U.S. Supreme Court Limits Development Impact Fees

In April, the United States Supreme Court decided Sheetz v. County of El Dorado, 601 U.S. ___, holding that legislatively-imposed fees on development are subject to the same constitutional scrutiny as fees imposed by administrative bodies. The Court's decision may have an impact on fees New York municipalities impose on developers in lieu of developer-provided parkland.

Background

In Nollan v. California Coastal Commission, 483 US 825, the Supreme Court established that the federal constitution's taking clause precludes a local government from conditioning development approval on the developer's agreement to relinquish a property right unless the right relinquished has a nexus with the reasons the government had for requiring a permit in the first place. In Dolan v. City of Tigard, 512 US 374, the Court extended Nollan to require that the development condition had to be roughly proportional to the impact of the proposed development. Then, in Koontz v. St. Johns River Water Management District, 570 U.S. 595, the Court made it clear that, in the Court's words, "'monetary exactions' must satisfy the nexus and rough proportionality requirements of Nollan and Dolan." The monetary exaction at issue in Koontz was imposed in the context of a permit application to the water district.

Sheetz

When George Sheetz applied for a permit to build a manufactured home, the county conditioned the permit on payment of a $23,420 traffic impact fee. The fee was not individually negotiated; the amount was derived from the rate schedule legislatively enacted by the county's elected Board of Supervisors. Sheetz paid the fee under protest, and when the county ignored his request for a refund, he brought suit contending that the fee was invalid under Nollan and Dolan because the fee was not roughly proportional to the impact of his proposed home. The California courts dismissed the challenge, concluding that Nollan and Dolan did not apply to legislatively imposed fees.