United States Supreme Court Issues Decision Relating to Municipal Impact Fees
The United States Supreme Court (the “Court”) issued a decision on April 12, 2024 in Sheetz v. County of El Dorado, California where it held that the Takings Clause, which requires the government to provide owners just compensation when private property is taken for a public purpose, does not distinguish between legislative and administrative land-use permits. No. 22-1074, (U.S. April 12, 2024). On appeal from the California Court of Appeals, the Court addressed the County of El Dorado’s (the “County”) traffic impact fee, which required the Petitioner to pay a $23,420 fee as a condition of receiving a residential building permit to construct a prefabricated house on a parcel of land. The fee was assessed according to a schedule issued by the County which considered the type of development and its location. The Petitioner argued that such a fee should be proportionate to the impact the particular project had on local traffic. The County argued that individualized determinations for impact fees did not apply to permits imposed on a “broad class of property owners” by the local legislature. See 84 Cal. App. 5th 394.
In its analysis, the Court reviewed two seminal cases, Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987) and Dolan v. City of Tigard, 512 U.S. 374 (1994), where the Court previously established a two-part test to address the potential abuse of the permitting process. Both Nollan and Dolan held that conditions on permit approvals must have (i) an essential nexus to the government’s interest in the land; and (ii) be roughly proportionate to that specific developments’ impact on that land-use interest. While governments are entitled to condition permits through actions that further a legitimate police-power purpose, “[a] permit condition that requires a landowner to give up more than is necessary to mitigate harms resulting from new development has the same potential for abuse as a condition that is unrelated to that purpose,” ultimately leading to an unlawful taking. Dolan, 512 U.S. at 393. The implications of Sheetz reaffirm the Court’s determination that municipal impact fees must be related to the government’s interest in the land and must be proportionate to the specific developments’ impact on that interest.
Attorneys at West Group Law have represented municipalities and public entities across the country for over 25 years relating to water and wastewater, municipal infrastructure, litigation, general municipal law, and municipal land-use, among others. West Group Law attorneys have a wealth of knowledge and can assist municipalities and public entities in matters relating to impact fees, the use of funds collected from such fees, and establishing proper evaluations when assessing impact fees.
