In January 2024, the Supreme Court heard oral argument in another takings case in Sheetz v. Cnty. of El Dorado, 216 L. Ed. 2d 1312 (2023) cert. granted. In Sheetz, the Court must decide whether a legislatively imposed, rather than an ad hoc, traffic impact mitigation fee may violate the Fifth Amendment’s takings clause and, more specifically, is immune from the test established in Nollan v. Cal. Coastal Comm’n., 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994).
In Sheetz, El Dorado County, California, seeks to impose a traffic impact fee on any building permit applicant. The fee is determined by the geographic zone in which the project is located and the type of construction proposed. The fee is mandatory regardless of the actual impact the project may have on existing or future roads. The petitioner, George Sheetz, applied for a permit for a single-family home on a vacant lot. The county conditioned the grant of his permit on a payment of $24,000 in traffic impact mitigation fees.
Sheetz paid under protest and challenged the fee in state court on the premise that the fee violated the Fifth Amendment’s takings clause. A California trial court upheld the fee, holding that, because it was authorized by legislation, the fee was immune from the so-called Nollan/Dolan test: for land use permitting condition or exaction to comply with the takings clause, it must bear an essential nexus to the effects of the proposed development, and be roughly proportionate to those effects. In a published decision, the California Court of Appeal affirmed, and the California Supreme Court subsequently denied further review.
During oral argument, the Justices appeared divided over how much scrutiny should be applied to the review of the statutory impact fees. The Justices did, however, signal broad consensus that, contrary to the lower court’s ruling, conditions on the exercise of property rights imposed by legislation are subject to heightened Nollan/Dolan scrutiny. Disagreement focused on whether the particular statutory impact fee runs afoul of the Nollan/Dolan standard.
Sheetz argued the impact fee “went beyond mitigation” and was “the same improper leveraging that led to this Court’s rule” in Nollan, Dolan, and Koontz v. St. John’s River Water Mgmt. Dist., 570 U.S. 595 (2013).” Sheetz argued that such permit exactions should be subject to heightened scrutiny “to ensure that the government in not committing a taking in the guise of the police power to mitigate for land use impacts.” Sheetz also argued the Court did not need to do anything more than decide whether the Nollan/Dolan test applies to legislative enactments because the lower court refused to “apply the Nollan/Dolan [test] simply because the fee came from a legislative, preset, generally applicable schedule that the County had adopted.” Sheetz urged that the decision below “is as wrong as it is dangerous” as it holds that the takings clause does not apply to legislation thereby effectively gutting this constitutional mandate.
El Dorado County argued that the traffic impact mitigation fees are immune from the takings clause because they are substantially identical to those levied by “countless local governments across the country…to address the impacts of new development using a preidentified schedule.” The county claimed the fees are only intended to finance “improvements necessary to alleviate increased traffic from new development.” The county contended that “forcing local governments to justify a programmatic fee on a parcel-by-parcel basis would disrupt, if not destroy, their ability to fund capital-intensive infrastructure necessary to serve new development, bringing such development to a grinding halt.” The county asserted that the fee at issue “shares all of the key features with the other property taxes, user fees, and similar property-based charges that this Court has cordoned off from Nollan/Dolan review.”
Some Justices expressed concern about the inherent difficulty in applying uniform, legislatively mandated impact fees, in an individualized manner, to particular properties and projects. According to Sheetz, however, it should not matter whether the impact fee is uniformly levied through legislation or on an individual property basis, because the appropriation should “be subject to the same standard, which is to protect an individual property owner’s right against an uncompensated taking.” A few of the Justices were skeptical of Sheetz’s position, and ultimately how the courts would carry out such an evaluation. However, the Justices appear poised to hold that legislatively mandated impact fees are subject to the Nollan/Dolan/Koontz test; which will be another win for the eminent domain bar.
