Fairfield Lake park property valued at ‘staggering’ $418M. What will the state do now?

A three-person panel has valued the former Fairfield Lake State Park property at $418.3 million, a win for the private developer who currently owns the land — and who paid less than a quarter of that price tag for the property earlier this year — and a blow to the state of Texas, which has been pursuing eminent domain to seize the property.

State Sen. Charles Perry — a Lubbock Republican and the chair of the Senate Committee on Water, Agriculture, and Rural Affairs — told the Star-Telegram that the state doesn’t have the funding to cover that valuation, even with the recently approved $1 billion Centennial Parks Conservation Fund.

“The $400 million price tag would not be something the fund could support and meet the intent of the legislature,” Perry said in a text message response to questions. “Thus, the $400 million price is greater than is available today.”

It’s unclear how the Texas Parks and Wildlife Department will respond to the valuation of the land in Freestone County, although the department has a few options. The most likely, according to an eminent domain attorney, would further extend a saga that’s already dragged on for months.

The Parks and Wildlife Department publicly sounded the alarm about the state park in January. At the time, the state worried that it would lose its lease on the park land, which was being sold by then-owner Vistra Corp., an energy company. The state tried and failed to acquire the 1,800 acres of park, which Vistra was selling along with the surrounding property, for a total of 5,000 acres.

Then, Dallas-based development firm Todd Interests purchased the property in June for $103.5 million, according to a state document that recounted the sale. After the purchase had gone through, the Texas Parks and Wildlife Commission voted to use eminent domain to take the 5,000-acre property, with the intent of returning it to public use. The property is southeast of the Metroplex, about halfway to Houston.

Todd Interests has fought the state, mounting a public relations campaign to emphasize the firm’s rightful ownership of the property. The firm plans to transform the former park land and the surrounding property into a high-end gated community.

A state appraisal report estimated that the land was worth $85 million, but Shawn Todd, the founder of Todd Interests, disagreed. His firm rejected the state’s voluntary offer in August, and the state then filed a formal condemnation petition on Sept. 1.

Todd has consistently said that he believes the property is worth much more than the approximately $100 million that he paid, largely because of the value of the water in Fairfield Lake. Todd did not immediately respond to a request for comment Wednesday.

The price tag

When the state filed its condemnation petition in Freestone County court, it kicked off the formal appraisal process for the property.

A panel of three people — required by state law to be property owners in the county — was tasked with listening to witness testimony and deciding how much the property is worth.

The panel was not weighing in on whether the state has the right to seize the property. Such a hearing would require a separate lawsuit, and eminent domain experts have told the Star-Telegram that the state had a clear-cut right to use eminent domain for the land. However, eminent domain still requires the seizing agency to pay a fair price for the property it takes.

After two days of hearings this week, the commission decided on Wednesday morning that Todd Interests’ 5,000-acre property, including the lake, is worth $418.3 million.

That number is “staggering,” said Andrew Morriss — a professor at Texas A&M’s School of Law and The Bush School of Government and Public Service — considering that the same property sold for about a quarter of that price earlier this year.

“That’s a surprising number,” Morriss said. “Anybody who could flip their property in that short a time, for that staggering an increase, would be a remarkable investor.”

That figure is also nearly five-times the value that the Parks and Wildlife proposed for the property. And that’s a number that the state is not prepared to make, according to Perry, the state senator.

So what could the state do next?

Next steps

If the state were to pay the panel’s valuation of the Fairfield Lake property, the land would go back into the state’s hands immediately, even if Todd Interests appealed the valuation. But the state Parks and Wildlife Department doesn’t have the funding currently to simply pay the $418.3 million price tag, Perry said.

That leaves the state with a few different options, according to Morris, the eminent domain expert.

The state could offer Todd Interests less than the valuation, and see if the firm will take it. The state could walk away from the eminent domain proceedings altogether. Or, the state could contest the valuation and take the matter to court. (The developer could also contest the valuation, if it chose.)

Cory Chandler, spokesperson for the Parks and Wildlife Department, said the department has not yet decided how it will respond to the valuation decision.

Morriss thinks it’s most likely that the state will contest the panel’s decision and take the matter to court, in the hopes of getting the property’s appraised value to drop. A court case would be a more formalized proceeding, Morriss said, where the state and the developer could again argue their sides and their appraisals of the property.

Morriss thinks it’s likely that a court would rule that the property is worth less than what the three-person panel ruled — although it’s hard to say how much less that could be, and it would depend on how well each side presented its case.

And even if a court were to lower the valuation of the property, the state would then still have to decide if it would pay the amount determined by the court. Perry said that it’s difficult to predict what the legislature might approve, without a final number in hand.

Chandler, the Parks and Wildlife spokesperson, said he wasn’t sure when the department might decide its next move.

“Texas Parks and Wildlife Commissioners and department staff will evaluate the award by the special commissioners and decide next steps,” Chandler wrote in a statement. “Our mission calls on us to provide for current and future outdoor recreation needs, and we will continue to work toward that end.”