Montrose Management District Loses in Court, Ordered To Pay Back That $6.6 Million It Collected

Montrose Management District boundaries

Montrose District Bike Houston Bike Rack, Montrose, HoustonA judge in Texas’s 333rd district court signed off on a finding this week siding with the plaintiffs in a lawsuit alleging that the Montrose Management District has been illegally levying taxes within its boundaries (shaded in blue above). Per state law the district only needed 25 signatures from would-be affected property owners to form in 2011; the case went to court back in 2012 after around 988 other property owners within those boundaries signed petitions to shut the district down.

The court’s freshly filed judgement document says that the formation of the district required the initial sign-on of 25 property owners who would be subject to the taxation by the new district; the court ruled that although the district did have 26 signatures, 3 of those folks weren’t actually taxed for all of the years the district has been in operation — dropping the number of valid signatures down to 23, and rendering the basis for the district’s authority moot. The judge also says the district must now pay back the money collected so far — around $6.59 million.

Map and photo: Montrose Management District

Taxing Outcome

29 Comment

  • Court order to pay is just a piece of paper, where are they going to get the money long spent? I hope they go after the con artists who started it individually and make them individually liable.

  • This is great. MMD has little to show for its $4M annual budget. Their online FY ‘Budgets’ are hilariously vague as you’d suspect. The court documents reveal that 3 of the people signed the agreement for it to be created were all business owners who were immediately given a homestead exemption. Then AFTER the lawsuit was filed, MMD tried to go back and retroactively assess them for money.
    ——-
    It’ll probably be reformed since the barrier to entry is so low and I’m sure a majority of (non-commercial) residents will support it. What’s more fun than spending other peoples money? I’m excited about reading this comment section in a couple hours.

  • I think it is a great day when one of these “management districts” get shut down. It seemed to have been started in a shady manner, kept alive in a shady manner, and now has been shut down with full visibility.

  • I was looking forward to the bridges over 59 being illuminated + all the fancy new “Montrose District” signs! Darn it! Couldn’t the court have shut them down AFTER they finished all this cool stuff?!?!

    I do suppose there is some merit to the suit though. Seems pretty unfair.

  • Long over due. Ellen Cohen shuttled the “legislation” thru the Texas Legislature on behalf of the cronies @ MMD including Claude Wynn ,Kathy Hubbard, Annise Parker et al . @ commonsense- that’s right: attach the individuals to the lawsuit who formed the MMD and make them PAY part of the damages. Maybe they won’t be so greedy with other peoples money.

  • Until a final judgement is entered in this case, the District will continue to assert its position that the assessment petition was valid and that District is in compliance with all laws relating to its assessment on property owners. The District respectfully disagrees with the Trial Court’s signing of Hawthorne’s findings of fact and conclusions of law, and will exercise its available legal remedies and appeals to correct the errors in the signed findings of fact and conclusions of law.

  • ALL of these so called fucking “districts” inside the city of Houston are a scam.

    Sadly they only exist because the City of Houston government fails so miserably to serve the taxpayers in these districts–and the entire city. Crumbling roads. Ever worsening traffic. Crime. Homelessness. Shitty schools. Toxic air pollution. Flooding.

    The Midtown Managment District is even worse the the Montrose one. At least, in theory, the Montrose version only taxed businesses. The Midtown version taxes EVERY property owner in their district. For what? Boondoggles like the multi-million dollar road improvements along Holman Street, that’s what.

    Fuck ALL Management Districts.

  • Wonderful news! It is just a decision right now but the small business owners in Montrose at least know someone is on their side. Of course the MMD lawyers will continue to fight this. The funny/infuriating thing is the money paid to the MMD lawyers is the tax money collected from the business owners in the first place!

  • So isn’t the real bon mot exactly who are the three property owners who signed the petition then were exempted from the MMD? This thing stunk from the get go and five years later, we get some trees in an esplanade, some bike racks
    and a security patrol that must be invisible.
    Good riddance!

  • @Josh Hawes Source of free OP money is taken away in a court of law. Let’s see if we can get a do over. I think this is to be expected.

  • Opinions- thoughts on good ol Josh:

    Glad to see jJosh’s comment.

    How much money has your Dads firm made managing this District?

    How many other Districts has your Dads firm rammed down commercial property owners throats? 5? 6? 7?

    What are the Total management fees from all the other districts raked in by your Dads firm?

    Josh, how much do u make from MMD? What’s your college degrees or prior experience.

