on St. Thomas regarding the payment of real property taxes by timeshare owners in the United States Virgin Islands.
What are some of the issues to be raised in the lawsuit on behalf of timeshare owners? There are many issues that can and will be advanced in the suit. Let's just provide a few examples raised by Pirates’ Pension Board President Ira L. Frank in appealing his own assessments to the Board of Tax Review.
For openers, the law requires the property to be assessed on its "actual value." This was not done. There is no evidence that the Government inspected the timeshare units in evaluating their value as required by law.
The Government may not increase the valuation and assessment of noncommercial property more than 10% over the previous valuation and assessment. In one particular year, President Frank’s Hilltop Villas unit’s valuation and assessment was raised by over 285%.
Valuations of the weeks for the same unit vary greatly week by week with no justification. Similar units on the same horizontal level also vary greatly in valuation without justification. In the case of his toxic mold-infested first floor studio unit in Hilltops Villas II, if the other units were valued as his, the total value of the studio would be $754,520. If one averaged all the assessments, the studio would be valued at $400,000. If the lowest valuation was used and multiplied by 52 weeks, the studio would be valued at approximately a quarter million dollars. This is nonsense and the Government only can get away with this if owners permit themselves the luxury of taking no action.
There is nothing in the law that permits the Government to subdivide condominium units used for timeshares into 52 separate entities and assess each week at a different rate. We insist the unit should be valued appropriately and taxed accordingly. That tax should be divided into 52 equal portions.
The Virgin Island legislature passed a statute in 2008 which provided for a separate mill rate for timeshare owners and a lower rate for other residential property. This is probably illegal for singling out timeshare owners as a separate class of part-year residents. The higher mill rate has been retroactively applied by the Virgin Islands Government to the 2006 real property bills.
Other matter of concern include that the statute requires appeals to be heard within sixty days of filing. The Board of Tax Review has exceeded that amount of time by years in the case of President Frank’s appeals. When a hearing was finally scheduled, the notice sent by the Board of Tax Review did not state that the appellant can appear by counsel. Instead, it said if you don't appear the case will be thrown out. This is very disadvantageous to timeshare owners who do not reside year round on the Virgin Islands. The Board lowered the assessment approximately in half but gave no rationale for their decision. Should it have been even more? Their decision appears to be arbitrary, whimsical and capricious.
The statute states that an appeal from the Board of Tax Appeals must be filed in Superior Court. However, counsel still believes he can get it heard in U.S. District Court based on certain legal theories. He prefers Federal court but will file in both.
Joseph A. DiRuzzo, III, an attorney on St. Thomas has been selected to litigate the issues. He is both an attorney and certified public accountant. Mr. DiRuzzo is an associate in the law office of Marjorie Rawls Roberts.
Mr. DiRuzzo plans to pursue this case as a class action. Those who wish to participate will be able to do so at no charge. Those who wish to "opt out" may make that election. However, if an individual opts out, they will not be covered by any judgment or settlement. If they wish to pursue their legal rights they would be free to do that at their own expense. But if the Court does not certify the Virgin Islands timeshare owners as a class, the case will be handled on a contingency fee basis.
The Plaintiffs would be required to pay the initial court filing fees along with the service of process. This can cost several hundred dollars. Later, the biggest expense would be any depositions needing to be taken. Mr. DiRuzzo would be willing to return out of pocket expenses should we win the case or settle if handled on a contingency fee basis.
It is really difficult to answer a common question regarding how long it will take this matter to be resolved. To a large degree it depends upon how strong a fight the defendant chooses to wage. But, it can also be to the advantage of the Government to settle quickly particularly if injunctive relief is sought to prevent the Government from moving forward on taxing timeshare owners.
In terms of financial benefit, we would be seeking cash for the damages to timeshare owners. We expect to allege fraud and seek punitive damages. The Government may seek to give a credit towards future taxes. But equally if not more important than the cash payment or tax credit is that the system will no longer discriminate against timeshare owners. There is a lot of money at stake in the case. At last count there were 22 timeshare associations on the Virgin Islands. The Government is not expecting owners organized to fight.
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