Woodwind Lakes: County Gofers

With a lot of prompting, HCAD files a lawsuit the neighbors never did

Woodwind Lakes residents never did file a lawsuit against Paul and Cheryl Anderson. Instead, they got the Harris County Appraisal District to do it for them.

In Houston, it is every property owner's right to protest his home valuation before an independent three-member Appraisal Review Board. If HCAD disagrees with an ARB ruling, it can appeal by suing the protester in district court. HCAD files maybe two or three such suits every year, and they're always against large commercial property owners.

"I don't recall another appeal involving an individual homeowner," says Jim Robinson, the county's chief appraiser for almost a quarter-century.

Paul Anderson proved masterful at the ARB hearings, producing stacks of environmental studies, letters from the state confirming that investigations remain ongoing, negative media reports and even sworn affidavits from licensed real estate appraisers who testified that the diminution of market value for houses in Woodwind Lakes could range from 20 to 100 percent.

In 2002, 2003 and 2005, he persuaded the ARB to cut his appraisal by more than $100,000 -- from $249,000 to $135,000.

Several homeowners in the northwest Houston subdivision have gotten their property appraisals reduced in recent years -- some even as significantly as the Andersons. But HCAD only targeted the Andersons, thanks to an aggressive lobbying campaign led by Harris County Municipal Utility District #261 president Ray Merola, a civil engineer employed by Shell Oil Company.

Merola's beef with Paul Anderson dates back to 2004.

Merola, as president of MUD #261, was overseeing a $5 million waterline construction project through Woodwind Lakes. The PVC pipeline was set to run directly behind the Andersons' home -- past a mound of bio-remediated soil and through one of the "areas of concern" identified back in the mid-1990s.

Anderson complained to the Texas Commission on Environmental Quality, which promptly halted the project and requested a slew of additional information, including soil sample results, maps showing where the pipeline would be installed and specifications from the PVC manufacturer.

The TCEQ then retracted its position just five weeks later, and the project was allowed to continue as planned.

Anderson calls the TCEQ's sudden reversal suspicious.

Merola calls Anderson's meddling a big fat waste of his time and taxpayer expense.

MUD #261 is one of the smallest utility districts in Harris County, comprising just 450 homes within Woodwind Lakes and a few nearby commercial properties. Its total annual expense budget is less than $600,000.

And yet, Merola says the MUD #261 board has spent more than $50,000 of taxpayer money during the last three years on engineering and environmental studies. He says this was done to "disprove the fictions" of Paul Anderson and the nearly two dozen residents who sued the subdivision's homebuilders and developer for allegedly failing to disclose that their houses were built on a former oil and gas field.

"This was taxpayer money that was probably not the best spent money in the world," Merola admits.

On June 16, 2004, the MUD #261 board sent HCAD a formal complaint to warn against homeowners from Woodwind Lakes attempting "to avoid paying their fair share of residential property taxes" by making "exaggerated or invented claims."

The next month, in a strange twist for what is normally a routine legal process, Merola and several other Woodwind Lakes residents arrived at HCAD's headquarters set along the Northwest Freeway to protest the Andersons' protest. The strategy worked, as the Andersons' valuation was reduced but only slightly.

The following year, Merola changed tactics. He swapped several e-mails with HCAD's top officials, pressuring them to sue the Andersons.

"I hope HCAD considers appealing Mr. Anderson's ARB assessment," Merola wrote senior appraiser Con McCleester on July 8, 2005. "It sets a bad precedent and many believe it compromises the integrity of the system. Paul was a trial balloon for the camp of protestors [sic]. He won his round unless HCAD pushes back."

On July 11, 2005, Robinson formally notified the ARB chairman that he intended to appeal the Andersons' adjusted valuation.

Two weeks later, Robinson sued the Andersons in Harris County 129th District Court. The suit did not allege any illegal activity, only that HCAD believed the newly appraised value was lower than fair market value.

Still unsatisfied, Merola advised Robinson and McCleester to "challenge [the Andersons'] assessment back at least three years."

On August 3, 2005, Merola told Robinson to make an example of the Andersons rather than sue other Woodwind Lakes homeowners who also received significant valuation reductions. "We got to pick our battles," Merola wrote.

The next day Merola e-mailed neighbor Marianne West, telling her to just sit back and wait: "HCAD knows the score here. We have to be patient and allow things to play out. We cannot control all the outcomes, either. But we can continue to influence them heavily."

Merola didn't just use his authority as an elected member of the MUD board to influence HCAD. He also used it to bully other homeowners into not protesting their appraisals or actually getting their valuations increased. And HCAD board chairman Glenn Peters encouraged him to do it.

"The plan is to pursue Anderson to closure through the courts," Peters e-mailed Merola on October 10, 2005. "As you know, that is very expensive. If and when we finalize the win on Anderson, we will use the precedent in other, similar cases. As of this moment, we are pursuing the Anderson case vigorously...Remember, your response to anyone in the neighborhood should be that Anderson will be settled, probably in our favor, and that others who may plan to use the Anderson tactic would be well advised to wait until the dust settles on this case."

The case dragged on for more than a year, during which Anderson obtained via subpoena the e-mails revealing HCAD's extensive communications with Merola.

Then on January 31, 2007, the Andersons filed a motion to depose Robinson under oath.

HCAD dropped its lawsuit the very next day.

Neither Peters nor McCleester responded to interview requests from the Houston Press.

Robinson tells the Press he only sued the Andersons because their house sold for market value. But Robinson notified the ARB chairman of his intent to sue more than two weeks before the sale.

"I'm not gonna make any other comment," Robinson says, "because I'm not gonna try the case in the paper."

Of course, the case was never tried at all.

Merola remains president of MUD #261, though last spring he moved away from Woodwind Lakes. The MUD gifted him a small parcel of land in the subdivision so he could remain on the board.

Merola insists he never abused his power, calling his efforts to discredit the Andersons and the plaintiffs "a service to our residents."

"Most residents don't want to align with the trial lawyers," Merola says. "Who else is going to stick up for the little guy here?"

Before ending his interview with the Press, Robinson did answer a few more questions:

Was HCAD influenced by MUD #261 to sue the Andersons?

"Oh, I wouldn't say that they necessarily influenced..." Robinson said.

Is it common for the president of a MUD board or any taxing entity to lobby HCAD over an individual homeowner's appraisal?

"It is extremely unusual," he said.

Is it ethical?

"It isn't illegal."

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