No More Gold for El Dorado County California
A unanimous United States Supreme Court decided in favor of property owner George Sheetz on April 12, 2024. Opinion here: Sheetz v Eldorado. Six months ago, the Court granted certiorari to hear the owner’s complaint about an excessive permit fee of $23,420 (our blog on topic here). The fee was imposed as a condition precedent to permit approval for the property owner to build a modest modular single-family residence on his property.
The ower paid the “traffic impact” fee under protest and then sued in California State Court alleging that the fee was an unconstitutional exaction prohibited by Nollan (v California Coastal Commission) and Dolan (v. City of Tigard). An intermediate California appellate court ruled that the Nollan / Dolan Test did not apply to legislative permitting conditions. The California Supreme Court declined to hear the case. The owner sought review before the United States Supreme Court, which was granted back in October 2023.
The first paragraph of the Court’s opinion tells the tale:
“George Sheetz wanted to build a small, prefabricated home on his residential parcel of land. To obtain a permit, though, he had to pay a substantial fee to mitigate local traffic congestion. Relying on this Court’s decisions in Nollan v. California Coastal Comm’n, 483 U. S. 825 (1987), and Dolan v. City of Tigard, 512 U. S. 374 (1994), Sheetz challenged the fee as an unlawful “exaction” of money under the
Takings Clause. The California Court of Appeal rejected that argument because the traffic impact fee was imposed by legislation, and, according to the court, Nollan and Dolan apply only to permit conditions imposed on an ad hoc basis by administrators. That is incorrect. The Takings Clause does not distinguish between legislative and administrative permit conditions.” [Slip op. at 1].
The Court then went on to explain why the permit condition would be unconstitutional based on the text, history, and precedent interpreting the Fifth Amendment’s takings clause – “nor shall private property be taken for public use without just compensation.” “By requiring the government to pay for what it takes, the Takings Clause saves individual property owners from bearing “public burdens which, in all fairness and justice, should be borne by the public as a whole.” Armstrong v. United
States, 364 U. S. 40, 49 (1960). [Slip op. at 4]. The Court reiterated the two-part Nollan/Dolan test:
“First, permit conditions must have an “essential nexus” to the government’s land-use interest. Nollan, 483 U. S., at 837. The nexus requirement ensures that the government is acting to further its stated purpose, not leveraging its permitting monopoly to exact private property without paying for it. See id., at 841. Second, permit conditions must have “‘rough proportionality’” to the development’s impact
on the land-use interest. Dolan, 512 U. S., at 391.” In the end, the Court remanded the case to the California Courts to determine whether the permit condition violated the applicable test.
The opinion is only a few days old, but it will generate a lot of commentary. Newsweek published an article here, and our Owners Counsel colleague Robert Thomas got the early jump on his blog here. More to follow I’m sure.
