HOUSTON — In the wake of a second Harris County District Court judge ruling against the Montrose Management District in the course of two months, the chairman of the district’s board announced his resignation this week, and the future of this powerful and politically connected taxing district appears to be uncertain.
Taxpayers in the neighborhood, who have been fighting the controversial management district for years, described both the second judge’s Dec. 11 ruling and the Dec. 14 resignation letter of Claude Wynn, as victories.
And looming on the horizon, there will be a hearing in a Harris County District courtroom that could determine if the Montrose Management District continues, or if the group of local taxpayer activists can win in their efforts to erase the taxing district from the books.
That hearing is scheduled for Jan. 5.
Houston attorney Andy Taylor, who is representing the Montrose taxpayers group, said the taxing district should have moved to dissolve itself after the first judge’s ruling, which was issued Oct. 31.
Judge Daryl Moore of the Harris County 333rd Civil Court ruled that the management district improperly assessed nearly $6.6 million from business owners. Moore also ruled that the district “is further ordered to refrain from attempting to collect further assessments” from taxpayers, as well as spending any of that money wrongly collected.
Indeed, the assessments paid by property owners were done so under duress, according to Moore.
Taylor said the January hearing, which will also be held in Moore’s court, will be a good, old-fashioned Western showdown, between the management district and taxpayers, who argue that the district is not needed and taxes too much.
“It will be a showdown at the OK Corral,” Taylor told The Texas Monitor. “We’ll be arguing the merits. I will be arguing that they have a… duty to dissolve. They improperly disqualified the petition to dissolve and they can do nothing but dissolve.”
Taylor added: “If we win this, it’s game over.”
A spokesman for the district suggested that the argument is more complicated, saying that “it hinges on a legal technicality and a complex set of arguments. The same case has essentially been litigated for more than six years.”
“Another issue is that the district’s services plan expires at the end of the year, so a new services plan will have to be approved — with input from commercial property owners,” the spokesman said. “Per requirements established by the Texas Legislature, management districts have finite periods to operate. The next one proposed for Montrose will be for a period of 15 years, but the previous one will expire on the thirty-first.”
“A lot hinges on what happens at the hearing,” he said.
Claude Wynn, a longtime board member who became chairman of the Montrose district in 2011, said in a letter that his resignation would be effective Dec. 31.
Wynn, a commercial real estate developer, praised in his letter the work that the district has done.
“(W)e provided the Montrose area with local vision and attention worthy of its unique and vital character,” Wynn wrote. “As I continue to live and work in Montrose we will all be beneficiaries of the many accomplishments and improvements we have made for the betterment of the district.”
Wynn also said he was tying his resignation to the end of the services plan, which expires Dec. 31.
A district spokesman noted that Wynn might not be leaving so quickly.
“It is unofficial until the board meets in January,” he said. “The board has to accept the resignation.”
And Montrose Management District Executive Director David Hawes told The Texas Monitor that any suggestion that Wynn resigned because of two successive judges ruling against the district was preposterous.
“They are completely and totally unrelated,” Hawes said.
Wynn’s resignation had been in the works for a year, according to Hawes.
The controversy surrounding management districts
Along with many special taxing districts, the creation of the Montrose Management District — initially called the West Montrose Management District before the merger with a neighboring district — was controversial.
The district was created in 2010. And like all of these management districts, they are not created by a vote of the people, but in the State Capitol in Austin where the bills are pushed quietly with very little input from those who would be taxed.
Once lawmakers and the governor sign off on the district legislation, management district officials must collect the signatures of 25 real commercial property owners within the district’s specified boundaries. It’s the businesses that are taxed rather than homeowners.
The aim of the legislation to create these districts is to spur improvements, provide better policing, and economic development.
In Wynn’s resignation letter, he notes why the Montrose district was created: “to fill a void which existed because the City of Houston was regrettably not fulfilling its obligations.”
From there, a city council and a mayor handpick the board of directors, often making the management district chiefs cozy with the political elite.
Daphne Scarbrough runs a custom metalwork and furniture store in Montrose and has been leading the charge against the management district from the beginning.
“There is only one person on the board with a business, he’s a restaurateur,” she said. “Many are political appointees. And some have never rotated off the board. There is no connection between the board and the people that they’re taxing.”
She added: “It is taxation without representation. You have no choice. The mayor approves every board member, so unless you’re politically connected and you’re going to tow the party line, you’re not going to be on the board.”
After the appointments are made, the taxes are collected.
A 2011 news investigation of the Montrose Management District found that two-thirds of the 15 Montrose Management District board members appointed by then-Mayor Annise Parker had financial ties to Parker. On the board also sat Parker’s spouse.
And the district banks big money. It taxed business owners $2.1 million last year, records show.
Trent Seibert can be reached at [email protected] or at 832-258-6119.