The Supreme Court on Friday unanimously ruled that fees governments issue — even those imposed by a legislature — must be based on actual adverse impacts.
In other words, building permit fees, for example, can’t cost more than any damage the public would face from development.
“Holding building permits hostage in exchange for excessive development fees is obviously extortion,” said Paul Beard, the attorney who represented the plaintiff in the Supreme Court case. “We are thrilled that the Court agreed and put a stop to a blatant attempt to skirt the Fifth Amendment’s prohibition against taking private property without just compensation.”
In 2016, George Sheetz bought a vacant lot in El Dorado County, California, near Lake Tahoe.
He planned to build a house for his retirement after working for 50 years in construction.
But he was told he would have to pay “traffic impact mitigation” fee of over $23,000 to obtain a building permit. The county legislature created the fee a few years earlier to help pay for roadwork.
“That’s when I started getting pissed off,” Sheetz, who spent 50 years in construction and built several homes throughout his life, told Fox News in January. “I said, ‘this is ridiculous.’”
Sheetz paid the fee but immediately sued El Dorado County.
The local government argued that its traffic impact mitigation fee was needed to pay for road maintenance and was similar to fees that fund parks and police departments.
Beard agreed that governments should be allowed to use taxpayer money to fund services. But he argued that El Dorado’s traffic impact mitigation fee was unconstitutional because the amount wasn’t tied to any actual estimated damage.
The lower courts sided with the county since the traffic impact mitigation fee was issued by the local legislature rather than the administrative branch. The Supreme Court rejected that position.
“In sum, there is no basis for affording property rights less protection in the hands of legislators than administrators,” Justice Amy Coney Barrett wrote in her opinion. “The Takings Clause applies equally to both—which means that it prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits.”
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“In sum, there is no basis for affording property rights less protection in the hands of legislators than administrators,” Justice Amy Coney Barrett wrote in her opinion. “The Takings Clause applies equally to both—which means that it prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits.”
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El Dorado County Deputy Chief Administrative Officer Carla Hass said the local government was “pleased” with the decision, noting that it “answers only a narrow question on which the parties already agreed.”
“It explicitly leaves open the County’s other strong defenses and casts no doubt on whether local governments can continue to impose reasonable permitting conditions (including impact fees) on new development under their traditional land-use authority, as the County has done here,” Hass said in a statement. “The County looks forward to defending its program in any further litigation.”
The case will return to the lower court. There, it will determine whether the fee is subject to the unconstitutional conditions doctrine, which requires government fees to be proportionate to adverse public impacts caused by development.
If it is, then the court will consider whether El Dorado County’s $23,000 fee was proportional to the traffic impact caused by Sheetz building his 1,800-square-foot manufactured home.