How does a Texas appraisal district calculate 'average land value' for a city's parkland dedication fee on new apartment and hotel development?

Plain-English summary

When a large Texas city makes a developer set aside land for a park, or pay a fee instead, the size of that fee depends on the "average land value" of the area where the project sits. A state senator asked the Attorney General how an appraisal district is supposed to calculate that figure under Local Government Code subsection 212.209(c), because two methods were producing wildly different numbers. The provision's author, a state representative, and the Travis County Appraisal District (TCAD) disagreed about the formula. The AG could not resolve the factual dispute between them, but it explained how a court would likely read the statute.

This whole framework comes from subchapter H of chapter 212, added by House Bill 1526 in 2023 to put guardrails on the common practice of "parkland dedication." It applies only to municipalities with more than 800,000 people. The city first designates its territory as suburban, urban, or central business district areas and notifies the appraisal district. Then, once every ten years, the appraisal district calculates the average land value for each such area. "Land value" is defined as the market value of land per acre, not counting improvements, and "market value" borrows the Tax Code definition.

The AG worked through the text and rejected the per-parcel approach. It found no support for taking each parcel, extrapolating it up or down to a fictional one-acre value, and averaging those fictional acres. It also rejected dividing the total area value by the number of parcels. The "per acre" language in the definition, the AG explained, just tells you what to divide by: the total acreage of the area. So the correct reading is to determine the market value of all land in each designated area, then divide that total by the total acres in the area. The AG agreed the representative's suggested method was essentially right, with one correction: the calculation uses "market value," which the Tax Code distinguishes from "assessed value."

What this means for you

If you are a developer or land-use attorney in a large Texas city

Based on this opinion, the parkland dedication fee tied to "average land value" should be built on an area-wide market value divided by area-wide acreage. The AG's reading rejects per-parcel extrapolation, which the briefing suggested could inflate the figure by treating sub-acre parcels as full fictional acres. If a city or appraisal district is using a per-parcel method, this opinion is the AG's view that the statute does not support it.

If you work at an appraisal district

The opinion describes the calculation the AG thinks a court would require: add the market value of all land in each municipally designated area located in your district, then divide by the total acreage in that same area. It notes that districts often already know the market value of individual properties from regular appraisals, so the task is largely to identify which properties sit in the area and total their values. It also flags that "market value," not "assessed value," is the input.

If you are a city official administering parkland dedication

The opinion sets the average-land-value step within the larger fee formula in section 212.210 and explains how 212.209 feeds it. The AG read "area" to mean the suburban, urban, or central-business-district categories the city designates, and confirmed the ten-year recalculation cycle with the consumer-price-index adjustment in intervening years under subsection 212.209(e).

Common questions

Q: What is "parkland dedication"?
A: It is the practice of a city requiring a developer to set aside part of a property for park use, or pay a fee instead, when building multifamily, hotel, or motel projects. House Bill 1526 codified it in subchapter H of Local Government Code chapter 212 for cities over 800,000 in population.

Q: What is the correct way to calculate "average land value"?
A: The AG concluded a court would likely require the appraisal district to determine the market value of all land in each designated suburban, urban, or central-business-district area, then divide that total by the total acreage in that same area.

Q: Why did the AG reject the "per parcel" method?
A: The AG found no textual support for assigning a per-acre value to individual parcels and averaging those fictional acres, or for dividing total value by the number of parcels. The statute defines land value for the whole area, and the "per acre" phrase tells you to divide by total acres, not by parcel count.

Q: Does the author's stated intent control how the statute is read?
A: No. The AG noted that even the author and sponsor's statement does not determine legislative intent, because the enacted text is the law and the most reliable guide to intent. A court would apply ordinary statutory-construction principles to the words of subsection 212.209(c).

Q: Did the AG say TCAD was doing it wrong?
A: No. The AG does not find facts in the opinion process and said nothing indicates TCAD uses any particular method. It discussed the per-parcel approach only in the abstract to test whether that approach matches the statute.

