U.S. Supreme Court Sides with El Dorado County Homeowner in Fight Over Impact Fees

A new U.S. Supreme Court ruling could make it harder for cities and counties to charge impact fees on development projects.

In a 9-0 decision Friday, the justices ruled that homeowners and developers can challenge these fees in court, leaving open the possibility that unreasonable impact fees could be deemed unconstitutional under the Fifth Amendment’s takings clause.

The case was filed by El Dorado County resident George Sheetz, who was represented by the Pacific Legal Foundation. He sued the county after it charged a $24,320 traffic impact fee for a small manufactured home that he installed on vacant land. 

The plaintiff said the county failed to show that the fee was actually related to traffic mitigation, and that it was not proportional to the project he built. The lower courts, including the 9th Circuit, ruled against him and the case was appealed to SCOTUS.

Since the passage of Proposition 13, cities and counties in California have come to rely on impact fees to finance infrastructure. 

“Limiting the ability to legislatively enact fees will negatively impact the ability of our 58 counties to protect the health and welfare of their communities and drastically limit the building of vital local infrastructure,” said Graham Knaus, Executive Director of the California State Assn. of Counties, in a statement.

However, critics argue the fees have been abused and have contributed to California’s housing crisis by raising the costs of building. They’d like to see new limits on how much can be charged, or stricter criteria to ensure the fees are sufficiently related to infrastructure needs.

Sheetz’s case will now go back to the lower courts. In the meantime, Sen. Scott Wiener has called on the legislature to address the issue and “put in place an actual structure for impact fees.”

“Right now,” said Wiener, “it’s all over the map.”