Water Utility Imposes Illegal, Overly-Inflated Water Service Fee on Local Church

Grace Community Church sues Montgomery County for illegal excessive fees they were forced to pay for their new facility.

The Woodlands, TX—Attorneys from First Liberty Institute and King & Spalding LLP filed a lawsuit today against the Southern Montgomery County Municipal Utility District, claiming it broke the law when it singled out Grace Community Church with excessive water connection fees. 

You can read the complaint here. 

“Churches like Grace Community are important parts of the communities they serve,” Craig Stanfield, a partner in the firm of King & Spalding, said.  “The resources of churches are best used in fulfilling their mission to serve their congregations and communities, not in paying unlawful taxes. We look forward to securing a refund for Grace Community.” 

The District initially stated the actual cost to connect to the water line would be $24,900 for labor and materials. When the church requested that the District install the water tap, they followed with a fee of $61,500 which amounted to 150% of the actual installation cost. When the church challenged the amount based on its tax-exempt status, the District countered with a tap fee of $147,938—more than doubling the prior fee. To complete, occupy, and use the new church facility for its intended religious purposes, Grace Community had no choice but to accede to the District’s demands under protest and pay the fees. 

“The county’s water tap fee scheme is a thinly veiled illegal property tax on Grace Community Church,” said Jeremy Dys, Senior Counsel and First Liberty Institute. “Any attempt by the government to collect taxes from a church under the guise of other fees is underhanded and unlawful.” 

The Church’s petition argues, “The tap fee imposed by the District on its face exceeds the cost of government action here—the installation of the tap.  Indeed, one iteration of the tap fee was equivalent to fifteen years of taxes and the last iteration exceeds what Grace would pay in taxes over seven years if Grace were not a tax-exempt entity.  Therefore, the tap fee constitutes an impermissible tax. The District and its Directors acted without legal or statutory authority in imposing this tax disguised as a tap fee, and Grace is entitled to a refund of the disputed amount.”

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About First Liberty Institute

First Liberty Institute is a non-profit public interest law firm and the largest legal organization in the nation dedicated exclusively to defending religious freedom for all Americans.