    Nepotism?

    I heard the lawsuit sued MMD board members personally? Josh, is this correct? How about your Dads firm was also sued?

    Josh, 1,000 or so Property owners want your Dads firm to go away— take the hint. Give back the $6.5 million bucks– it’s Xmas time.

  • Typical comment from Josh, who has the job of “senior advisor to the District”, courtesy of his Dad. When the District is shut down, his Dad will just give him another district job somewhere else in Houston. Looks like the taxpayers are getting stuck with more legal fees, more than $550,000 has been spent with attorneys, the Big Firms, who get paid retroactively for lobbying for these districts at the State Legislature. Taxpayers are always out gunned at the Legislature when it comes to lobbying. This comment illustrates the Districts attitude about the taxpayers, who are forced to pay this tax, the District cares nothing about the taxpayers and shows that with the wasteful, unwanted projects they have blown the money on. It is taxation without representation and that is unconstitutional.

  • Interesting/curious that some of the same people that are ‘staff’ of MMD are also ‘staff’ of Spring Branch District. Admittedly, I have no idea how these ‘districts’ are organized – although this sounds a bit fishy.

  • Good luck with that appeal Mr Hawes. Your group has been ripping off taxpayers for years , The group who is after you is like flypaper and now they have the law on their side. Keep collecting that tax and letting that debt pile up. Better check your O&E insurance, they might pull the plug on you and all the board members. Did some someone mention the word “bankruptcy”? I can not believe someone has not sued TIRZ 16 and 17 . Same thing, violation of state law. Maybe this will be the confidence builder to “drain the swamp”

  • @Josh Hawes may serenely assert the District’s position that their assessment petition was valid, but the honorable court says otherwise. Let’s hope that this decision puts an end to all the other ‘positions’ this District has taken that have one thing in common – they have the power and the property owners don’t. Let it be known that this District has been petitioned to dissolve (twice, really) because they did not earn the consent of the governed. It’s high time we’re rid of them.

  • @Jared,
    You obviously are clueless about Midtown. The district (by taxing residents) turned Midtown from a wasteland into the shiny thing you get to enjoy today. Baldwin Park used to be a dangerous overgrown lot w/ dealers, prostitution, and homeless. That fancy new superblock? Midtown. Bagby urban street corridor? Midtown. Extra constable patrols to clean up and reduce crime w/ HPD? Midtown. Improvements around HCC? Midtown. Graffiti removal? Midtown. Several apt buildings designed mixed use? Midtown.
    I lived in Midtown years ago when I hoped it would become what it is today. There were people shooting up in broad daylight. Needles on the grass, etc. It has come miles from what it is now. Even third ward is now benefiting from what Midtown has become. W/out that district you’re complaining about, both the third and fourth (Midtown) wards would still be full of empty lots and empty houses.

  • @Jared M You said it buddy. City of Houston is corrupt, ineffective, and incompetent with no true leadership. Taxpayers are used and abused. Montrose is high in property tax yet low in homeowner services. $800,000 homes surrounded by vile drug-dealing bars and criminals. East Montrose is in such bad shape that the only people buying there are clueless foreigners and out-of-towners. An expensive crime-ridden ghetto.

  • @Innerlooped – no need to go into that sort of explanation, true though it may be. It’s lost on anyone who uses the term “boondoggle” non-ironically.

  • I’m sure I’ll get all my money back. Or any of it back. Riiiight.
    .
    When property owners delivered signatures that met the 75% (I believe that was the #) threshold required to cause the MMD to disband, THAT should have been should have stopped operation. They became a rouge outfit after that date IMO. The fact they only had 23 of 25 signures of effected owners is the judment that caused them to have lost the court case but the 100’s of owners making up a huge majority signing to get rid of it should have been enough.
    .
    But anyway… When the petition with enough signatures was submitted, I stopped paying. They sued, threatened my banks with foreclosure, and I had to pay (with late fees, court costs, etc.)
    .
    While I think some of the board members have good intentions (I know some of them), I’m personally pretty pissed off about the whole thing

    (Man I had to edit this comment to remove profanities and to try to be a bit respectful of the people I know on the board — But sorry, you guys can’t just run roughshod over the will of all the owners you’re taxing)

  • Innerlooped: I agree and actually think Midtown does it right. But they also tax everyone so that everyone has a stake in fixing things up (I’m still somewhat against the idea of an ‘extra’ tax to do what should be done with the taxes we already pay — but at least I can see an argument that everyone pays a bit more to get the cash needed to improve their own area)
    .
    MMD only taxes commercial property owners. Jared, why do you think that’s a more equitable way?

