April 17, 2024

PRELIMINARY ANALYSIS: Sheetz decision has broad implications for cities, developers


On April 12, 2024, the United States Supreme Court issued its ruling in Sheetz v. County of El Dorado, California, affirming and expanding on earlier decisions that limit both the type and scope of exactions that local jurisdictions can seek from new developments. The case involved George Sheetz, who applied for a permit to build his modest 1,854 square-foot prefabricated home on his rural property. El Dorado County charged him an astounding $23,420 traffic impact fee, but did not provide any individualized traffic analysis when assessing the fee. Instead, the county merely relied on its fee master plan that was previously adopted by the board of supervisors, which serves as the county’s legislature.

Sheetz first paid the fee under protest. He then sued in state court arguing that the fee was an unconstitutional taking. The California state courts ruled that because the traffic impact fee had been imposed through the legislative process and authorized by state law, the county was exempt from the general constitutional takings analysis. This analysis usually requires the determination of nexus and proportionality of development exactions (traffic fees) and identified impact (traffic associated with the new house.)

Until now, Oregon state courts have followed the same logic as the California courts. In Rogers Machinery v. City of Tigard, the Oregon Court of Appeals decided that the traffic impact fee was constitutional because it was derived from a legislatively approved transportation master plan and associated impact fee schedule that determined rates for various land uses. In doing so, the Court effectively prohibited development applicants from challenging system development charges and other exactions under the Fifth Amendment’s Takings Clause. Without that opportunity, Oregon builders have generally lacked the ability to check most of the exorbitant fees and unreasonable exactions.

The United States Supreme Court unanimously ruled in favor of Sheetz, holding that development fees and exactions imposed on a broad class of property owners through legislative action are subject to the same nexus and proportionality analysis as those applied on an ad hoc basis. In so doing, the Court effectively overturned Rogers Machinery.

To find out what Sheetz means for your organization, attend our upcoming HBA webinar, be on a lookout for an upcoming article or look here on jordanramis.com.

Tags: Construction, Real Estate and Land Use, Homebuilding

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