WASHINGTON (CN) — A California property owner appeared to convince the Supreme Court on Tuesday to revive his challenge to permitting fees he incurred while building a new house.
The high court appeared in agreement on a narrow question that would reverse a California appeals court ruling upholding George Sheetz’s $23,420 bill. However, there was division on the high court bench on the broader questions that would decide if the county fee would be permissible.
Justice Neil Gorsuch led the charge in calling for the court to decide the tougher questions in the case another day.
“What would be wrong with allowing both sides to go back and make their arguments, recognizing that Nollan and Dolan do apply to some legislative enactments? And then you can go back to the courts below and talk about whether this is a tax, whether it's a user fee, or whether it isn't,” the Trump appointee said.
The Supreme Court’s rulings in Nollan v. California Coastal Commission and Dolan v. City of Tigard provide a constitutional test for government permitting requirements, seeking to balance government and landowner interests.
Sheetz’s case asked the court to go beyond those rulings to say what laws should fall under this type of scrutiny.
Sheetz is challenging El Dorado County’s Traffic Impact Mitigation Fee Program that imposes a traffic impact fee on any property owner asking to build on their property. Sheetz applied for a permit in 2016 to build a 1,854-square-foot house on his plot of land, and was charged a $23,420 permitting fee for the endeavor.
El Dorado County adopted the program to pay for the impacts new developments will have on county infrastructure, particularly road and highway use. The program mandates that developer-paid traffic impact fees will pay for a portion of road improvements necessary to offset and mitigate traffic impacts caused by the new development.
In 2017, Sheetz asked the California superior court to force the county to refund his fee, claiming the exaction was unconstitutional. A trial court dismissed his constitutional claims and the ruling was affirmed on appeal.
At the Supreme Court, Sheetz urged the justices to reverse, claiming the county violated Nollan and Dolan with its permit fee because it shifted the burden to new developers. He also argued that the fee is not proportional because the county failed to conduct an individualized determination on the impact his development would have on the county’s infrastructure.
“Everyone loves good roads and schools and public infrastructure, so the government certainly has many tools at its disposal, including taxes, to pay for those,” Paul Beard II, an attorney from FisherBroyles representing Sheetz, said during oral arguments. “What we're saying is that the government can't select a few property owners who happen to need a permit at any given time to bear the burdens of paying for that public infrastructure.”
El Dorado says that its fee was separate from consideration under Nollan and Dolan review because it more closely resembled property-based charges.
“[The county's impact fee] is imposed by the legislature subject to an array of state law requirements and applies to all similar new development in the county based on the legislature's finding that new development creates the need for and will benefit from the road improvements the fee will fund,” said Aileen McGrath, an attorney with Akin Gump representing the county. “And, critically, it does not attempt to obtain any dedication of real property.”
Although the court seemed to agree that El Dorado’s permitting fees could be considered under the court’s precedents, there was little agreement on how that would happen.
“There are some unknowns here about how the Nolan and Dolan test would work in practice for legislation and that's what the justices are wrestling with,” said Kevin King, an appellate lawyer with Covington. “I think that we saw some hesitation from some of the justices about those unknowns.”
Some of these unknowns could include determining the impact of each developer, as Sheetz suggested the county ought to be forced to do. The county determined its current fee schedule by separating developments into categories.
Justice Brett Kavanaugh probed the workability of Sheetz’s proposal, while Justice Amy Coney Barrett suggested it would be a “nightmare” to figure out where to draw the line.
King said it was likely there would be some form of constitutional scrutiny for these regulations in the future. Although the court has yet to agree on what this test will look like, King said its examination of the matter signals a broader interest in balancing government regulations against the rights of property owners.
“The Sheetz case, to me, reflects a broader trend at the Supreme Court in the court's ongoing interest in taking up property rights cases and takings cases,” King said. “In particular, I think there's a feeling out there that many lower courts have been unduly narrow in their application of the takings clause and have not been respectful enough of private property rights.”
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