Montrose Business Owners Say They're Being Illegally Taxed

Categories: Courts

Montrose-608x608.jpg
Montrose: The battle is on.
Some business owners in Montrose are up in arms over a taxing district they say continues to, uh, tax, despite a petition voiding the district's existence.

At issue is the Montrose Management District, which levies taxes on commercial land and improvements in the eponymous locale, for what -- as far as we can tell -- goes to those financial black holes known as "consulting," "studies" and "plans." (The district's board of directors includes attorneys, developers and Houston's first lady, Kathy Hubbard, among others).

Here's the deal, according to a lawsuit filed by business owner Robert Rose, on behalf of his business, 1620 Hawthorne Ltd: The state legislature in 2005 allowed for the creation of a special taxing district, if the owners of a majority of assessed property in the proposed district sign a petition; or if 50 25 property owners in the proposed district sign a petition, provided there are more than 50 25 people who own property there.

Seems easy enough. The tough part is dissolving the entity -- for that, according to the statute, you need signatures of the owners of "75 percent or more of the assessed value of the property" or "75 percent or more of the surface area of the district."

Rose's lawsuit states that he collected enough signatures to dissolve the Montrose Management District -- 80 percent. But lawyers for the MMD say Rose's coalition misinterpreted the law and is really just shy of 14 percent because Rose interpreted the statute to mean the owners of 75 percent of the taxed property, when it should be the owners of 75 percent of all property, even stuff that's not taxed.

Rose believes that it's a perversion of the law, that there would never be any incentive for those who don't pay district taxes (i.e., folks getting a free ride) to want to dissolve the district.

But lawyers for the district say the Harris County District Court doesn't even have jurisdiction, and that the district is immune to lawsuits in the first place. A judge heard arguments on that today, but, according to Rose's attorney, Andy Taylor, the judge asked attorneys for both sides to see if they can reach some sort of understanding on their own. Somehow, we don't think that's going to happen.

Now, Rose isn't exactly paying an arm and a leg -- his most recent taxes are under $600, according to court filings -- but that's not his point.

Frankly, we might be able to understand the whole thing better if we could find tangible evidence of what exactly it is the MMD does. Ostensibly, the district is supposed to promote the local economy, which means keeping the area looking spiffy -- i.e., making sure properties are kept up, getting rid of graffiti, making sure there's ample parking and security, etc.

But the MMD's ledger shows some questionable expenditures. For example, in January 2012, the district paid Vinson & Elkins $10,725.60 in "legal fees-special counsel" and $2,106 to Shooter and Lindsey, Inc., for "landscape maintenance" (along Montrose Boulevard). So that's spending five times as much on lawyers in one month than for something people in the district (or driving through the district) can actually see.

Then there are the payments to the consulting group Hawes Hill Calderon, LLP -- $19,317.28 for "consulting & admin fee" and $500 for "website database development" in February 2012 alone. The Calderon in question is Bill Calderon, who's also the MMD's executive director.

Now, what looks on paper to be a conflict of interest/suckling at the government teat might actually be something benign, but Calderon told us that he wasn't able to talk today. He also told us he didn't think anyone else with the MMD would be available. We left messages for "Director of Services" Josh Hawes and "Director of Marketing and Business Development" Gretchen Larson, but we aren't holding our breath.

Now, let's check out the April 2012 expenditures: over $72,000 to Vinson & Elkins, and another $14,000 for Hawes Hill Calderon. Then there's the recurring thousands of dollars to pay off-duty police to patrol the area, with one officer making a sweet $42/hr. There's also $2,280 for "Phase I Logo Work."

The only thing we know for sure so far is that we want to start up a taxing district. You only need a few people to start one, but you need a majority to stop it, and then you can siphon the revenue to companies you have an interest in. Seems totally legitimate to us -- as well as dang profitable!

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6 comments
Josh-montrose
Josh-montrose

I put in a request for the district to remove a long standing pile of trash on a footpath around the corner from my property.  They won't even reply.  I won't be paying my next tax bill.

teresa
teresa

I'm not really all that surprised that the management district is paying exorbitant fees to lawyers.  All management districts in the city are required to have lawyers attend board meetings, review contracts to ensure they are in accordance with the law, etc.  These lawyers do not offer a discount because they are paid by public taxes.  Regarding the comparison to Midtown, most of those improvements are probably paid for by the TIRZ.  Montrose does not have a TIRZ, so their budget is probably too small to actually pay for any public improvements.  As for the consulting fee, I have no idea, but it does sound like a conflict of interest.

J Gardosik
J Gardosik

Yes, I would happily support the district if there were any evidence at all that they were doing anything. Compare it to the Midtown Improvement district- you can clearly see where the money goes- into sidewalks, parks, street improvements and encouraging pedestrian-friendly construction. I would love to see the same in Montrose, but as it stands this seems fishy

greg
greg

i am all for taxing districts if they actually do something; the whole idea is that the money goes back into the district to help the community both in terms of standard of living and increased revenues for businesses; the money should be an investment. but clearly if the money is getting siphoned off outside the district, then it serves no worthwhile purpose.

David Houston
David Houston

Taxes are ridiculously high over there for everyone.  My elderly m-i-l petitioned her taxes for her home in the Montrose area - this year for the first time ever, but she's been getting fleeced for the past four years.  Like many elderly people she doesn't question authority, and doesn't like to do this, which is exactly what the city seems to want people to do anyway. I'd say this to anyone petitioning their taxes, don't accept the paltry 10%, and nothing for the previous years you were ripped off (as we mistakenly did) the city assessor will offer you at the first meeting, since when you accept this 'informal' offer, you can't then take them to court.  [This is not explained to you!]  We were told incidentally that we cannot claim on previous years, even by presenting evidence. Basically if you live or do business anywhere near Montrose you are getting right Royally screwed over, and you will find the city don't bother to explain anything to you even when you meet them.  Leaving you in the dark and underwriting your claim is their whole game. Oddly enough even with the document offering a miserable 10% back on this years taxes, they still never told us what to do with that form. Still to find that out before we can claim a refund for the old lady. Until now, I'd never come across any financial situation where an over-payment was not fairly refunded by the people who unfairly took it, and interestingly enough they have the law on their side to get away with this daylight robbery. Petition your taxes people, every year!

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