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When approving an application for development, a local government often imposes conditions requiring an applicant to dedicate land or make certain improvements such as installing sidewalks. Since these conditions require conveyance of title or improvements upon land, they implicate the Fifth Amendment right to just compensation for property the government 鈥渢akes鈥� when owners apply for land-use permits. These obligations are called exactions.

In a 1994 case originating in Oregon, Dolan v. City of Tigard, the U.S. Supreme Court held that when an exaction is imposed by a local government imposing a specific condition on a development proposal, that action must be coupled with 鈥渞ough proportionality鈥� findings explaining how the condition imposed relates to the impacts of the development. Although rough proportionality does not require a precise mathematical calculation, the burden is on the local government to make some 鈥渋ndividualized determination that the required (condition) is related both in nature and extent to the impact of the proposed development.鈥� The purpose is to avoid extortionate demands by a local government in exchange for obtaining a development permit.

In 2013, in another Supreme Court case, Koontz v. St. Johns River Water Management District, the court expanded the scope of exactions subject to the rough proportionality requirement to include those requiring physical work at or near the site or the payment of money in lieu of improvements such as a contribution to an off-site wetland mitigation bank.

Responding to a concern raised in the dissent in Koontz, that applying rough proportionality obligations to fiscal exactions would provide no principled way to distinguish them from taxes, the majority stated: 鈥淚t is beyond dispute that 鈥渢axes and user fees 鈥� are not 鈥榯akings.鈥欌�� This statement is followed by a long list of cases holding as much going back to 1881. Apparently this well-heeled, long-established precedent is not as solid as the majority previously claimed as the U.S. Supreme Court is now poised to consider whether the imposition of user impact fees is subject to rough proportionality as well.

The facts at issue in Sheetz v. County of El Dorado, California are straightforward. To finance necessary road improvements in an area southwest of South Lake Tahoe, the county enacted a traffic impact mitigation (TIM) fee that is based on a property鈥檚 location as well as the type of construction proposed. TIM fees are imposed for all new development within the county, and they must be paid to obtain a building permit. A system development charge (SDC) is the analogous term used in Oregon to describe these types of infrastructure fees.

George Sheetz applied for a building permit to construct an 1,854-square-foot manufactured home. Applying the adopted TIM fee methodology, the county approved the permit with the condition requiring payment of a $23,420 fee. The county did not make any individualized findings about what impact this development would have on the local roads or how payment of the fee would improve the roads. Although the fee was paid under protest, Mr. Sheetz filed an action challenging the condition as unconstitutional.

The lower courts all denied Sheetz鈥� claim, finding that rough proportionality does not apply to legislative exactions as opposed to those imposed on an ad hoc basis. The lower court decisions are based on the idea that any state law allowing for the collection of such fees, in this case California鈥檚 Fee Mitigation Act, explained that the amount of the fee is related to the extent of the impact resulting from general categories of development. The fee structure does not confer on local government any discretion to vary from the methodology. Any disagreement with the methodology could be challenged at the time of adoption. The argument that Sheetz is presenting is that regardless of whether the fee is legislatively imposed, the county should still have an obligation to show that it does not impose a burden on a single property owner to a degree that should instead be shouldered by the public.

Setting aside the various legal arguments, a ruling in favor of Sheetz in this case may have far-reaching practical effects on land use planning. First, legislatively imposed user fees is a widespread and well-acknowledged means by which local governments pay for needed infrastructure and facilities. How local governments will make individualized proportionality findings for generalized and diffuse impacts will be extremely complicated. It is easy to evaluate how much sewer demand a particular use places on a pipe of a certain size. For example, identifying impacts from traffic or on a park from new development is often diffuse and does not lend itself to such easy apportionment. Although the court has said that rough proportionality does not require mathematical certainty, how 鈥渞ough鈥� of an analysis will a court accept? It may need to be something more detailed than the methodology associated with adoption.

Further, although developers may wish to do away with user fees, they may not be so enthusiastic when securing such a reduction is coupled with the delay and discretion conferred to the local government in making rough proportionality findings. Local governments often require developers to complete expensive project-specific studies, like transportation impact analyses that are used to inform rough proportionality obligations. Evaluating these more diffuse impacts will require more in-depth studies that increase costs. Rather, paying a flat fee resulting from an overall view of infrastructure needs injects predictability and efficiency in the review.

Finally, there is the slippery slope concern. All land use planning and zoning regulations in some form or another constrain the use of property to some monetary effect. Should local governments be required to make individualized determinations of what uses, intensities or designs should be imposed based on the impacts of the particular development on a case-by-case basis? If money is property and a government taking of that money implicates Fifth Amendment constitutional protections, then zoning, like taxes, may well be subject to greater scrutiny (notwithstanding a long line of cases saying otherwise.)

Edward Sullivan is a retired practitioner of land use and municipal law with more than 50 years of experience. Contact him at [email protected].

Carrie Richter is an attorney specializing in land use and municipal law at Bateman Seidel. Contact her at 503-972-9903 or [email protected].

The opinions, beliefs and viewpoints expressed in the preceding commentary are those of the authors and do not necessarily reflect the opinions, beliefs and viewpoints of the Daily Journal of Commerce or its editors. Neither author nor the 91视频 guarantees the accuracy or completeness of any information published herein.