The Tribune

• Carey backs ‘null and void’ property tax bill stance

• Situation on unlicensed persons ‘beyond frustrating’

• Says every AG contacted ‘doesn’t seem to care’

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian realtor yesterday argued that the use of foreign appraisers is “an insult” to the local industry as he backed arguments that the 2022 real property tax bills are “null and void”.

Mario Carey, the Better Homes and Gardens Real Estate MCR Group’s principal, told Tribune Business he fully supported the stance taken by his colleague, David Morley, and the Bahamas Real Estate Association (BREA) as the practice of foreign realtors working illegally in this nation had grown to the point where it was “beyond frustrating”.

He added that the Government’s decision to engage US-based Tyler Technologies, whose recent New Providence-wide mapping and revaluations have sparked an outcry among the recipients of soaring real property tax bills, even though it was not licensed to do appraisal work in The Bahamas sets a bad example that will result in “no one else caring” about the need to respect the law.

Calling for the real estate profession and authorities to crack down on unlicensed foreign appraisers and realtors operating in The Bahamas, Mr Carey said their activities likely sucked hundreds of thousands of dollars in revenues and taxes “out of the country” every year.

He recalled, in particular, regularly seeing “multiple appraisal reports” on the valuation of hotels and other major Bahamas-based assets by foreigners, and urged that their developers and owners be “given notice” in their Heads of Agreements with the Government that only locally-licensed professionals can conduct such assessments.

“I think that the process of bringing in a foreign assessor is nothing more than an insult to us as a country, and us as an industry,” Mr Carey told Tribune Business. “You have all these industries around real estate, and very seldom do we get the Government consulting with us.”

Pointing out that the likes of foreign doctors and attorneys cannot simply show up in The Bahamas and start practicing without obtaining the necessary permits and licences, he questioned why this was allowed to happen with real estate despite the industry seemingly being protected by the Real Estate (Brokers and Salesmen) Act 1995.

“We cannot do it in Canada,” Mr Carey added. “We’ll get fined and put in jail. Why do we allow it here, and why is the Government not making it a priority? The money goes out of the country. How is that helping us? It doesn’t make any sense.”

Referring to the Government’s decision to engage Tyler Technologies for real estate appraisal and valuation services, he said: “The Government making that decision.... If it starts at the Government level, why would anyone else care? If the Government is doing it, they’re breaking the law.

“I have read multiple appraisal reports on hotels on this country done by foreign appraisers with no referral to anyone in this country. It’s illegal. These foreign appraisers need to be put on notice. And these developers should note that any appraisal work or services provided need to be done done by a licensed Bahamian or some form of affiliation. It has to come through a Bahamian.

“Why do we let these guys come in here and do what they do? It’s beyond frustrating; it’s insulting. It has to stop. It’s getting beyond frustrating.” Mr Carey questioned whether foreign appraisers working in The Bahamas illegally had ever been caught and placed on the ‘stop list’, or if they simply entered The Bahamas pretending they were here on vacation.

And, referring to the real property tax valuations performed by Tyler Technologies, he added: “They all should be null and void - the entire project. Halkitis is shocked. These guys don’t know anything about our industry. They have no knowledge and don’t consult.”

Mr Carey spoke out after BREA urged the Davis administration to withdraw the 2022 real property tax bills now being mailed out to home and business owners on the basis that the appraisals supporting the Department of Inland Revenue (DIR) valuations are not valid or legal.

Echoing concerns first printed in this newspaper earlier this week, BREA said Tyler Technologies cannot legally conduct appraisals/valuations in this nation because it is not licensed to do so.

And nor could it be licensed, the Association added, because only Bahamian citizens or permanent residents with the right to work can be authorised to do appraisals under the Real Estate (Brokers and Salesmen) Act 1995 via its sections four and 13.

Tyler Technologies effectively confirmed it was providing appraisal services to the Government in a May 2019 press release seen by Tribune Business. “We are pleased to be selected once again to provide appraisal services to The Bahamas and bring fair and equitable taxation to its residents,” said Jake Wilson, its vice-president and general manager of appraisal services.

The Government, though, made the counter-argument that the powers of the Government’s chief valuation officer to assess property values for taxation purposes are “totally unrelated to the provisions of The Real Estate (Brokers and Salesmen) Act 1995”.

It pointed to the Real Property Tax Act 2010’s section seven, which states that this official has the duty to determine which properties - and owners - are liable to pay taxes. “No such prohibition regarding citizenship or work permits can be found in the Act,” the Department of Inland Revenue said in a statement.

“And the chief valuation officer (CVO) has the power to obtain information from any person that is relevant to the CVO’s accurate assessment of property under the Act.” As a result, Michael Halkitis, minister of economic affairs, said “this issue of unlicensed appraisers does not arise”.

The BREA statement, though, potentially provides a road-map for attorneys and their clients to challenge the validity of the 2022 real property tax billings. Any court challenge, particularly if it is successful, could cause major chaos and disruption to the Government’s revenues and fiscal planning at a time when it needs to collect every cent possible.

Mr Carey, meanwhile, told Tribune Business that he “totally supports” Mr Morley’s position, adding: “Something has to give.” Suggesting that hotel valuations generate between $75,000 and $100,000 in revenue for the appraiser, the MCR Bahamas chief said “there’s no trickle down effect” or taxes paid if these are performed by foreigners.

“We’ve worked too hard in our industry to have laws, codes of ethics and rules to have it continue,” Mr Carey added. “It’s an insult and makes us laughable. Everybody who goes to hire a foreign realtor or appraiser needs to be put on notice that they are doing it illegally. Every attorney general we’ve approached, they don’t care about this industry; that’s the feeling I get.

“How much money, how much VAT do we bring into this country? Every property sold creates three to four jobs. We get no respect. I’ve been fighting this fight for a long time, having conversations with foreign appraisal companies to stop working in our country. I’ve gone after them personally to tell them to stop it. It’s not right.”

The present backlash over the substantial increase in real property tax bills received by many business and home owners has its roots in long-standing problems that have been allowed to fester for decades. These include weak administration, and little to non-existent enforcement, by the Government coupled with a culture of non-compliance among a significant portion of taxpayers.

This has manifested itself in a situation where the Auditor General, in his report on the 2017-2018 fiscal year, estimated that some $600m in real property tax remains past due and uncollected. This outstanding amount is growing annually against a backdrop where 30-40 percent of real property tax bills never reach the correct taxpayer, while compliance stands at just 25 percent.

The Government’s failure to largely enforce penalty surcharges, liens and other enforcement mechanisms has helped breed the non-compliance culture, while not doing regular valuation assessments has left many properties seriously under-valued for years - if not decades.

It is those in the latter category that have been hit hardest by the 2022 billings, together with properties that previously evaded the tax roll. The Government’s objective of broadening the tax base, and making it fairer by getting everyone to pay their due share, is not being seen as the problem, but rather, the way it has gone about it via one-shot increases amid COVID’s devastation.

There are also concerns about how Tyler Technologies came up with its valuations, and the methodology used.