BILL ANALYSIS

C.S.H.B. 1526

By: Harris, Cody

Land & Resource Management

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Texas continues to be a high-growth state and the lack of housing is a major threat to Texas' further economic growth. Historically, large cities in Texas adopt parkland dedication ordinances that require a developer to either donate part of their site plan to park space or pay a fee in lieu of donating part of their land. The percentage of the site the developer must donate has steadily grown in recent years. According to calculations derived from the Austin City Council, the percentage has recently risen in Austin from 10 percent to as high as 40 percent of a landowner's property in some cases. Many multifamily housing developers have been unable to move forward with projects due to the decrease in buildable units resulting from increases in parkland dedication requirements. Some developers even report that they have decided against building multifamily developments in certain areas of the state because increases in parkland dedication requirements have made it cost‑prohibitive to build projects that can offer affordable housing in those markets. C.S.H.B. 1526 seeks to address these issues by providing certain requirements with respect to parkland dedication ordinances in Texas' largest cities.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

Parkland Dedication for Property Development

C.S.H.B. 1526 amends the Local Government Code to grant a municipality with a population of more than 800,000 the exclusive authority within its boundaries to require the dedication of parkland, impose a parkland dedication fee, or both require the dedication and impose the fee. The municipality may only exercise this authority through an application for a subdivision development plan, subdivision plan, site plan, land development plan, or site development plan proposing the development of multifamily, hotel, or motel units. The bill prohibits an applicable municipality from delegating such authority to another political subdivision. Accordingly, an applicable municipality 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 under such a plan application by doing the following:

· paying a set fee as specified by the bill; or

· dedicating a portion up to the maximum size of property that a municipality may request for parkland use and paying a reduced fee as specified by the bill.

A municipality may allow a landowner to elect a parkland dedication, a parkland dedication fee, or a dedication and fee.

Parkland Dedication Determination; Dedication Authority; Amount Limitation

C.S.H.B. 1526 authorizes a landowner to make, at the landowner's sole discretion, a written request to a municipality that the municipality make a timely determination of the dedication amount the municipality will impose under the municipality's parkland dedication requirements as applied to the landowner's property that is being considered for development. The municipality may make a reasonable written request to the landowner for additional information that is publicly and readily available and necessary to provide a determination. Furthermore, the bill provides the following:

· a municipality must respond to the landowner's request for a timely determination in writing, not later than the 30th day after the date the completed request was received;

· if the municipality fails to respond accordingly, the municipality may not require a parkland dedication as a condition of approval of a proposed plan or application for property that is the subject of the request; and

· a parkland dedication determination is, as follows:

o a legally binding determination of the landowner's parkland dedication amount for the property that is the subject of the determination; and

o applicable to the property that is the subject of the determination for a period that is the lesser of two years or the time between the date the determination is issued and the date a plan application is filed that uses or relies on that determination.

The bill authorizes a landowner to release a municipality from the bill's parkland dedication determination in writing.

C.S.H.B. 1526 prohibits a municipality from requiring a parkland dedication, imposing a parkland dedication fee, or both requiring the dedication and imposing the fee for any commercial use, which does not include a multifamily, hotel, or motel use. If a plan application submitted to a municipality proposes development of the land subject to the application that includes both multifamily, hotel, or motel and commercial uses, the municipality must determine the amount of a parkland dedication based only on the pro rata portion of the land proposed for multifamily, hotel, or motel use. The bill prohibits a municipality from requiring a landowner to dedicate as parkland more than 10 percent, without adjustment or disqualification for impairment, of the gross site area of the land subject to a plan application.

Fees Imposed for Parkland Dedication

C.S.H.B. 1526 provides for the governing body of a municipality to do the following in determining the amounts of fees to be imposed for parkland dedication:

· not later than December 1, 2023, the governing body must, effective January 1, 2024, and after providing at least 30 days' public notice and holding a public hearing, designate by official action all territory within its municipal boundaries as a suburban area, urban area, or central business district area; and

· at the municipality's discretion, use the same designation for multiple areas in the municipality and amend a designation only during the adoption or amendment of a municipal comprehensive plan.

