U.S. Supreme Court Hands Down Ruling on Impact Fee Case

In 2016, property owner George Sheetz bought a parcel of land where he hoped to place a manufactured home. Before Sheetz could get a building permit, the County conditioned approval of the permit on the payment of a $23,000 traffic impact fee. Sheetz sued, arguing the imposition of the fee sidestepped the Constitution’s Fifth Amendment clause and the Nollan-Dolan standard.

Sheetz v. El Dorado County, 22-1074 (2024), examined whether legislative or administrative actions, such as fee schedules, are immune from the Takings Clause of the US Constitution’s Fifth Amendment.

Last week, the United States Supreme Court ruled 9-0 for Sheetz, reversing an earlier California Court of Appeals ruling.

Sheetz builds upon several regulatory takings cases and expands the Nollan-Dolan standard to legislative and administrative actions such as fee schedules. Koontz v. St. Johns River Water Management (2013) expanded takings to monetary exaction. Following Sheetz, any impact fee must follow the standards of “essential nexus” and “rough proportionality”, otherwise it may be viewed as a regulatory taking.

In sum, there is no basis for affording property rights less protection in the hands of legislators than administrators. The Takings Clause applies equally to both—which means that it prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits.”Justice Amy Coney Barrett

Under Sheetz, existing case law regarding regulatory takings expanded to fee schedules enacted through legislative or administrative action. Any fee not tied to an individualized analysis of a project’s specific impact can be an uncompensated taking of private property.