Background and statutory framework

Subchapter H of Local Government Code chapter 212, enacted by House Bill 1526 in 2023, lets large municipalities require parkland dedication, a fee in lieu, or both, for certain developments (Tex. Loc. Gov't Code § 212.205(a)). It applies only to cities over 800,000 in population (id. § 212.202). The fee math runs through sections 212.209, 212.210, and 212.211. The city designates suburban, urban, or central-business-district areas (id. § 212.209(a)) and notifies each appraisal district (id. § 212.209(b)). Every ten years the district calculates the average land value for each designated area in the district (id. § 212.209(c)), and the fee formula multiplies a dwelling-unit-factor figure by that average land value (id. § 212.210(b)(2)).

The defined terms drive the answer. "Land value" means "the market value of land per acre, not including an improvement to the land" (id. § 212.201(4)), and "market value" takes the Tax Code meaning (id. § 212.201(3); Tex. Tax Code § 1.04(7)), determined by generally accepted appraisal methods (Tex. Tax Code § 23.01(b), (h)). On statutory construction, the AG relied on the rule that the enacted text is the most reliable guide to legislative intent, not a single legislator's statement (Morath v. Lampasas Indep. Sch. Dist., 686 S.W.3d 725, 734 (Tex. 2024); AT & T Commc'ns of Tex., L.P. v. Sw. Bell Tel. Co., 186 S.W.3d 517, 528-29 (Tex. 2006)), and on dictionary meaning for the undefined word "average" (Fort Worth Transp. Auth. v. Rodriguez, 547 S.W.3d 830, 838 (Tex. 2018)).

Citations and references

Statutes:

• Tex. Loc. Gov't Code § 212.209 — appraisal district calculation of average land value
• Tex. Loc. Gov't Code § 212.201 — subchapter H definitions, including "land value"
• Tex. Tax Code § 23.01 — market value and generally accepted appraisal methods

Key cases:

• Morath v. Lampasas Indep. Sch. Dist., 686 S.W.3d 725 (Tex. 2024) — plain meaning informed by context is the most reliable guide to intent
• AT & T Commc'ns of Tex., L.P. v. Sw. Bell Tel. Co., 186 S.W.3d 517 (Tex. 2006) — a single legislator's statement does not determine legislative intent

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/ken-paxton/kp-0473
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2024/kp-0473.pdf

Original opinion text

KEN PAXTON
ATTORNEY GENERAL OF TEXAS

August 8, 2024

The Honorable Brian Birdwell
Chair, Senate Committee on Natural Resources & Economic Development
Texas State Senate
Post Office Box 12068
Austin, Texas 78711-2068

Opinion No. KP-0473

Re: Calculation of "average land value" under Local Government Code section 212.209 (RQ-0535-KP)

Dear Senator Birdwell:

You inquire about the method by which an appraisal district must calculate "average land value" pursuant to Local Government Code subsection 212.209(c).¹ You inform us that a discrepancy has arisen about how the calculation should be performed. Request Letter at 2. Specifically, you relay a concern from the provision's author, Representative Cody Harris, "that the differing methods produce widely different [average land] values." Id. You also attach correspondence between Representative Harris and the Travis County Appraisal District ("TCAD") memorializing their disagreement. Id. at 3-5. While we cannot resolve the dispute between Representative Harris and TCAD, we will generally address how a court would likely construe Local Government Code subsection 212.209(c). We begin by reviewing the recently enacted statutory framework in which subsection 212.209(c) is situated.

Local Government Code chapter 212, subchapter H, establishes parameters for multifamily, hotel, and motel parkland dedication in certain large municipalities.

Local Government Code subsection 212.209(c) is found in subchapter H of Local Government Code chapter 212. See generally TEX. LOC. GOV'T CODE §§ 212.201-.213. This subchapter, including the provision about which you ask, was enacted by House Bill 1526 in the Eighty-eighth regular legislative session.² You state that this legislation was intended "to codify and put guardrails on a common practice, known as parkland dedication, [that] several cities impose on new multifamily developments." Request Letter at 1. Toward that end, subchapter H establishes a framework under which a municipality subject to its application³ "may require a landowner to dedicate a portion of the landowner's property for parkland use, impose a parkland dedication fee, or both require the dedication and impose the fee . . . ." TEX. LOC. GOV'T CODE § 212.205(a).

