This impact fees case rules that monetary exactions are subject to the regulatory taking tests under the Fifth Amendment’s Takings Clause, whether imposed as permit conditions or legislative enactments.

In other words, the Takings Clause does not distinguish between legislative and administrative land-use permit conditions.

This is instructive for impact fees and other types of exactions, which commonly are applied to classes or types of uses.

George Sheetz challenged a $23,420 traffic impact fee for a building permit for his home. It was based on the county's General Plan rate schedule, not an individual determination.

SCOTUS unanimously ruled the Nollan/Dolan test applies. This has major implications for how impact fees must be structured and justified.

The Court clarified that there is no constitutional, historical, or precedential basis to differentiate between these scenarios.

Thus, the Takings Clause prohibits both legislatures and administrators from imposing unconstitutional conditions on land use permits.

The Court remanded the case to the California courts to determine, under the principles enunciated (and past precedents explained), if there was an unconstitutional taking without compensation.

Justice Barrett and concurring opinions point out key issues remain: validity of this traffic impact fee; whether the 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; and whether the elements of the Taking Doctrine apply the same way within or outside a permit scheme.

Most important, left open in general is how Regulatory Taking law applies to permit conditions, including impact fees, assessed through “reasonable formulas or schedules” on classes of developments.

This last item has land use lawyers and planners on alert.

The Kavanaugh concurring opinion, joined by Justices Kagan and Jackson, presages more jurisprudence on the “longstanding government practice” of imposing “permit conditions” generally and “impact fees” in particular, “through reasonable formulas or schedules” on classes of developments.

Take-Aways

• Nollan/Dolan test applies equally to legislative and administrative permit conditions
• Impact on property rights must be analyzed the same way regardless of source
• Fees need an "essential nexus" and "rough proportionality" to development impacts
• Local governments must ensure fees are properly calibrated to actual impacts
• Decision may lead to more individualized fee determinations but does not prohibit reasonable formula-based fees that assess class impacts
• Beware charging the same fee for all residential units regardless of type or size
• The Supreme Court continues to have an abiding interest in reviewing local land use decision making.