A Judge Declared Montrose Business Owners Have Been Illegally Taxed Out of $6.6 Million

A tax that goes toward "visual improvements" — such as these signs — has been illegally assessed to Montrose commercial property owners for seven years, says a Harris County Civil Court judge.
A tax that goes toward "visual improvements" — such as these signs — has been illegally assessed to Montrose commercial property owners for seven years, says a Harris County Civil Court judge.
Courtesy of the Montrose Management District

A Harris County District Court judge ruled last week that the Montrose Management District has illegally levied taxes for seven years. And it’s not a small amount, either — $6.59 million.

Last week, Judge Joseph J. “Tad” Halbach Jr., in Harris County 333rd Civil Court, handed down a decision that sides with the plaintiff, 1620 Hawthorne, Ltd., in a years-long legal battle with the Montrose Management District. According to court documents, the management district hasn't met state requirements since 2011 and thus had no authority to assess and collect annual taxes from real property owners. As a result, the judge says that the Montrose Management District, which is headed by the controversial consulting firm Hawes Hill Calderon LLP, must repay the $6.59 million.

Management districts exist for so-called infrastructure enhancements to a gerrymandered area. Business owners pay an annual tax and in return, area residents can live, work and play in a sexier neighborhood that includes, for instance, repaired roads, tree-lined medians, fancy identity markers in Montrose and fashion-forward bus shelters.

The “visual enhancements,” leaders of management districts and tax increment reinvestment zones argue, charm commercial developers into throwing in a new CVS or mixed-use loftzilla in the name of “economic improvement,” another one of the stated goals of management districts. To complete the circle that’s an intoxicating ring of hearts, stars, ponies and unicorns, more business development equals more taxpayer revenue equals new parks and more bike paths equals everyone is receiving a Starbucks gift card for the holidays.

While proponents might be cozied next to the hearth of the fire, drinking Cahors-region malbec, eating brie made from a circa-1814 Congress of Vienna-era recipe and listening to Diana Krall reissues on the hi-fi, critics of management districts contend that the state-created zones are a money-bleeding scam.

As we've previously reported, the formation of a management district, per state law, requires only 25 petition signatures by property owners in the district that will be subject to the tax assessment. While it’s a cakewalk to create a management district, state law forces the opposite to get rid of one — 75 percent (not 75 people, but 75 percent) of property owners in a specified district must sign a dissolution petition.

While the Montrose Management District went above and beyond the 25-signature requirement by grabbing 26 autographs, three of the commercial property owners have never ever been taxed. The invalidated signatures lower the petition signatures to 23, two short of the state statute.

The assessment petition “was not in compliance with state law and the total amount is void as a matter of law,” read court documents. “[Montrose Management District] must reimburse its unlawful assessment to those who paid them.”

It doesn’t look like the Montrose Management District and Hawes Hill Calderon will go quietly. Days after the judge’s decision, Josh Hawes, Montrose Management District deputy executive director and the son of David Hawes, who’s the namesake of the firm, took to the comment section of a Swamplot post and said:

“Until a final judgement [sic] 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.”


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