Texas Attorney General Opinion: GA-0634 Page: 4 of 11
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The Honorable Kip Averitt - Page 4
market value applies to an exchange7 of real property, the Authority and the lessees assume that it
also applies or would effectively apply as a matter of practice to the proposed sale of real property
here. See Authority's Brief, supra note 4, at 2-3 (suggesting that statutory fair market value
requirement applies to sale of property); Authority's Reply Brief, supra note 4, at 4 (stating that the
statute requires the Authority to receive fair market value for property sold); Lessees' Brief, supra
note 3, at 2 (suggesting that appraisal practices require valuing the property to be sold at its fair
market value); Staley Brief, supra note 3, at 3 ("It is not disputed that the Texas Water Code ...
requires the [Authority to] receive fair market value . . . for any 'interest in land' that it sells.")
(footnote omitted). But see TEX. SPEC. DIST. CODE ANN. 8502.012(f) (Vernon 2007) (permitting
the Authority to sell property "on terms and conditions . .. or sale prices, on which the parties
agree"), 8502.013(b) (permitting the Authority to "sell for cash any property or interest if the board
by affirmative vote of 11 of its members determines that the property or interest is not necessary to
the business of the Authority and approves the terms of the sale"). Assuming for the purposes of this
opinion that the fair market value requirement also applies or would effectively apply to the sale of
property, the statute does not directly state that a water district board must or must not, in arriving
at the fair market value of the land or interest in land, consider any leases on the land. See TEX.
WATER CODE ANN. 49.226(a) (Vernon 2008).
In the absence of such a direct expression in section 49.226 regarding a lease, we consider
whether the definition of fair market value itself, as a matter of law,8 imposes any constraints on a
district board's discretion to make that determination. Section 49.226 does not define or otherwise
elaborate on the phrase "fair market value." Nor has a court construed the phrase as used in this
statute. However, Texas courts have generally defined "market value" as the "'price the property
will bring when offered for sale by one who desires to sell, but is not obligated to sell, and is bought
by one who desires to buy, but is under no necessity of buying."' City ofHarlingen v. Estate of
Sharboneau, 48 S.W.3d 177, 182 (Tex. 2001) (quoting State v. Carpenter, 89 S.W.2d 979, 980 (Tex.
1936)); accord State v. Windham, 837 S.W.2d 73, 77 (Tex. 1992); see also Tex. Att'y Gen. LO-98-
082, at 2; Tex. Att'y Gen. Op. No. DM-441 (1997) at 4.
No decision that we find addresses whether fair market value as used in Water Code section
49.226(a) or in a similar context requires valuing leased public property as encumbered or
7While a court has construed the term "sale" to include an "exchange" of property, we find no Texas case that
has construed the term "exchange" to include a sale. Cf Bowling v. City ofEl Paso, 525 S.W.2d 539, 541 (Tex. Civ.
App.-El Paso 1975, writ ref'd n.r.e.) (acknowledging "that there is a technical distinction between a sale and an
exchange of property," and construing the term "sale" in the statute at issue to encompass an "exchange" because of the
purpose of the statute); see also THE NEW OXFORD AMERICAN DICTIONARY 592 (2001) (defining the term "exchange"
when used as a verb as to "give something and receive something of the same kind in return"); BLACK'S LAW
DICTIONARY 585 (7th ed. 1999) (defining "exchange" when used as a noun as "[t]he act of transferring interests, each
in consideration for the other").
8See Tex. Att'y Gen. LO-98-082, at 3 ("The method used to calculate the fair market value of a particular
property and the factors that must be considered in arriving at the fair market value of a particular piece of property are
for a qualified appraiser to determine in accordance with accepted standards of appraisal; they are not questions of law
that are susceptible to the opinion process.") (footnote deleted).(GA-0634)
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Texas. Attorney-General's Office. Texas Attorney General Opinion: GA-0634, text, June 5, 2008; (https://texashistory.unt.edu/ark:/67531/metapth275530/m1/4/?q=%222008~%22: accessed August 15, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.