  • Montrose doesn’t need or want this district, which is why 80% of property owners signed petitions to dissolve it twice already. Regardless of word choice by Mr. Hawes, there’s nothing “respectful” about using the courts to fight a supermajority of property owners telling MMD to get out of the neighborhood. 23 people said yes, 600+ said no… how do you justify your presence here?

  • Wow, I haven’t seen this many angry, white tea baggers since the last Trump rally!

    So Tad Halbach spent months counting his Republican campaign contributions before judiciously arriving at this decision. Like any of you care. The Montrose Management District could’ve been etched in stone tablets by the hand of God and carried down the slopes of Mt. Sinai by Moses himself and all of you would’ve still summoned swarms of lawyers from the 8th level of Hades to defend every last penny in your pockets.

    Because of the City’s revenue cap, management districts and TIRZs are necessary work-arounds to provide adequate services. Reasonable people can disagree about how the extra money is spent, and Lord knows that Montrose Management District dropped dollars on some dumb ideas before this lawsuit constricted it into a sweaty ball of fear (the citizen side of me is sickened by the board members being sued individually, yet my bar card beams with pride). But the vast majority of district’s take goes into police patrols, and those officers are damn good, and they’ve made a real difference in my neighborhood.

    God bless Claude Wynn and the rest of the district’s board for trying to make Montrose a better place, fools that they are. Jackals like you all will never understand serving something greater than yourselves, and I can only hope that your trust fund children one day might, but those are long odds indeed.

  • @Furious Jam MMD has nothing in common with the TIRZs. The shady way it was formed and the shady way has done business.

  • @Furious Jam – Interesting, $640k of $4M spent on police patrols is not what I (or most reasonable people) would call “a vast majority of the district’s take”. Even if you only include income from assessments, it fails to meet 1/3 of the income. With security spending about equal to ‘Business Development’ and staffing per their budget.

  • MMD should’ve built a fancy bus lane.

  • Furious Jam,
    .
    The issue, as someone that owns property subject to the tax, is the requirements to dissolve the district are HUGE. You not only have to get 75% of the owners to agree (and getting 75% of anyone to agree on anything is near impossible) but you have to actually get those 75% to sign a petition to dissolve the district.
    .
    That was a MONSTROUS undertaking. But the people who lead the effort spent their time to get it done. And those petitions were delivered to the MMD. And the MMD basically rejected 1/2 of them said “F you” and continued to operate as if nothing happened. (mine was one of the ones rejected. And they sure as hell knew I was against it. And when I sent an email asking why it was rejected, and saying if my petition doesn’t count, then don’t tax me, my email was bounced back).
    .
    So you can argue the value of the MMD all you want. But there is a mechanism in place to get rid of it (which is a whole hell of a lot harder than getting 25 people to start one) and that process took place.
    .
    My guess (I’m not involved) is the individual board members were sued due to their continuing to run even after they should have stopped. And not only counting to run and spend money (which should have been returned) but they’re continued to tax and threaten foreclosure on anyone who didn’t pay up. If I were on the board, and was handed a petition signed by 80% of the owners, I’d take the hint and move on.

  • HeyHeyHouston: A large % of their income was spent on legal fees, to fight the owners that wanted them removed. There is some sick irony in taxing someone wrongfully, then using that tax income to pay for lawyers to fight to be able to keep taxing wrongfully.
    .
    If everyone in the MMD refused to pay it, they wouldn’t have MMD owners own tax income to use against them.

  • @Montrose Owner – That simply isn’t true. FY2015 they spent 100k on legal services and budgeted $60k for 2016. In another perspective, $60 is 1/5 of what they budgeted for ‘Marketing & Public Relations’ in 2016.

    Just follow the money. MMDbudgeted $300k for ‘Project Management’ for the various initiatives OUTSIDE of the $200k budgeted for staff and admin.

  • HeyHey: Since we’re on the same “team” I don’t want to get into an argument of what % was legal. I thought it was a higher %. Perhaps 2015 was less since not as much was going on? I don’t remember when the bulk of the fighting was taking place (2014 maybe?) Or maybe “staff” has some of that fee since some staff time is spent on these matters?

    But $100k is $100k . That’s a lot of money to spend, when it come from the same people you’re fighting. The commercial owners have to pay their own legal costs and the costs of their opposition.