Montrose Business Owners Say They're Being Illegally Taxed

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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Contributor Craig Malisow covers crooks, quacks, animal abusers, elected officials, and other assorted people for the Houston Press.
Contact: Craig Malisow