By @Mustafa Hessabi
Last week, the United States Supreme Court heard oral arguments in a case that may significantly affect the standard special districts and other local agencies must follow in order to show that impact fees (also known as "development impact fees" or DIFs) adopted by an agency are necessary and appropriate for the impact on each individual parcel that the fee is levied upon.
In Sheetz v. County of El Dorado, the plaintiff applied to the County of El Dorado for a permit to build a manufactured house on his property. Pursuant to an ordinance enacted by the County, and as a condition of obtaining the permit, Mr. Sheetz was required to pay a fee of $23,420 to help finance road improvements. Sheetz paid the fee and then sued the County, arguing that the fee violates the Fifth Amendment’s takings clause and that the county demanded payment although it had made no "individualized determination" that the fee bore an "essential nexus" and "rough proportionality" to the purported impacts associated with his project as required by law (known as "Nollan/Dolan" review).
The trial court and Third District Court of Appeal ruled in favor of the County, holding that, because it was authorized by legislation pursuant to the Mitigation Fee Act (i.e., the county ordinance), and was not applied individually to Mr. Sheetz, the fee was immune from Nollan/Dolan review. The California Supreme Court denied review, and subsequently the U.S. Supreme Court granted review late September 2023. The question presented to the U.S. Supreme Court is: "whether a permit exaction is exempt from the unconstitutional-conditions doctrine as applied in Nollan and Dolan simply because it is authorized by legislation."
In December, CSDA joined the League of California Cities (Cal Cities) and the California State Association of Counties (CSAC) to file an amicus brief in support of El Dorado County, arguing, in part, that reversal of the decision would radically harm future development and shift the burden of development and its impact on public infrastructure to existing taxpayers rather than developers.
During oral argument, the Supreme Court justices appeared divided on whether Nollan/Dolan review was required for generally applicable fees adopted pursuant to detailed legislation, and if so, how exacting that analysis must be – should there be an individualized analysis, parcel-by-parcel for the fee, or would only the broader “proportionality and reasonableness” of the general legislative scheme require Nollan/Dolan scrutiny?
The oral argument session can be streamed at: https://www.supremecourt.gov/oral_arguments/audio/2023/22-1074.
A decision is expected before the end of the court's term this June. Stay tuned to CSDA eNews and Advocacy News for updates on this important case.
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