A parkland dedication fee is "a fee imposed by a municipality on a landowner for the acquisition, development, repair, and maintenance of parkland." Id. § 212.201(9). As you note, the calculation of average land value "plays an important role in the final calculation of the [parkland dedication] fees that may be imposed in-lieu [of] or in combination with a parkland dedication." Request Letter at 1; see also TEX. LOC. GOV'T CODE § 212.210(b)(2) (requiring as one step in the calculation of such a fee that the sum arrived at under subsection 212.210(b)(1) be multiplied "by the average land value for the area in which the land is located"). Local Government Code sections 212.209, 212.210, and 212.211⁴ generally address how such fees are calculated.

Your request broadly implicates sections 212.209 and 212.210. Determining parkland dedication fees begins with section 212.209. The first step is for the governing board of the relevant municipality to "designate all territory within its municipal boundaries as a suburban area, urban area, or central business district area." TEX. LOC. GOV'T CODE § 212.209(a). The municipality then must "notify each appraisal district in which the municipality is wholly or partly located of the designation." Id. § 212.209(b). Following notification, the provision about which you ask—subsection 212.209(c)—requires an appraisal district to determine "average land value" as follows:

(c) Once every 10 years,⁵ each appraisal district in which the municipality is wholly or partly located shall calculate and provide to the municipality the average land value for each area or portion of an area designated by the municipality under Subsection (a) that is located in the district.

Id. § 212.209(c) (footnote added). Where more than one appraisal district is involved, subsection 212.209(d) requires an additional calculation to determine the "total average land value" for each area within the municipality. Id. § 212.209(d). Finally, the municipality must set its "dwelling unit factor" and "density factor." Id. § 212.209(f), (g).

Section 212.210 contains the general requirements for calculating a parkland dedication fee where a municipality subject to subchapter H does not qualify under section 212.211. Id. §§ 212.210(a), .211(b). The multistep calculation set forth in subsection 212.210(b) is particularly relevant to your request.⁶ The first step makes use of the "dwelling unit factor" set pursuant to subsection 212.209(f). Id. § 212.210(b)(1). The second step involves the "average land value for the area in which the land is located[.]" Id. § 212.210(b)(2). And the third step divides the product obtained in step two by the "density factor" set under subsection 212.209(g). Id. § 212.210(b)(3). Given its close relationship to section 212.209, subsection 212.210(b) provides important context when considering your inquiry.

A court would determine the legislative intent for subsection 212.209(c) by construing its text.

In the correspondence appended to your request, Representative Harris explained his "original legislative intent" as the author of House Bill 1526. Request Letter at 3. Upon providing this explanation, the representative requested that TCAD perform the calculation required by subsection 212.209(c) "according to the law and [his] legislative intent." Id. at 4. While it is true that, in construing a statute, a court's "primary objective is to ascertain and give effect to the Legislature's intent," courts consider "the most reliable guide to the Legislature's intent" to be "the plain meaning of the statutory terms, informed by context[.]" Morath v. Lampasas Indep. Sch. Dist., 686 S.W.3d 725, 734 (Tex. 2024). Indeed, "the statement of a single legislator, even the author and sponsor of the legislation, does not determine legislative intent." AT & T Commc'ns of Tex., L.P. v. Sw. Bell Tel. Co., 186 S.W.3d 517, 528-29 (Tex. 2006). Rather, "[t]he text of the statute is the law and the only definitive evidence of what the legislators had in mind when the statute was enacted into law[.]" Starks v. State, 684 S.W.3d 868, 874 (Tex. App.—Eastland 2024, no pet.); see also Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 651 (Tex. 2006) ("Ordinarily, the truest manifestation of what legislators intended is what lawmakers enacted, the literal text they voted on."). Accordingly, a court would apply traditional principles of statutory construction to determine the meaning and application of subsection 212.209(c).

An appraisal district calculates the average land value for each municipally designated suburban area, urban area, or central business district area.

Subsection 212.209(c) refers to "the average land value for each area or portion of an area designated by the municipality under Subsection (a) that is located in the district." TEX. LOC. GOV'T CODE § 212.209(c) (emphasis added). The statute delineates between an "area" and a "portion of an area" because subsection 212.209(c) applies to an "appraisal district in which the municipality is wholly or partly located . . . ." Id.; see also id. § 212.209(d) (setting forth an additional calculation where "multiple appraisal districts calculate an average land value for different portions of an area"). Furthermore, the reference to subsection 212.209(a) indicates that the "area" for which the average land value must be calculated means "a suburban area, urban area, or central business district area." Id. § 212.209(a); see generally Brown v. City of Houston, 660 S.W.3d 749, 754 (Tex. 2023) (stating that "the surrounding provisions of a disputed text" are "[a]mong the core contextual considerations that generate reliable constructions"). Accordingly, subsection 212.209(c) requires an appraisal district to calculate the average land value for each municipally designated suburban area, urban area, and central business district area located within the district.

