SHEETZ V. COUNTY OF EL DORADO

    When does a “traffic impact fee” imposed upon a landowner seeking to build a single-family house become a Taking under the Fifth Amendment to the U.S. Constitution? In Sheetz v. County of El Dorado, ----U.S.----- (2024), the Supreme Court determined that a traffic impact fee which was so inconsistent with the type of residential development requested amounted to a Taking under the Fifth Amendment and also amounted to extortion.
    Plaintiff George Sheetz owned a small parcel of land in El Dorado County, California (“El Dorado”). He wanted to build a small prefabricated house on this residential lot to use as a retirement residence. El Dorado is a small, sparsely populated county in California which borders Nevada. It has experienced some increased building activity in the past few years. In order to address traffic issues, El Dorado requires that developers pay a traffic impact fee as a condition of receiving a building permit. The fee is supposed to be based upon the type of development and location in the county and not related to any given project. The ostensible use of the money generated by the traffic impact fees is to improve road conditions in El Dorado.
 When Mr. Sheetz applied for his building permit, he was informed by El Dorado that he would have to pay a traffic impact fee of $23,420 in order to obtain this permit. Under the regulatory scheme in El Dorado, the county allegedly maintained a rate schedule based upon the type of proposed development and its alleged impact upon the community.
 Mr. Sheetz paid the fee and initiated a lawsuit in California state court. Mr. Sheetz’s complaint alleged that the size of the fee was not in proportion to the size of the proposed project, that the county failed to present any countywide traffic impact study to justify the fee, and claimed that the fee was a Taking under the Fifth Amendment. Further, Mr. Sheetz contended that under Dolan v. City of Tigard, 512 U.S. 374 and Nollan v. California Coastal Commission, 483 U.S. 825, El Dorado was required to make a specific determination as to the impact of his project upon the county, which El Dorado failed to do. The lower state court dismissed Mr. Sheetz’s lawsuit. 
    Mr. Sheetz then appealed the size of the fee imposed by El Dorado to the California Court of Appeals. Again, the California Court of Appeals held that since the traffic impact fee was imposed upon a broad class of property owners through legislation and not through an individual administrative result, that neither Dolan v. City of Tigard, 512 U.S. 374, nor Nollan v. California Coastal Commission, 483 U.S. 825 applied to Mr. Sheetz’s case. The Supreme Court accepted the case since there were disagreements between state courts as to whether there was a distinction between legislative v. administrative conditions imposed upon land use permits.  
    Contrary to the holdings by the California state courts, the Supreme Court unanimously determined that both Dolan and Nollan applied to both legislative and administrative decisions on land use permits. There should not be any distinction between legislatively imposed conditions upon land use development or administratively imposed conditions upon land use development.
 The Supreme Court found that localities do have the right to regulate development. For example, if a particular development alters road patterns, it is within a local government’s regulatory powers to impose conditions prior to issuing a land use permit. The conditions imposed, however, must have a relationship to the general land use patterns in a municipality, or such conditions could be considered extortion. 
    Under Nollan and Dolan, then permit conditions must meet the following criteria:
1)    Permit conditions must have a nexus to the government’s land use interest;
2)    Government conditions must be in proportion to the proposed development’s impact on land use.
Absent these conditions, a governmental land use scheme could amount to a Taking 
under the Fifth Amendment. The Supreme Court vacated the decision and order of the California Court of Appeals and remanded the case for further proceedings.

(case syllabus here)