SCOTUS rules government cannot use permit process to coerce property owners  

Washington, DC; April 12, 2024: Today, the Supreme Court unanimously ruled that legislatures cannot use the permit process to coerce owners into paying exorbitant development fees. The ruling, a major victory for property rights, will remove costly barriers to development, thereby helping to combat the housing crisis.  

Specifically, the Court held 9-0 that such fees, otherwise known as “legislative exactions,” must satisfy the doctrine of unconstitutional conditions — meaning they must be closely related and proportional to any adverse public impacts caused by development and no more. 

“Holding building permits hostage in exchange for excessive development fees is obviously extortion,” said Paul Beard, partner at Pierson Ferdinand. “We are thrilled that the Court agreed and put a stop to a blatant attempt to skirt the Fifth Amendment’s prohibition against taking private property without just compensation.” 

In 2016, George Sheetz bought a vacant lot in rural El Dorado County, California, and planned to build a small home where he and his wife would live and raise their grandson. But George was told he would have to pay a so-called traffic impact fee of more than $23,000 in exchange for his building permit.  

The County claimed he was required to pay under local legislation that sought to shift the cost of addressing existing and future road deficiencies onto new development. Thus, the County imposed the fee without any evidence tying George’s new home to any specific public costs or impacts. 

The Court ruled that the case must return to the lower court to determine whether the $23,000 fee was an exaction subject to the unconstitutional conditions doctrine. If so, the lower court must determine whether the fee was disproportionate to the traffic impact caused by a modest manufactured home in a rural area, and thus, unconstitutional. 

 As Justice Barrett said in her opinion, “In sum, there is no basis for affording property rights less protection in the hands of legislators than administrators. The Takings Clause applies equally to both—which means that it prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits.” 

Pacific Legal Foundation has been fighting unconstitutional permit demands at the Supreme Court since 1987, winning both Nollan v. California Coastal Commission and Koontz v. St. Johns River Water Management District. 

Sheetz v. El Dorado County is Pacific Legal Foundation’s 18th victory at the Supreme Court. PLF joined Paul Beard, partner at Pierson Ferdinand, as co-counsel in the case.