California Eminent Domain Report

The Supreme Court has granted certiorari in George Sheetz v. County of El Dorado, agreeing to answer the question of whether legislatively enacted development impact fees are subject to a lower level of constitutional scrutiny than fees that are imposed by a permitting authority on an ad hoc basis. While this question has been presented to the Court multiple times over the last several decades, historically the Court has declined to take up the issue. Now, with the changing makeup of the Court, at least four justices appear willing to address the issue.

In 2016, Mr. Sheetz applied for a building permit from the County of El Dorado to develop a 1,854-square-foot house on his property. The County was willing to issue Mr. Sheetz a permit for the house on the condition that Mr. Sheetz first pay the County $23,420 in traffic-mitigation fees. The traffic mitigation fee had been enacted by the County in 2006 to finance the construction of new roads and the widening of existing roads to address traffic impacts generated by new development anticipated in the County’s General Plan. The County’s fee program established eight distinct fee zones and different fee rates based on the type of the proposed development. Mr. Sheetz paid the fee under protest and shortly thereafter filed suit, arguing that under U.S. Supreme Court precedent – Nollan v. California Coastal Commission (1987) 483 U.S. 825 and Dolan v. City of Tigard (1994) 512 U.S. 374 – the County could not impose the impact fee without first making an individualized determination as to the nature and extent of the traffic impacts caused by his specific project. The trial court denied relief, finding Nollan and Dolan inapplicable to legislatively established development impact fees. The Court of Appeal affirmed the Trial Court’s decision, and the California Supreme Court denied Mr. Sheetz’s petition for review.

As explained in the Court of Appeal’s published opinion, in California, only development impact fees imposed on an ad hoc basis are subject to the individualized analysis mandated by Nollan/Dolan. In contrast, development impact fees that are generally applicable and imposed through legislative action merely require a showing that there is a reasonable relationship between “the fee’s use and the type of development project on which the fee is imposed” and “the need for the public facility and the type of development project on which the fee is imposed.” (Cal. Gov. Code, § 66001, subd. (a), underlining added.) 

One reason offered by the Court of Appeal as to why legislatively enacted development impact fees are given deferential treatment and are not subject to heightened scrutiny is because legislation is subject to democratic restraints while ad hoc fees are not. In other words, California courts believe property owners are protected by the political process, a sentiment that is not necessarily shared by other states. The Texas Supreme Court, for example, recognizes the power and possibility of the government to gang up on property owners en masse. (See Town of Flower Mound v. Stafford Estates (Tex. 2004) 135 S.W.3d 620.) 

Be sure to check back as we will continue to follow this case throughout its Supreme Court journey.