Not later than the 10th day after the date the municipality designates its territory, the municipality must notify each appraisal district in which the municipality is wholly or partly located of that designation. The bill requires each such appraisal district, beginning not later than January 1, 2024, and once every 10 years, to calculate and provide to the municipality the average land value for each designated area or portion of designated area that is located in the district. The bill requires each applicable municipality, not later than December 1, 2023, to provide the location of each designated area to each district in a manner sufficient to allow the district to make such calculations.

C.S.H.B. 1526 establishes that, in making fee determinations, a municipality must calculate the following using specified methods set out in the bill:

· if multiple appraisal districts calculate an average land value for different portions of an applicable designated area, the area's total average land value;

· in each year other than the year in which an appraisal district calculates average land values, the average land value for each area;

· the municipality's dwelling unit factor, which reflects the number of parkland acres for each dwelling unit proposed by a plan application; and

· the municipality's density factor, which reflects the diminishing expectation of parkland acres per dwelling unit in increasingly dense urban environments, for each designated area.

C.S.H.B. 1526 establishes that, in making fee determinations, a municipality that after August 31, 2023, requires a parkland dedication fee for a multifamily, hotel, or motel development in an amount, calculated on a per dwelling unit basis, greater than two percent of the municipality's median family income on that date must calculate the following using specified methods set out in the bill:

· the amount of the parkland dedication fee imposed for land subject to a plan application, excluding the number of affordable dwelling units proposed by the plan; and

· the amount of the reduced fee imposed for a landowner who dedicates a portion of the maximum amount that a municipality may request for parkland use.

If the calculation for the reduced fee results in a negative number, the applicable landowner is entitled to receive from the applicable municipality the amount equal to the positive difference between the calculated amount and zero, and the municipality must pay that amount to the landowner at the time of transfer of fee simple title or the recording of the easement, as applicable. In addition, not later than December 1, 2023, each applicable municipality must, effective January 1, 2024, set the municipality's dwelling unit and density factors as specified by the bill.

C.S.H.B. 1526 authorizes a municipality that after August 31, 2023, requires a parkland dedication fee for a multifamily, hotel, or motel development in an amount, calculated on a per dwelling unit basis, not greater than two percent of the municipality's median family income on that date to set a parkland dedication fee. The bill requires a municipality to calculate the amount of the reduced fee imposed for a landowner who dedicates a portion of the maximum amount that a municipality may request for parkland use using the specified method in the bill. If the calculation results in a negative number, the applicable landowner is entitled to receive from the municipality the amount equal to the positive difference between the calculated amount and zero and the municipality must pay that amount to the landowner at the time of transfer of fee simple title or the recording of the easement. If the municipality elects to set the fee in an amount greater than two percent of the municipality's median family income these provisions no longer apply to the municipality, which must then set the fee in accordance with the calculations under the bill's provisions for a municipality requiring such a fee in an amount greater than two percent of the municipality's median family income.

C.S.H.B. 1526 requires a municipality to provide a landowner with a written determination of the parkland dedication fees before approving a plan application but conditions a municipality's authority to collect such a fee on the fee itself being a precondition to the issuance of a final certificate of occupancy.

Appeal of Determination

C.S.H.B. 1526 authorizes a landowner to appeal a determination made by a municipal department, board, or commission regarding any element of a parkland dedication requirement, as it applies to the landowner's property, to the municipal planning commission or, if the municipality has no planning commission, the governing body of the municipality. A landowner may appeal a municipal planning commission's determination to the governing body of the municipality. The bill does the following with regard to an appeal of a determination:

· requires the appeal to include a requested adjudication of the issue in controversy;

· authorizes the municipal planning commission or governing body of a municipality in such an appeal to uphold, reverse, or modify a parkland dedication requirement as applied to the landowner making the appeal; and

· requires the planning commission or governing body to make such a determination not later than the 60th day after the date the appeal is filed with the commission or governing body.

