A Texas church is pursuing legal action against its local municipal utility district, alleging that the steep water tap installation fees levied against the congregation effectively serve as a tax against an otherwise tax-exempt organization.
Grace Woodlands Church in The Woodlands, north of Houston, alleges that Southern Montgomery County Municipal Utility District officials overcharged the church for installing a water tap at the facility earlier this year, according to a lawsuit filed in district court on Nov. 15.
Municipal Utility Districts are political subdivisions in Texas that provide water, sewage, drainage and other services.
An original quote from the district reportedly estimated that hooking up the church’s water line would cost no more than $24,900. But subsequent invoices raised the price to $61,500 before raising it to $147,938, dropping it to $61,500 again, and finally settling on $83,780.
The suit claims that the fees exceeded the cost of labor, equipment and materials required for the water tap and that the highest iteration of the fee was equivalent to 15 years worth of taxation if they were not tax-exempt.
The most recent tab was more than what the church would pay in seven years, the suit claims.
“The District insists that these additional fees are justified because it cannot collect taxes from Grace since it is a tax-exempt, religious organization,” the suit said. “But these fees are simply taxes by a different name.”
“The District is attempting to replace taxes — that it would be able to collect if Grace were a taxable entity — with fees far in excess of those paid by any taxable user,” the suit continued. “Accordingly, the District’s attempt to impose these taxes on a non-taxable entity such as Grace, however those taxes are characterized, is unlawful.”
The church reluctantly paid the $83,780 fee in September but now seeks $250,000 or less in damages. The church wants a court to acknowledge a violation of the Texas Water Code, the Texas Religious Freedom Restoration Act and the Free Exercise Clause of the U.S. Constitution’s First Amendment.
The Rev. Steve Riggle, whose Grace Woodlands Church has operated for 18 years and has approximately 4,000 members, protested the fee during a board meeting of the MUD in March, according to meeting minutes reported by the Houston Chronicle.
Riggle cited the Texas Tax Code to claim tax exemptions toward religious organizations, though an attorney for the district pushed back by claiming that state law “gives water districts the authority to recover the cost of providing services to non-taxable entities,” according to the minutes.
“For instance, the District is entitled to charge a non-taxable entity the cost of providing the central plant and water, sewer, and drainage facilities necessary to service the non-taxable entity,” the meeting minutes state.Â
Grace Woodlands Church is represented by attorneys with the Plano-based nonprofit First Liberty Institute, which noted in a statement that they have successfully fought similar “holy water tax” cases on behalf of Magnolia Bible Church, First Baptist Church and Believers Fellowship, also in Montgomery County.
“Religious liberty is a precious thing, hard won and easily lost,” First Liberty Senior Counsel Jeremy Dys told The Christian Post about the larger implications of such cases.
“Whether through animus or simply looking for more avenues of funding for an ever ballooning government bureaucracy, it is critical to ensure that government respects the immeasurable impact our churches provide to the community.”
“That’s why we have long removed houses of worship from the obligation of taxation. If government officials refuse to respect that, our communities — and government agencies — will be overwhelmed at meeting the needs once met by people of faith and their religious institutions.”
CP reached out to the Southern Montgomery County Municipal District and its attorney but did not receive a response by press time.
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