Supreme Court Holds That Legislative Impact Fee Programs Can Constitute A Taking

Today, April 12, 2024, in Sheetz v. County of El Dorado, the U.S. Supreme Court unanimously overruled more than two decades of California precedent, holding that legislatively established development impact fee programs must have an essential nexus and a rough proportionality to the impacts from the proposed development project on which they are being applied. The full ramifications of this ruling are still yet to be decided, however, as the Supreme Court left open the possibility of applying the nexus/proportionality tests in a more deferential manner when the development impact fees are legislatively established and apply to a broad class of development.

By way of background, the U.S. Supreme Court has historically relied on a two-part test for evaluating the constitutionality of permit exactions. The first part, established in Nollan v. California Coastal Commission (1987) 483 U.S. 825 (Nollan), asks "whether [an] 'essential nexus' exists between the 'legitimate