By Jon BrownChristian Post Reporter Tuesday, November 28, 2023

A Texas church is pursuing a lawsuit against its local municipal utility district, alleging that the steep water faucet installation fees levied against the congregation effectively act as a tax against an otherwise tax-exempt organization.

Grace Woodlands Church in The Woodlands, north of Houston, claims Southern Montgomery County Municipal Utility District officials overcharged the church to install a water faucet at the facility earlier this year, according to trial filed in district court Nov. 15.

Municipal Service 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 later bills 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 payments exceeded the cost of labor, equipment and materials necessary for the water tap and that the highest repetition of the payment 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 alleges.

“The County insists these additional fees are justified because it cannot collect taxes from Grace because it is a tax-exempt, religious organization,” the suit said. “But these fees are simply taxes by another name.”

“The County is attempting to replace taxes — which it could collect if Grace were a taxable entity — with fees far in excess of those paid by any tax user,” the suit continued. “Accordingly, the District’s attempt to impose these taxes on a nontaxable entity like Grace, however those taxes are characterized, is illegal.”

The church reluctantly paid the $83,780 fee in September but is now seeking $250,000 or less in damages. The church wants a court to recognize a violation of the Texas Water Code, the Texas Religious Freedom Restoration Act and the Free Exercise Clause of the First Amendment of the United States Constitution.

The Rev. Steve Riggle, whose Grace Woodlands Church has been in business for 18 years and has about 4,000 members, protested the fee during a MUD board meeting in March, according to meeting minutes reported by the Houston Chronicle.

Riggle cited the Texas Tax Code to claim tax exemptions for religious organizations, although an attorney for the district pushed back claiming that state law “gives water districts the authority to recover the cost of providing services to nontaxable entities,” according to the minutes.

“For example, the District may charge a non-taxable entity the cost of providing the central plant and water, sewer and drainage facilities necessary to serve the non-taxable entity,” the meeting minutes state.

Grace Woodlands Church is represented by attorneys with the Plano-based nonprofit First Liberty Institute, which noted in statement that they successfully fought similar “holy water tax” cases on behalf of Magnolia Bible Church, First Baptist Church and Believers Fellowship, also in Montgomery County.

“Religious freedom is a precious thing, hard won and easily lost,” Jeremy Dys, Counsel for First Freedom, told The Christian Post about the larger implications of such cases.

“Whether by soul or simply looking for more avenues of funding for an ever ballooning government bureaucracy, it is important to ensure that government respects the immeasurable impact that our churches provide to the community.”

“That’s why we 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 in 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.