Calculating "average land value" begins by determining the "market value" for the "land" within a given area.

An appraisal district's determination of "average land value" pursuant to subsection 212.209(c) must be performed in accordance with the statutory definition of "land value." Subchapter H defines "[l]and value" to mean "the market value of land per acre, not including an improvement to the land." TEX. LOC. GOV'T CODE § 212.201(4). In turn, "[m]arket value" generally "means the price at which a property would transfer for cash or its equivalent under prevailing market conditions" where three listed circumstances are present. TEX. TAX CODE § 1.04(7) (specifying three circumstances with respect to market conditions); see also TEX. LOC. GOV'T CODE § 212.201(3) (providing that "market value" for purposes of subchapter H has "the meaning[] assigned by Section 1.04, Tax Code"). Calculating "average land value" thus begins with an appraisal district determining the "market value" of the relevant "land."

While section 212.209 does not expressly address which "land" subsection (c) implicates, subsection 212.210(b)(2) provides guidance. The "land" associated with calculating "average land value" is that which is located within a municipally designated suburban area, urban area, or central business district area. TEX. LOC. GOV'T CODE § 212.210(b)(2) (providing that calculation of a parkland dedication fee includes "multiplying the sum calculated under Subdivision (1) by the average land value for the area in which the land is located" (emphasis added)); see also supra at 3-4 (construing an "area" to refer to "a suburban area, urban area, or central business district area").

Furthermore, by defining "land value" in reference to the Tax Code's definition of "market value," subchapter H incorporates the requirement for an appraisal district to determine the land value for the area within the district "by the application of generally accepted appraisal methods and techniques."⁷ TEX. TAX CODE § 23.01(b) (setting forth how "market value" is to be determined). Tax Code subsection 23.01(h) provides guidance on what constitutes such a method or technique as follows:

(h) Appraisal methods and techniques included in the most recent versions of the following are considered generally accepted appraisal methods and techniques for the purposes of this title:

(1) the Appraisal of Real Estate published by the Appraisal Institute;

(2) the Dictionary of Real Estate Appraisal published by the Appraisal Institute;

(3) the Uniform Standards of Professional Appraisal Practice published by The Appraisal Foundation; and

(4) a publication that includes information related to mass appraisal.

Id. § 23.01(h). As a practical matter, an appraisal district will often already be aware of the market value of individual properties within the relevant whole or partial area, as previously determined through generally accepted methods and techniques, and thus need only delineate which properties are located on that area's land and add together the values of each property. See id. § 23.01(a) (providing that "[e]xcept as otherwise provided by this chapter, all taxable property is appraised at its market value as of January 1").

Accordingly, a court would likely conclude that calculating "land value" pursuant to subsection 212.209(c) requires an appraisal district to determine the "market value" for the "land" in each municipally designated suburban area, urban area, and central business district area located within the district.

"Average land value" refers to the value for all land in a given area as expressed on a "per acre" basis.

Following a determination of the land value for each area or portion of an area, subsection 212.209(c) then requires this figure to be converted to the "average land value." TEX. LOC. GOV'T CODE § 212.209(c) (emphasis added). Without more, the statute's plain text would simply direct appraisal districts to calculate the average value of all land in each full or partial area. But since "[l]and value" is statutorily defined to mean "the market value of land per acre, not including an improvement to the land," id. § 212.201(4), we incorporate that definition into the subsection 212.209(c) calculation, which produces the following result:

(c) Once every 10 years, each appraisal district in which the municipality is wholly or partly located shall calculate and provide to the municipality the average [market value of land per acre, not including an improvement to the land] for each area or portion of an area designated by the municipality under Subsection (a) that is located in the district.

