ARTICLE
24 April 2024

SCOTUS Rules For Landowner In Fifth Amendment Takings Clause Case

In a unanimous decision, the Supreme Court of the United States (SCOTUS) held that the Fifth Amendment's Takings Clause does not distinguish between legislative and administrative land‑use permit conditions.
United States Real Estate and Construction
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In a unanimous decision, the Supreme Court of the United States (SCOTUS) held that the Fifth Amendment's Takings Clause does not distinguish between legislative and administrative land‑use permit conditions. Building permit conditions are not exempt from traditional takings analysis, the Court found, simply because a legislative body imposes them, instead of such conditions being imposed by a zoning administrator or planning department. The Court's ruling stressed that state courts must determine in the first instance whether permit conditions rise to the level of a taking of private property. Despite this clear-cut ruling, SCOTUS's decision leaves several fundamental questions unanswered.

The Case

In Sheetz v. County of El Dorado, California, a California homeowner wanted to build a "modest prefabricated house" on his property. As a condition for a building permit, the County required Mr. Sheetz to pay a $23,420 traffic impact fee. Sheetz paid the fee under protest, but sued the County, arguing that the fee—authorized by state legislation and aimed at mitigating traffic impacts—was unconstitutional.

Sheetz alleged that the fee violated the Fifth Amendment's Takings Clause, which requires just compensation for government takings of private property. He contended the fee must satisfy two Supreme Court precedents, Nollan v. California Coastal Commission and Dolan v. City of Tigard, which mandate that a fee for or condition on a land-use permit must have (1) an "essential nexus" to the government's land‑use interest and (2) "rough proportionality" to the development's impact on that land-use interest.

The state courts rejected Sheetz's argument. They held that the Nollan/Dolan test applied only to fees imposed on an individual basis, not those authorized by legislation.

SCOTUS unanimously disagreed with this interpretation. Justice Amy Coney Barrett authored the Court's opinion, which carefully reviewed the language of the Takings Clause and the country's long history (even before its founding) of legislative takings as "the conventional way that governments exercised their eminent domain power." Likewise, the decision detailed how Supreme Court precedent made no distinction between legislation and other official acts for purposes of a takings analysis. Therefore, based on text, history, and precedent, the Court held that "[t]he Takings Clause . . . prohibits legislatures and agencies alike from imposing unconstitutional conditions on land use permits."

Unresolved Issues

Although Mr. Sheetz prevailed, his legal challenge continues. Because the state court exempted the legislative act from a takings analysis, it had not reviewed any of the landowner's arguments concerning the Nollan/Dolan test. The Supreme Court ruling remanded the merits of the constitutional argument to the state court. Thus, Mr. Sheetz will still need to prove that the traffic impact fee was, in fact, a taking of property without just compensation. This is not an easy case to win.

Equally important, the Supreme Court pointedly left open questions raised in state court regarding the validity of the traffic impact fee generally. The Court held that the state court must consider in the first instance "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 particular development."

Three justices wrote brief concurring opinions on these unresolved issues.

  • Justice Sonia Sotomayor, joined by Justice Ketanji Brown Jackson, noted that the question presented in the case did not include "whether the permit condition would be a compensable taking if imposed outside the permitting context."
  • Justice Brett Kavanaugh, with Justices Jackson and Elena Kagan, emphasized that the Sheetz decision "does not address or prohibit the common government practice of imposing permit conditions, such as impact fees, on new developments through reasonable formulas or schedules that assess the impact of classes of development rather than the impact of specific parcels of property."
  • Justice Neil Gorsuch asserted that the Nollan/Dolan test remains consistent, regardless of whether a case involves a class of properties or a specific development.

In the end, Mr. Sheetz won a clear-cut victory in the nation's highest court. But whether he obtains relief is far from certain. In general, while the Court clarified that legislative permit conditions are not exempt from constitutional scrutiny, private property owners still have a high burden to prove a Fifth Amendment taking resulting from the imposition of those conditions or fees.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
24 April 2024

SCOTUS Rules For Landowner In Fifth Amendment Takings Clause Case

United States Real Estate and Construction

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