On September 29, 2011, Montrose Management District received signed petitions for dissolution representing over 78% of the affected property owners. Over the next couple of months, the board labored over a petition validation exercise before they ultimately rejected the petition by interpreting the relevant statute (Sec. 375.262 of the Local Government Code ) to say the threshold for action was 75% of all property within the geographical bounds of the district rather than 75% of those properties subject to the tax.

Two questions leap to mind:

1) Why would a law defining the requirements for dissolution – an undertaking that presumes dissatisfaction with the district - contemplate the inclusion of property owners who are unaffected by the district?

2) If the district understood the law to require 75% of all property, why did they even bother with the laborious petition validation exercise (at an outlay of $40,000 to Hawes, Hill, Calderon)? After all, 100% of property subject to the tax is a mere quarter of the property within the bounds of the district.

STOP the District takes the position that the answer to the first question is that the law does not include unaffected property owners and the answer to the second question is that the board first tried to disqualify the petition before casting around for an excuse to ignore it.

Accordingly, on April 5, 2012 "1620 Hawthorne Ltd", a participant in the STOP the District petition drive, having secured the services of Andy Taylor and associates, filed suit in Harris County Civil District Court: "1620 HAWTHORNE LTD vs. MONTROSE MANAGEMENT DISTRICT". The original petition to the court presents several claims:

1) The district incorrectly interpreted the law and has a ministerial duty to dissolve;

2) Interpreting the law as the district did would violate the equal protection clauses of the Texas and U.S. Constitutions;

3) The "West Montrose" district 11 was illegally formed because 3 of the 26 signatories on the original petition for service did not own property that was going to be subject to the assessment – a requirement for a valid signatory; and

4) Neither the “East Montrose” district 6 nor “West Montrose” district 11 meet the eligibility requirements for a special district per Section 375.021 of the Local Government Code in force at the time of their formation.

The case was assigned to Judge Joseph Halbach's 333rd District court, cause number 2012-20396. The legal filings of the case are posted here.

The petition for dissolution

How reasonable is the districts interpretation that the lion’s share of unaffected property owners is required for dissolution? Their argument rests on an analysis of language in different sections of the law. They point to Chapter 3878 of the Special District Local Laws Code as an example. This is the law that authorizes the district and, in it, Sec. 3878.204(b)(2) specifies that a petition for service must be signed by “at least 25 owners of real property in the district that will be subject to the assessment”(emphasis added) . Compare that to that language in Sec. 375.262 of the Local Government Code –defining the requirements for dissolution by petition - which says

"Except as limited by Section 375.264 (does not apply here), the board shall dissolve the district on written petition filed with the board by the owners of:
(1) 75 percent or more of the assessed value of the property in the district based on the most recent certified county property tax rolls; ..."

Since 375.264(1) does not say "property subject to the assessment" it MUST mean any property in the district whose value is assessed by any agency. Specifically, the district proposes, it includes property not assessed by the district itself. Will that argument sound reasonable to a judge? Our answer in court hearings is that the language in the first case is necessarily constructed that way because the pool of properties from which the 25 owners may sign is being defined in that sentence. That law is future-looking. The law for dissolution, on the other hand, is backward looking. The pool of properties exists already and its owners may petition for dissolution.

Invalid petition for service

We believe our arguments are considerably more reasonable than the districts. Moreover, while the petition is sufficient grounds for dissolution, we also included in our suit the complaint that the original petition for service is insufficient and therefore the district had and has no legal right to levy an assessment. This problem, incidentally, was brought to the attention of the board by a STOP the District volunteer during the very hearing in January of 2011 when they resolved to form the district. At that time we noted that three of the 26 petitioners did not appear to meet the requirement that their property would be subject to the assessment.

1) Bailey Moore’s property was residential according to the most recent certified county property tax rolls and, as such, would never be subject to the assessment ;

2) Randy Mitchmore operates a dental business from his property, but he also claims a residential homestead exemption and would therefore not be subject to the assessment;

3) Michael Carter operates a funeral business from his property and also claims a residential homestead exemption.

Indeed, none of these signers subsequently appeared on the tax rolls of the district - from which we reasonably conclude that they never paid an assessment at any time prior to the 2012 filing of our suit. And since Randy Mitchmore and Michael Carter are both board members there is precious little room here for an honest mistake. Once these details were drawn to the attention of the judge, misters Mitchmore & Carter were subsequently assessed and paid their levies in July of 2012 (without the imposition of any late fees, we note). Who does not recognize that for the heavy application of lipstick that it is? And Mr. Moore? The district concedes our point and quickly changes the subject.

Ineligible service area

Our lawsuit makes a final claim that the district had no legal right to exist in the first place. According section 375.021(a) of the Local Government Code, a district could be created only in an area devoted primarily to commercial development and business activity. So how came a district into an area where the commercial property is outnumbered by residential property at better than three to one? This is a point we have raised on our website since we began this crusade and, with surprise, we learned that this law was repealed in the 2011 legislative session. (Why? By whom?) It was, however, in effect throughout the formation of what is now the Montrose Management District. The district’s argument here is that the district was formed by a legislative act rather than through the mechanisms of Chapter 375 of the Local Government Code. With that, the question before the court is: can Chapter 3878 of the Special District Local Laws Code break the law in Chapter 375 of the Local Government Code? After all, someone went to the trouble of repealing that troublesome restriction last year.

So what are our chances? We offer the court three compelling reasons why we should be rid of this district. A favorable ruling on any one will reach our objective. We think our chances are very good.