In April of this year, the United States Supreme Court issued a decision with significant implications for the real estate development process. In Sheetz v. County of El Dorado, California 601 U.S. ______ (2024), the Court held that the Fifth Amendment’s Taking’s Clause does not distinguish between legislative and administrative land use permit conditions. In Sheetz, a property owner in rural northern California named George Sheetz was required by El Dorado County to pay a $23,420 impact fee as a condition of receiving a permit to build a modest prefabricated home. The impact fee was enacted by the County’s Board of Supervisors.
Mr. Sheetz challenged the condition, arguing that it was an unlawful exaction in violation of Takings Clause. More specifically, Mr. Sheetz contended that the condition was not the product of an “individualized determination” that the fee amount was necessary to offset to the impact of his development as required by Nollan v. California Coastal Comm’n, 483 U. S. 825, and Dolan v. City of Tigard, 512 U. S. 374. The lower courts sided with El Dorado County, ruling that the Nollan/Dolan test applies only to permit conditions imposed on an “individual and discretionary basis” via administrative action, and that “legislatively prescribed monetary fees” are not subject to the same level of scrutiny.
The U.S. Supreme Court overturned the California Court of Appeals, holding that the Takings Clause applies equally to both legislative and administrative actions. In doing so, the Court highlighted the fact that a legislative exception to the ordinary takings rules “finds no support in constitutional text, history, or precedent.”
This ruling is significant, particularly in the context of legislatively imposed stipulations associated with land use entitlement approvals. Before Sheetz, conditions of approval for zoning applications were typically viewed with less scrutiny – largely due to the broad legislative discretion afforded to city councils and boards of supervisors in zoning decisions.
The Court in Sheetz, however, states in no uncertain terms that legislative decisions and subject to the same level of scrutiny as administrative decisions in the context of land use permit conditions, proportionality, and the Nollan/Dolan test. This decision will very likely force counties and municipalities to re-evaluate their approach to conditions of approval in land use applications, particularly rezoning requests.
If you have questions or concerns about a zoning stipulation, contact us.