Land Use Update

• Pages: 58-60
• Date: 01 September 2024
• Subject Matter: Derecho Público y Administrativo

September/OctOber 2024

58

Published in Probate & Property, Volume 38, No 5 © 2024 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be

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LAND USE

UPDATE

Land Use Update Editor: Daniel R.

Mandelker, Stamper Professor of Law

Emeritus, Washington University School of

Law, St. Louis, Missouri.

An exaction requires a developer to pay

or provide for a public facility or ame-

nity as a condition of receiving permit

approval. Exactions are widespread

and an important supplement to prop-

erty and other local taxes. They are a

vital f‌inancial resource for local govern-

ments, especially when statutory and

constitutional tax provisions limit prop-

erty taxes. Exactions can add thousands

of dollars to the price of a new house.

Exactions are either administrative

or legislative. An administrative exac-

tion is a condition required to approve

a building permit based on an indi-

vidualized assessment. A law applies

a legislative exaction to some or all

new residential developments without

an individualized assessment. Sheetz

v. County of El Dorado, 144 S. Ct. 893

(2024), in an opinion by Justice Barrett,

held that the takings clause applies to

legislative exactions. Courts divided on

this issue before Sheetz, as discussed in

my Land Use Update on exactions (37

Prob. & Prop. 58 (March/April 2023)).

The Sheetz Decision

In Sheetz, a legislative trac impact fee

required as a building permit condition

funded road and transit improvements.

The county did not do an individual-

ized assessment but based the fee on

countywide estimations.

The California appellate court held

that the county correctly applied a

statutory test for impact fees, Sheetz

v. County of El Dorado, 300 Cal. Rptr.

3d 308 (Ct. App. 2022), vacated and

remanded, 144 S. Ct. 893 (2024), but

has the same potential for abuse as a

condition unrelated to that purpose.

She did not discuss Nollan.

Justice Barrett next provided a

detailed discussion of the takings

clause, concluding that “Nothing in

constitutional text, history, or prece-

dent supports exempting legislatures

from ordinary takings rules” and add-

ing that the county “no longer contends

otherwise.”

Justice Gorsuch agreed in his concur-

rence. He argued that nothing about the

Nollan/Dolan test depended on whether

the challenged condition was imposed

on a large class of properties, a single

tract, or something in between. “The

logic of today’s decision” was consistent

with these cases.

The Takings Clause and Impact

Fees

Justice Barrett’s decision answers the

limited question presented to the Court.

She did not go beyond the question,

explaining that “We do not address the

parties’ other disputes over the valid-

ity of the trac impact fee, including

whether a permit condition imposed

on a class of properties must be tailored

with the same degree of specif‌icity as a

permit condition that targets a particu-

lar development.” Justice Sotomayor’s

concurrence, Justice Jackson joining,

added that the question presented did

not include the antecedent question

of whether the trac impact fee could

trigger Nollan/Dolan scrutiny as a com-

pensable taking imposed outside the

permitting context.

Justice Kavanaugh’s concurrence,

Justices Kagan and Jackson joining,

argued that the Court’s decision did

not “address or prohibit the common

government practice of imposing per-

mit conditions, such as impact fees, on

Sheetz claimed that the fee was an

unlawful “exaction” of money that had

to comply with the US Supreme Court’s

takings clause decisions on exactions,

Nollan v. California Coastal Comm’n, 483

U. S. 825 (1987), and Dolan v. City of

Tigard, 512 U.S. 374 (1994). Justice Bar-

rett agreed and held that the takings

clause “does not distinguish between

the legislative and administrative per-

mit conditions.”

Justice Barrett distinguished build-

ing permit conditions, such as impact

fees, from land use restrictions. Land

use restrictions are not a taking if they

are “reasonably necessary to eectuate

a substantial government purpose,” but

they are a taking if they sap too much

property value or frustrate investment-

backed expectations. Permit conditions

are more complicated. If denying a

permit would advance a “legitimate

police-power purpose,” the govern-

ment may impose a condition to serve

the same purpose instead. This permit

condition is “a hallmark of responsible

land-use policy.” The landowner must

accept the bargain or abandon the pro-

posed development. The bargain has

a “dierent character” when the rea-

sons for withholding or conditioning

a building permit are unrelated to the

government’s land-use interests. It then

amounts to “an out-and-out plan of

extortion.”

Justice Barrett held that Nollan and

Dolan addressed possible abuse of the

permitting process with tests modeled

on the unconstitutional conditions

doctrine. She discussed Dolan, which

requires a “rough proportionality” for

permit conditions based on the impact

of a development on the governmental

land-use interest. A permit condition

that requires more than is necessary to

mitigate harm from new development

The Supreme Court Speaks on Legislative Exactions