The Montrose Management District, dormant since 2018, is coming back online.

Officials overseeing the district announced its relaunch in December, a move that was followed by the first board meeting in more than five years Dec. 14. The district collects tax revenue from certain commercial properties within its boundaries with the goal of improving public safety and the local economy. It was revived after district officials received a petition from the owners of 60 properties.

“We need something to fill the void of what the city [of Houston] hasn’t been able to do—graffiti, littering, some security issues,” said Dimitri Fetokakis, a new board member and owner of the Montrose-based Greek eatery Niko Niko’s.

The district’s past includes a courtroom battle with local property owners, who are once again speaking out against its relaunch, citing concerns about how few signatures were needed to bring the district back and claiming the assessment the district previously charged was not worth the services that came in return. Now, new board members are emphasizing the need for transparency and listening to the community.

Two-minute impact

District officials anticipate spending around $2.17 million on average each year for the 15 years of the service plan, which lays out district projects.

District Executive Director Andrea Duhon said the district will look to improve public safety by hiring a security company to have two patrol shifts immediately with longer term plans involving bringing in Houston Police Department officers to work overtime in areas where it's needed most. The district will also install security cameras in areas that will be informed by professional input.

Other initiatives would include graffiti and litter abatement. The district could also take on maintenance of projects completed by the Montrose Tax Increment Reinvestment Zone, which is prohibited by law from funding maintenance work.

The city of Houston maintains some TIRZ infrastructure, but a management district could help with maintenance that goes above city standards, TIRZ Chair Joe Webb said. In a Feb. 28 interview, prior to a district discussion on board members, Webb said TIRZ officials were open to working with the district, but were watching from a distance as board member appointments play out.

"Once they have their service plan in place, we'll sit down with them and give an update on what we’re doing and see how it works," Webb said.
A closer look

The Montrose Management District first formed in 2011 when two existing improvement districts were merged. A management district is a governmental entity that can assess property taxes and fees on certain commercial property owners within its boundaries.

The district cannot impose taxes or fees unless a petition is led to the district’s board requesting the services. The district then uses the funds it raises on initiatives according to a service plan approved by its board.

Although the district will tax 996 properties, its reformation only required a petition from 25 property owners, a standard that was raised when the law was amended in 2019 under House Bill 304.

Those opposed to the district say it should abide by the new standard, which only allows a management district to form if it gets a petition "signed by the owners of a majority of the assessed value of the real property in the proposed district that would be subject to assessment by the district." However, the new standard only applies to districts that have formed since the law was amended, district officials said.

Duhon said the district received a petition with signatures from 60 property owners, including Kimco—which owns The Driscoll at River Oaks apartment community—and La Colombe d’Or hotel.

Businesses within the boundaries will be taxed according to the following plan:

Assessment rate: $0.09 per $100 in property value
  • A property valued at $1 million would pay roughly $900 in annual taxes to the district.
  • Before it went inactive in 2018, the district charged $0.12 per $100 in property value.
Applies to commercial properties, not residential properties, with several exceptions:
  • Mid-rise and high-rise buildings pay assessments based on the value of only four levels of each structure.
  • Multifamily residential complexes of 25 units or less are exempt
  • Mixed-use properties will pay assessments only if the business portion of the property is more than 40% of the total valuation.
The other side

Those opposed to the district express concerns about the number of signatures needed to bring it back and what they said was a lack of benefits when it last existed.

Mariana Lemesoff, owner of Avant Garden on Westheimer Road, said the district did not provide her business any benefits when it last operated.

"I can't justify the reorganization of the MMD when they were rejected by so many business property owners because they didn't make any improvements to the neighborhood," she said. "We all felt we were being taxed because the MMD gained the legal right to tax us. Not because they provided useful services and improvements to the neighborhood. It is a self-serving organization."

John Foelber and Judy Adams, owners of Foelber Pottery on Richmond Avenue, were part of a six-year fight to get the district dissolved when it last operated. Opposition leaders at that time gathered signatures to dissolve the district from what they said was 80% of assessed tax payers. Adams said she didn’t think it was right to launch a tax collecting district with 60 signatures when she said the majority of people she speaks with are against it.

“It looks good, what they say they are going to do, but nothing they did was actually helpful as a business owner,” Adams said. “Bigger businesses won’t feel [the tax increase], but most small business owners can’t waste that $50-$100. You’re going to lose what makes Montrose unique.”

Opponents like Daphne Scarborough, owner of The Brass Maiden, thought they were victorious in 2018 when the board voted to dissolve. However, the dissolution was contingent on a judge issuing an order to do so, and officials said that order was not issued.

Scarborough would not be subject to taxes under the district’s new bylaws under the provision that exempts mixed-use properties if the business portion of the property is less than 40% of the total valuation. However, she said she’s still raising awareness for other business owners.

“We worked so hard,” Scarborough said of previous efforts to dissolve the district. “Any time I take on a project, I want to finish it.”

What's next

The district was also sued in 2012 and has a roughly $500,000 legal settlement to pay from a judgment that district officials said they planned to follow. However, details on how that payment will be worked into its future budget were not released as of press time.

At a Feb. 29 special meeting, the board’s three current members voted to appoint six new board members, which will later have to be approved by Houston Mayor John Whitmire.

New members include Dan Fergus, the owner of Brasil, who attended the meeting to speak about his dissatisfaction with the district when it last operated. When asked by current board members if he would like to join the board as a way to represent business owner needs, he agreed.

“We’d rather have practical solutions to the problems we share,” Fergus said at the meeting. “It’s important to know what you are being asked to pay for.”

District officials said the next big steps will involve getting appointments approved by Whitmire and the Houston City Council, after which another meeting will be hosted.

In a Feb. 28 email, a spokesperson with Whitmire's office said everything is under review at this time.