Id. § 212.209(c) (emphasis added). Before considering the effect on the statute's meaning, we briefly review the competing interpretations received in relation to your request regarding how the calculation is to be performed.

The correspondence from Representative Harris appended to your request asserts that an appraisal district should add together "all assessed value within each of the suburban, urban, [and] CBD areas" and then divide the resulting sum "by the total acreage for each area." Request Letter at 3. By contrast, Representative Harris indicates that TCAD performs the calculation by adding together all "per acre per parcel value[s]" and then dividing by the total number of "parcels." Id. (referring to "the average of all parcels' acre value").⁸ However, neither TCAD's response to Representative Harris nor its briefing to our office confirms the exact formula it has chosen to employ. See id. at 5; Brief from Leana Mann, Chief Appraiser, Travis Cent. Appraisal Dist. at 1-2 (Apr. 5, 2024) (on file with the Op. Comm.). In any event, our office does not determine facts through the opinion process, and thus nothing in this opinion is intended to indicate that TCAD employs any particular method of calculation. See Tex. Att'y Gen. Op. No. KP-0281 (2020) at 1. We thus discuss the approach ascribed to TCAD only in the abstract to determine whether it comports with subsection 212.209(c).

We find no textual support for calculating "average land value" by first determining per-acre-per-parcel values, which we understand to mean extrapolating the value of individual parcels upward or downward to that of a fictive acre. While "[l]and value" is defined as "market value of land per acre," the land value that must be calculated pursuant to subsection 212.209(c) is that of "each area or portion of an area . . . ." TEX. LOC. GOV'T CODE §§ 212.201(4), .209(c). Assigning a per-acre value to individual parcels impermissibly divorces "market value" from this wider statutory context. To be sure, "market value" generally refers to specific valuations of real property conducted by appraisal districts. See TEX. TAX CODE § 23.01(b) (providing that "each property shall be appraised based upon the individual characteristics that affect the property's market value"). But when read into subsection 212.209(c), "market value" instead suggests that valuation data reflecting actual property values should be utilized rather than extrapolated values of fictive acres. Accordingly, the calculation set forth in subsection 212.209(c) does not involve assigning a per-acre value to individual parcels of land.

The "per acre" reference in the definition of "land value" instead performs a different function: It clarifies what is to be averaged when calculating "average land value." See TEX. LOC. GOV'T CODE §§ 212.201(4), .209(c). An "average" is commonly defined as "constituting the result obtained by adding together several quantities and then dividing this total by the number of quantities[.]" NEW OXFORD AMERICAN DICTIONARY 111 (3d ed. 2010); see also Fort Worth Transp. Auth. v. Rodriguez, 547 S.W.3d 830, 838 (Tex. 2018) (stating that courts "typically look first to dictionary definitions" when determining the "common, ordinary meaning" of words not statutorily defined). As set forth above, the initial sum is the total value of the "land" located in a given area or portion of an area. Indeed, the reference to "land" in the singular rather than, for example, a reference to parcels, tracts, or "lands" in the plural, confirms that "per acre" applies to the totality of the relevant area. The resulting total value is then divided by the total number of acres in the same area, resulting in an "average" as expressed in dollars "per acre." Accordingly, neither the text of subsection 212.209(c) nor the embedded reference to "market value of land per acre" provides support for dividing the value of land within a whole or partial area by its number of parcels.

Given that these constructions are foreclosed by the relevant statutory text, we briefly turn back to the construction suggested by Representative Harris. As a threshold matter, we disagree that the calculation of average land value necessarily involves adding together "all assessed value" within a given area, as "assessed value" is distinct from "market value." Compare TEX. TAX CODE § 1.04(7) (defining "[m]arket value"), with id. § 1.04(9) (containing a different definition for "[a]ssessed value"). Having made that distinction, we agree that the representative's suggested calculation otherwise comports with the text of subsection 212.209(c) under the analysis set forth above. Accordingly, a court would likely conclude that the calculation of "the average land value for each area or portion of an area" is performed by determining the market value of all land in a municipally designated suburban area, urban area, or central business district area located within the relevant appraisal district and then dividing the resulting total land value by the total acreage within the same area of the appraisal district.