If the commission or governing body fails to act in accordance with these provisions, the parkland dedication requirement is considered resolved in favor of the landowner's requested adjudication.

Construction

C.S.H.B. 1526 establishes that its provisions may not be construed to prohibit a municipality from requiring by ordinance a landowner to dedicate a portion of their property for parkland use, impose a parkland dedication fee, or both require the dedication and impose the fee for the development of single-family or two-family uses.

Definitions

For purposes of the bill's provisions, C.S.H.B. 1526 sets out the following definitions:

· "affordable dwelling unit" means a residential unit offered at a below market rate for rent or sale under a municipal, county, state, or federal program;

· "consumer price index" means the Consumer Price Index for All Urban Consumers (CPI-U), U.S. City Average, published by the Bureau of Labor Statistics of the U.S. Department of Labor or its successor in function;

· "improvement," defined by reference, means the following:

o a building, structure, fixture, or fence erected on or affixed to land;

o a transportable structure that is designed to be occupied for residential or business purposes, whether or not it is affixed to land, if the owner of the structure owns the land on which it is located, unless the structure is unoccupied and held for sale or normally is located at a particular place only temporarily; or

o for purposes of certain entities, the subdivision of land by plat, paving of undeveloped land, or installation of water, sewer, or drainage lines;

· "land value" means the market value of land per acre, not including an improvement to the land;

· "market value," defined by reference, means the price at which a property would transfer for cash or its equivalent under prevailing market conditions if:

o exposed for sale in the open market with a reasonable time for the seller to find a purchaser;

o both the seller and the purchaser know of all the uses and purposes to which the property is adapted and for which it is capable of being used and of the enforceable restrictions on its use; and

o both the seller and purchaser seek to maximize their gains and neither is in a position to take advantage of the exigencies of the other;

· "median family income" means the U.S. Census Bureau's most recent American Community Survey's five-year estimate of median family income for all families within the applicable municipality;

· "multifamily unit" means a residential unit other than a detached single-family or two‑family dwelling;

· "parkland" means an area that is designated as a park for the purpose of recreational activity, including an open space, recreational facility, and a trail;

· "parkland dedication" means the fee simple transfer of land or the dedication of an easement to a municipality for nonexclusive use as parkland;

· "parkland dedication fee" means a fee imposed by a municipality on a landowner for the acquisition, development, repair, and maintenance of parkland; and

· "plan" means a subdivision development plan, subdivision plan, site plan, land development plan, and site development plan each proposing the development of multifamily, hotel, or motel units.

Applicability

C.S.H.B. 1526 applies only to a plan application filed on or after January 1, 2024.

EFFECTIVE DATE

On passage, or, if the bill does not receive the necessary vote, September 1, 2023.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 1526 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

The substitute includes definitions of the following terms, which were absent from the introduced:

· "affordable dwelling unit";

· "median family income";

· "multifamily unit"; and

· "parkland dedication fee."

The substitute includes a specification absent from the introduced that the term "parkland" includes an open space, recreational facility, and a trail. Whereas the introduced defined "plan" as a subdivision development plan, subdivision plan, site plan, land development plan, and site development plan proposing the development of residential units, the substitute defines "plan" as a subdivision development plan, subdivision plan, site plan, land development plan, and site development plan each proposing the development of multifamily, hotel, or motel units.

Whereas the introduced grants a municipality the exclusive authority within its boundaries to require the dedication of parkland or a parkland dedication fee instead of the dedication, the substitute grants a municipality the exclusive authority within its boundaries to require the dedication of parkland, impose a parkland dedication fee, or both require the dedication and impose the fee. The substitute includes a provision absent from the introduced restricting that authority through a plan application proposing the development of multifamily, hotel, or motel units.

