The United States Supreme Court recently issued a unanimous decision in the case of Sheetz v. County of El Dorado, 601 U.S. ___ (2024), which will affect how municipalities impose impact fees on developers.  As a result of this decision, regulations that broadly require developers to pay fees for offsite improvements will come under heightened scrutiny if they require landowners to give up more than is necessary to mitigate harms resulting from new development.

In Sheetz, a property owner received a building permit to construct a home on his property, but as a condition of receiving this permit, he was required to pay a traffic impact fee of $23,420.  This requirement was based on a regulation enacted by the County government that applied to any developer seeking a building permit.  The fee was calculated not based on the impact on the specific project, but on a rate schedule that took into account the type of development and its location within the County.  The Court held that land use permit conditions imposed by a legislative body are subject to the same takings rules that apply when an administrative body imposes such conditions.  Accordingly, these conditions must have an “essential nexus” to the government’s land use interest and a “rough proportionality” to the development’s impact on the land use interest.  A condition that fails this test will be held to be a taking of private property without just compensation.  Notably, the decision does not prohibit local governments from imposing impact fees on new developments through reasonable formulas that assess the impact of certain classes of developments, rather than on a case-by-case basis. 

Our lawyers will continue to monitor developments related to this case.  For further information, please contact:

Daniel Chapple

This information is for educational purposes only to provide general information and a general understanding of the law. It does not constitute legal advice and does not establish any attorney-client relationship.