SUMMARY

Local Government Code chapter 212, subchapter H, establishes a statutory framework related to multifamily, hotel, or motel development in certain large municipalities. Under this framework, a municipality may require a portion of a landowner's property to be dedicated for parkland use, impose a parkland dedication fee, or both require the dedication and impose the fee. Within subchapter H, subsection 212.209(c) requires appraisal districts in which a municipality is wholly or partly located to calculate the "average land value for each area or portion of an area." The "land value" refers to the total "market value" of land within each municipally designated suburban area, urban area, or central business district area located wholly or partially within the appraisal district. A court would likely conclude that the "average land value" is obtained by dividing the land value in each partial or whole area within the district by the total acres within the same area.

Very truly yours,

KEN PAXTON
Attorney General of Texas

BRENT WEBSTER
First Assistant Attorney General

LESLEY FRENCH
Chief of Staff

D. FORREST BRUMBAUGH
Deputy Attorney General for Legal Counsel

AUSTIN KINGHORN
Chair, Opinion Committee

J. AARON BARNES
Assistant Attorney General, Opinion Committee

Footnotes:

¹ See Letter from Honorable Brian Birdwell, Chair, Senate Comm. on Nat. Res. & Econ. Dev., to Honorable Ken Paxton, Tex. Att'y Gen. at 1 (Mar. 5, 2024), https://www.texasattorneygeneral.gov/sites/default/files/request-files/request/2024/RQ0535KP.pdf ("Request Letter").

² Act of May 21, 2023, 88th Leg., R.S., ch. 493, § 1, 2023 Tex. Gen. Laws 1165, 1166-67 (codified at TEX. LOC. GOV'T CODE §§ 212.201-.213) ("House Bill 1526").

³ Subchapter H applies only to municipalities with a population greater than 800,000. TEX. LOC. GOV'T CODE § 212.202.

⁴ Section 212.211 sets forth requirements when the calculation is performed by certain municipalities in which the parkland dedication fee is "not greater than two percent of the median family income." Id. § 212.211(a), (b). If a municipality chooses to both require a landowner to dedicate some portion of a property and to impose a parkland dedication fee, subsection 212.211(c) provides for a calculation that features "the land value applicable to the land" that is "subject to a plan application . . . ." Id. § 212.211(c); see also id. § 212.205(a)(2). Because this calculation involves the land value of a particular owner's land rather than an entire area's "average land value," subsection 212.209(c) is not implicated by this provision.

⁵ Pursuant to House Bill 1526, the initial determination of average land value under subsection 212.209(c) was to be completed by each appraisal district no later than January 1, 2024. Act of May 21, 2023, 88th Leg., R.S., ch. 493, § 2, 2023 Tex. Gen. Laws 1165, 1169. Average land value "[i]n each year other than the year in which an appraisal district calculates average land values under Subsection (c)" is then determined pursuant to subsection 212.209(e). TEX. LOC. GOV'T CODE § 212.209(e) (requiring a municipality to "calculate the average land value for each area designated under Subsection (a) by multiplying the previous year's average land value for the area by one plus the average consumer price index for each month of the previous year").

⁶ Similar to section 212.211, subsections 212.210(d) and 212.210(e) determine the fee when the relevant municipality chooses to both require a landowner to dedicate a portion of the landowner's property for parkland use and to impose a parkland dedication fee pursuant to subsection 212.205(a)(2). TEX. LOC. GOV'T CODE § 212.210(d)-(e); see also id. § 212.205(a)(2). Accordingly, these provisions within section 212.210 also do not implicate an area's "average land value" as that term is used in subsection 212.209(c).

⁷ While application of generally accepted appraisal methods and techniques informs the initial determination of "land value," such methods and techniques provide no assistance in construing the function of the word "average" in the calculation of "average land value." We instead construe "average" based on the statutory text itself.

⁸ Briefing received in response to your request further suggests that TCAD "determine[s] the average calculations at the parcel level . . . ." Brief from Citizens for Responsible Parks at 2 (Apr. 2, 2024) (on file with the Op. Comm.). Specifically, the brief alleges that TCAD takes "the appraised value of each individual sub-acre parcel and extrapolat[es] a per acre value for each individual parcel[,]" "takes individual parcels that are greater than one acre and downsizes them to an acre to extrapolate a per-acre value[,]" and "then takes each of these fictional one-acre parcels and averages them together . . . ." Id. at 1.