EL DORADO COUNTY, Sept. 30, 2023 – El Dorado County required George Sheetz to pay $23,420 to finance road improvements. He claimed that the exaction was calculated without consideration of the impact his project would have on the nearby roads and challenged it under the takings clause of the US Constitution.
The court agreed Friday to decide the case of George Sheetz, who contends the fee required to build his manufactured home in Placerville, California, should not be exempted from a takings test just because it was authorized by legislation. Sheetz’s cert petition says the fee was for “unrelated road improvements.”
Sheetz argued that in Nollan v. California Coastal Commission and Dolan v. City of Tigard the Supreme Court made clear that the government can’t ask a person to give up a constitutional right in exchange for a discretionary benefit where the benefit sought has little or no relationship to the property.
Under the Nollan/Dolan test, approval of a land-use permit can be conditioned on payment of an exaction only if there’s a nexus and rough proportionality between the property and the social costs of the landowner’s proposal, Sheetz said.
Could construction-permit fees be exempt from takings analysis? Supreme Court to decide – cases added to Supreme Court calendar. The case granted on Friday will likely be argued in January or February 2024, with a decision to follow by summer.
The U.S. Supreme Court has agreed to decide whether a legislatively imposed road-construction fee of more than $23,000—which was required for a building permit—may be an unconstitutional taking.
Three decades ago, in Nollan v. California Coastal Commission and Dolan v. City of Tigard, the Supreme Court outlined a two-part test for courts to use to determine whether state or local governments violate the Constitution’s ban on uncompensated takings by conditioning the grant of a development permit on the developer’s agreement to set aside land, pay money, or provide materials or services. First, there must be an “essential nexus” between the condition and the government’s interest in restricting development; second, there must be a “rough proportionality” between the condition and the restriction. On Friday, the justices agreed to decide whether the Nollan/Dolan test applies to a California man’s challenge to a development fee, or whether – as a California appeals court ruled – the fee is instead immune from such review because it was authorized by legislation.
The question comes to the court in the case of George Sheetz, who in 2016 applied for a permit to build a 1,854-square-foot manufactured home on land that he owns in Placerville, California. To receive the permit, Sheetz was required to pay El Dorado County $23,420 in traffic-mitigation fees.
The court agreed Friday to decide the case of George Sheetz, who contends the fee required to build his manufactured home in Placerville, California, should not be exempted from a takings test just because it was authorized by legislation.
Sheetz paid the fees but went to court, where he argued (among other things) that the fee is unconstitutional because the county did not make an individual determination that there was an “essential nexus” and “rough proportionality” between his house’s effect on traffic and the need to improve the surrounding roads.
Sheetz’s cert petition says the fee was for “unrelated road improvements.”
The takings test for conditions on development permits was established in two prior decisions of the U.S. Supreme Court. Applied to Sheetz, the test would require an “essential nexus” and “rough proportionality” between his planned home’s effect on traffic and the $23,420 road fee imposed by El Dorado County. The county never made such a determination.
But development fees in California aren’t subjected to that test when they are adopted by legislation that applies to everyone, the California Court of Appeals ruled in Sheetz’s case.
After the California Supreme Court declined to weigh in, Sheetz came to the U.S. Supreme Court. Calling the question “perhaps the most vexing and disputed ‘takings’ question in land-use law,” he asked the justices to take up his case and decide whether the Nollan/Dolan test applies to development fees like the one enacted by El Dorado County. He contended that other state and federal courts have held that the test does apply to such fees; moreover, he added, there is “strong tension” between the California court’s decision in his case and the Supreme Court’s more recent decisions.
A landowner’s petition claiming California courts misapplied precedent on land-use exactions when they upheld a fee for road improvements a county charged him to get a permit to build a house on his property was granted certiorari by the US Supreme Court Friday.
For decades, some lower courts have agreed with that reasoning, according to Sheetz’s cert petition. They have reasoned that permit fees imposed by legislation are less likely to be used unfairly than discretionary fees.
But those decisions are at odds with the decisions of other state and federal courts, as well as more recent U.S Supreme Court precedent, the cert petition says.
The case concerns the “unconstitutional-conditions doctrine,” which holds the government can’t deny a benefit to a person who exercises a constitutional right. Sheetz’s case concerns application of the doctrine to the right to compensation under the Fifth and 14th Amendments for property taken for land-use permits, according to Sheet’s cert petition and an amicus brief by the Pacific Legal Foundation.
The cert petition asks the Supreme Court to “provide uniformity” on the issue and “finally put to rest perhaps the most vexing and disputed ‘takings’ question in land-use law.”
Sheetz argued in his petition for certiorari that federal and state courts are split over whether the Nollan/Dolan test applies to legislatively enacted fees and asked the Supreme Court to decide “whether a permit exaction is exempt from the unconstitutional conditions doctrine as applied in Nollan and Dolan simply because it is authorized by legislation.”
El Dorado County said that the court of appeal’s decision didn’t hinge on the distinction between legislative and administrative exactions. The state courts held that the fee program Sheetz challenged was fully compliant with the reasonable relationship test for legislative exactions under California’s Mitigation Fee Act.
The Pacific Legal Foundation and the Cato Institute were among the amici that filed briefs supporting Sheetz.
Sheetz argued that in Nollan v. California Coastal Commission and Dolan v. City of Tigard the Supreme Court made clear that the government can’t ask a person to give up a constitutional right in exchange for a discretionary benefit where the benefit sought has little or no relationship to the property.
Under the Nollan/Dolan test, approval of a land-use permit can be conditioned on payment of an exaction only if there’s a nexus and rough proportionality between the property and the social costs of the landowner’s proposal, Sheetz said.
But the California Court of Appeal ruled that the Nollan/Dolan test doesn’t apply to development fees that are generally applicable to a broad class of property owners through legislative action, as distinguished from a monetary condition imposed on an individual permit application on an ad hoc basis.
The case is Sheetz v. El Dorado Cty., U.S., No. 22-1074, petition for certiorari granted 9/29/23.