On April 12, 2024, the United States Supreme Court unanimously decided Sheetz v. County of El Dorado, California, No. 22-1074, holding that county-level legislation that imposes conditions on the receipt of building permits, here the imposition of traffic impact fees, may amount to a taking under the Constitution’s Fifth Amendment when the conditions do not have an “essential nexus” to the government’s land use interest and a “rough proportionality” to the proposed development’s impact on that interest.  The ruling overturned decisions from lower courts that had held that the Takings Clause operates to invalidate only administrative conditions imposed by local land use agencies, not legislative enactments like the traffic impact fee imposed by the County in this case.  

Plaintiff George Sheetz sought a permit to build a prefabricated home in El Dorado County (the “County”), California.  The County’s Board of Supervisors adopted a General Plan, which among other things, required Sheetz to pay a $23,420 traffic impact fee, determined by a generic rate schedule, as a condition to receiving the building permit.

Sheetz paid the fee under protest but sued the County alleging that the fee was an unlawful exaction and violated the Fifth Amendment Takings Clause under the test the Supreme Court set forth in Nollan v. California Coastal Comm’n, 483 U.S. 825 (1987), and Dolan v. City of Tigard, 512 U.S. 372 (1994).  The Court's decisions in Nollan/Dolan set limits on the ability of local governments to impose conditions on land use permits and approvals when the conditions amounted to an abuse of the permitting process. Specifically, the Court had held there must be an “essential nexus” and “rough proportionality” between the government’s demand and the effects of the proposed land use.  

Here, the County passed legislation, i.e. the General Plan, to establish the traffic impact fee as a condition to the receipt of a building permit. Sheetz argued that the County had to make an individualized determination that the traffic impact fee amount was necessary to offset traffic congestion attributable to his specific development, which he claimed the fee schedule failed to do.  The trial court rejected Sheetz’s claim and the California Court of Appeals affirmed, both holding that Nollan/Dolan applied only to administrative conditions on land-use permits, not legislative conditions of the type at issue here.

The United States Supreme Court granted certiorari and reversed, holding that Nollan/Dolan  applied regardless of which branch of government imposed the offending permit condition.  The Court found that the Constitution provided no textual justification for the argument that the scope of the government’s power to take private property without just compensation varied according to the branch of government effectuating the taking.  Similarly, the Court found that historical practices showed that governments traditionally used legislation at the state and national levels to exercise their eminent domain power to obtain land for various governmental purposes and to provide compensation to dispossessed landowners.  Lastly, the Court found no precedent for a legislative exception to Nollan/Dolan because the takings’ jurisprudence as a whole did not otherwise distinguish between legislation and other official acts. 

The Court therefore remanded the case back to state court but declined to determine whether the County’s impact fee amounted to a taking in this case or the degree of specificity required when tailoring an impact fee.  The ruling nevertheless confirms that legislatively prescribed conditions related to land use permitting may amount to takings when the Nollan/Dolan test is satisfied. 

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