Grace Church Woodlands, TX

Grace Community Church in The Woodlands, Texas is a large, growing, non-denominational church serving a diverse group of people in the North Houston area.  A longstanding part of the Montgomery County community, Grace provides weekly Sunday worship services to approximately 2,000 plus another 800 on Wednesday night, and offers numerous, ongoing opportunities for its members to engage in religious exercise through the local community.  Grace provides valuable services to its neighbors in Montgomery County through various ministries and outreach projects to carry out Grace’s deeply held religious beliefs in ministry and evangelization.

To meet the needs of the church’s mission, Grace purchased property in Montgomery County to construct a new church building and related facilities. As the construction project was underway, they needed water services from the county districts utility system. The connection involves a water tap to connect the pipes which delivery water to the new facility.

When new facilities need water services from the district’s system, users have the option to acquire their own installation services at the districts approval or pay to have the district complete the water tap connection. In communications with the district, it was made clear to the church that the actual cost of labor, materials, and equipment to install the tap would not exceed $24,900.

Based on that information, Grace Church requested that the district install the 8-inch water tap. To their surprise the district quoted a tap free of $61,500 which consisted of the installation fee plus 150 percent of the actual installation cost. Grace Church expressed their concern for the significant increase from what was originally quoted. Rather than lowering the cost to the first amount, the district recognized Grace’s tax-exempt status and responded with a new tap fee of $147,938—more than double the prior quoted fee. Broken down, the fee was itemized at $24,900 for the actual cost of installation, plus an additional fee of $123,038.85 the district claimed applied to non-taxable entities.

To complete, occupy, and use the Church for its intended religious exercise, Grace had no choice but to accede to the district’s demands under protest and pay the fees, otherwise Grace Church would not be able to use the facility to carry out its mission.

On behalf of Grace Church, First Liberty Institute and the law firm of King & Spalding filed a federal lawsuit, arguing that the county’s water tap fee violates state and federal law.

“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 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.”