Sheetz Case Will Require More Precision on Exactions
- William Fulton
- Oct 20, 2024
- 4 min read
Six months after it came, the U.S. Supreme Court’s ruling in the Sheetz case is beginning to have an impact on land use planning in California. But – typical of Supreme Court rulings these days – Sheetz leaves a lot of question unanswered and practicing planners and land use lawyers are still wondering, or maybe hoping, that future court rulings will clarify things.
Sheetz overturned California’s longstanding Ehrlich doctrine, which said that if exactions and impact fees are adopted as part of a legislative decision such as a General Plan update they don’t have to follow the “rough proportionality” rule of the so-called Nollan/Dolan legal doctrine.
That doctrine, which emerged from the U.S. Supreme Court rulings in the Nollan and Dolan cases, says that exactions must be both reasonably related and roughly proportional to the impact of a development . But California had stubbornly held on to the Ehrlich doctrine, which constituted an exception to the rule. The Sheetz case – involving a traffic impact fee imposed on a homeowner in El Dorado County – struck down the Ehrlich doctrine. (CP&DR’s coverage of the Sheetz ruling can be found here.)
Unfortunately, the court didn’t say what California jurisdictions should do instead, which led to a wide variety of interpretations. More than one planner has reported that, starting the day after Sheetz was issued in April, developers started calling up and saying they didn’t have to pay impact fees anymore.
The big question is whether California’s method of calculating fees – essentially by using an average – conforms to the Sheetz ruling. As we explained last spring here, the typical exaction or impact fee regime spreads the cost of infrastructure and other impacts evenly across all development – essentially dividing the cost by the number of units (or the square footage) to arrive at a number. This is essentially what El Dorado County did in the Sheetz situation.
But are averages okay? Or must cities and counties actually engage in what the Supreme Court has called an ‘individualized determination” for, say, every single home or building in the entire jurisdiction – a huge departure from the past practice of averaging?
At the California Chapter, American Planning Association, conference in Riverside last month, several practitioners had some preliminary answers. But everybody agrees that more clarification from the U.S. Supreme Court – or other courts in California – would help a lot.
“What we don’t know is whether … in 3-4 years we’ll get a new clarification ,” said Teifion Rice-Evans, a managing principal with EPS.
The consensus was that there’s probably some middle ground between the current practice of averaging and the “individualized determination” the Supreme Court might have in mind.
“The question is whether a permit condition imposed on a class of properties must be tailored with the same degree of specified as a permit condition that targets a particular development,” said Lufti Kharuf, an attorney with Best Best & Krieger. Referring to a concurring opinion by Justice Neil Gorsuch, Kharuf added: “Gorsuch suggested yes, but no other justice joined him.”
Among the suggestions from the panel were:
