Supreme Court Update: Sheetz v. El Dorado County

Supreme Court Update: Sheetz v. El Dorado County

COUNTY NEXUS

Exaction or impact fees are an important way for local governments to balance the benefits of growth with its impacts on the pre-existing community. Limiting the ability of counties to legislatively enact generally applicable development impact fees would impede our efforts to protect the health and welfare of their communities while ensuring that those who create the need for new community infrastructure fairly bear the costs.

BACKGROUND

A resident of El Dorado County, California has challenged the constitutionality of a traffic mitigation fee required in exchange for a development permit, arguing that the fee violates the Fifth Amendment’s takings clause under the Nollan/Dolan unconstitutional conditions test, which prevents governments from applying exaction fees unless they can demonstrate an essential “nexus” between their interest and the fee charged as well as “rough proportionality” between the fee charged and the proposed impact of the development. The Supreme Court will rule on whether Nollan/Dolan is limited to fees issued on an an individual basis or whether it also applies to legislatively enacted, generally applicable impact fees and thereby compels local governments to make case-by-case determinations if such fees are warranted.

Counties across the country rely on legislatively adopted impact fees to address the burdensome impacts of new development on the availability and quality of local infrastructure, facilities, programs, and services. Without the ability to impose impact fees, local governments would need to resort to imposing new or increased taxes, displace the anticipated infrastructure costs necessary to meet the needs of new residential and commercial development onto existing residents and businesses or even impose development moratoria in the absence of funds to pay for required infrastructure. Expanding Nollan/Dolan to encompass legislative enacted impact fees could diminish this important policy tool.

CURRENT STATUS

On April 12, the Court issued a narrow 9-0 decision vacating the state court's ruling that Nollan/Dolan does not apply to legislatively-enacted impact fees and remanding the case for another look. While the Court's ruling does create heightened constitutional scrutiny for legislatively-enacted impact fees, it does not prevent local governments from enacting reasonable permitting conditions, including impact fees, via legislation. Learn more about the Court's decision and what it means for counties here. 

NACo ADVOCACY

Read the Local Government Legal Center Amicus Brief filed in support of the respondent.