In a significant ruling on Friday, the Supreme Court declared that developers and home builders in California have the right to challenge the fees imposed by cities and counties for public improvements such as roads, schools, and sewers. The court stated that these "impact fees" could be considered unconstitutional if builders and developers were burdened with an unfair share of the cost for these projects.

The decision, reached with a unanimous 9-0 vote, has the potential to impact the construction of more affordable housing in California. Developers argued that the high fees imposed by the state limited their ability to construct housing that is accessible to a wider range of individuals. Until now, California state courts had consistently rejected such challenges when the fees were imposed under a legislatively authorized fee program for new development.

However, the Supreme Court's decision in the case of Sheetz vs. El Dorado County has now opened the door for such challenges to be made. The justices revived a constitutional claim brought by a man from El Dorado County who was required to pay a staggering "traffic mitigation fee" of $23,420 for placing a manufactured home on a small lot. This ruling holds significant implications for California, where local governments have increasingly relied on impact fees rather than property taxes to finance new projects.

Despite the landmark decision, the justices did not establish a clear rule for determining when these fees become unfair and unconstitutional. Justices Sonia Sotomayor and Ketanji Brown Jackson supported the court's opinion in allowing challenges to be made, while Justice Brett M. Kavanaugh expressed his belief in the practice of imposing permit conditions, such as impact fees, as long as they ensure fairness by assessing the impact on classes of development rather than specific properties.

State and county attorneys argued that it is fairer to impose development fees on all lots within an area rather than targeting individual property owners. However, the Supreme Court ruled that homeowners and developers have the right to sue these fees as an unconstitutional taking of private property. The Pacific Legal Foundation in Sacramento praised the court's decision as a victory for property rights, calling excessive development fees a form of extortion.

The case will now return to the California courts, where attorney Paul Beard, who represented the El Dorado County homeowner, asserted that the fee must be deemed unconstitutional, as the county failed to demonstrate that it was sufficiently related and proportionate to the traffic impacts of the modest home in question.

This ruling harks back to the Supreme Court's past interventions in California property disputes, where it curbed the power of government officials to demand concessions from property owners in exchange for building permits. In 1987, the court ruled in favor of a beach bungalow owner in Ventura, equating such demands to "extortion" and a violation of the 5th Amendment's prohibition against taking private property without just compensation.

The decision also clarifies the application of property rights to development fees and situations where fees are legislatively set, rather than imposed on individual permit seekers. Writing for the court, Justice Amy Coney Barrett stated that property rights should receive equal protection regardless of whether they are in the hands of legislators or administrators, emphasizing that both legislatures and agencies are prohibited from imposing unconstitutional conditions on land-use permits under the Takings Clause.

The case originated when property owner George Sheetz sought a permit to install a manufactured home on his Placerville lot near Sacramento. El Dorado County mandated that he pay a "traffic impact mitigation" fee to obtain the permit, with funds intended for highway upgrades and county-wide road developments. Sheetz complied with the fee requirement but subsequently challenged its constitutionality in court. After his appeal was granted by the Supreme Court, the case will now proceed in the California courts for further consideration and a final resolution.