Whereas the introduced required a municipality that requires a landowner to dedicate a portion of the landowner's property for parkland use under a filed plan application to require the landowner to pay a set fee as specified by the bill or dedicate a certain portion of the landowner's property less than the maximum size as provided by the bill, the substitute authorizes a municipality to 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 under a filed plan application by paying the set fee as specified by the bill or dedicating a certain portion of the landowner's property. The substitute includes an authorization absent from the introduced for a municipality to allow a landowner to elect a parkland dedication, a parkland dedication fee, or a dedication and fee.

Whereas both the introduced and substitute authorize a landowner to make a written request to a municipality for determination of the applicable parkland dedication amount that will be imposed, the substitute includes a specification absent from the introduced that the authority to make such a request is at the landowner's sole discretion. The substitute conditions the authorization present in the introduced for a municipality to make a reasonable written request to the landowner for additional information necessary to make such a determination on that information being publicly and readily available.

Whereas the introduced prohibited a municipality from requiring a parkland dedication or imposing a parkland dedication fee instead of a parkland dedication for land that is not proposed for residential use under a plan application, the substitute prohibits a municipality from requiring a parkland dedication, imposing a parkland dedication fee, or both requiring the dedication and imposing the fee for any commercial use. The substitute includes a specification absent from the introduced that commercial use does not include a multifamily, hotel, or motel use.

The introduced required a municipality, if a submitted plan application proposes development that includes both residential and nonresidential uses, to determine the amount of a parkland dedication based only on the portion of the land proposed for residential use. The substitute replaces this provision with a requirement for a municipality, if an application proposes development that includes both multifamily, hotel, or motel and commercial uses, to determine the amount of a parkland dedication based on the pro rata portion of the land proposed for multifamily, hotel, or motel use.

The introduced set out the manner in which to calculate the average land value for each area designated as either a suburban area, urban area, or central business district area and a cap on a municipality's dwelling factor. The substitute revises both the manner in which that calculation is made and the cap on the dwelling unit factor. The substitute includes a specification absent from the introduced that a municipality's density factor reflects the diminishing expectation of parkland acres per dwelling unit in increasingly dense urban environments.

Both the introduced and substitute require a municipality to determine the amount of the parkland dedication fee imposed for land subject to a plan application and the amount of the reduced fee imposed for a landowner who dedicates a portion of the maximum amount that a municipality may request for parkland use. However, the substitute does the following:

· revises the manner in which the amount of the parkland dedication fee is calculated;

· includes a requirement absent from the introduced for a municipality to exclude from a plan application the number of affordable dwelling units proposed by the plan; and

· includes a provision absent from the introduced restricting the applicability of general requirements for calculating those fees to a municipality that after August 31, 2023, required a parkland dedication fee for a multifamily, hotel, or motel development in an amount, calculated on a per dwelling unit basis, greater than two percent of the municipality's median family income on that date.

The substitute includes provisions absent from the introduced that establish the requirements for the calculation of fees for a municipality that after August 31, 2023, requires a parkland dedication fee for a multifamily, hotel, or motel development in an amount, calculated on a per dwelling unit basis, not greater than two percent of the municipality's median family income on that date.

The substitute omits a provision from the introduced restricting the use of collected municipal fees to parkland acquisition, development, maintenance, or repair or other park purposes within municipal boundaries or outside municipal boundaries when partnering with one or more political subdivisions.

The substitute includes a provision absent from the introduced requiring an appeal to include a requested adjudication of the issue in controversy.

Both the introduced and substitute require a municipal planning commission or governing body of a municipality to act on a parkland dedication requirement that is the subject of an appeal not later than the 60th day after the date the appeal is filed. Whereas the introduced establishes that the applicable requirement is considered reversed if the commission or body fails to act by that deadline, the substitute establishes that the requirement is considered resolved in favor of the landowner's requested adjudication upon the commission or body's failure to act by that deadline.

The substitute includes a provision absent from the introduced establishing that the bill's provisions may not be construed to prohibit a municipality from requiring by ordinance a landowner to dedicate a portion of their property for parkland use, impose a parkland dedication fee, or both require the dedication and impose the fee for the development of single-family or two-family uses.