pacificlegal.org
California retiree prepares for second Supreme Court battle
In April 2024, California retiree George Sheetz celebrated a rare legal milestone: a unanimous ruling in his favor by the U.S. Supreme Court.
George sued his county government years prior after it refused to issue him a building permit until he paid a fee to fund future county traffic projects. Initially, California courts dismissed his claim, relying on a state rule alleging that fees required by legislation are not subject to the same constitutional scrutiny as fees imposed by bureaucrats. The U.S. Supreme Court, however, rejected the state court’s rule. The Court held that the legislature, like every other branch of government, is subject to the Takings Clause and that it cannot coerce homeowners into paying unrelated fees by holding building permits hostage.
But what should have been an unmitigated victory was recently swept under the rug when a lower court attempted to reinstate the rule the Court struck down in his 2024 victory.
Now, George is petitioning the Supreme Court to take up his case a second time.
From a California Worksite to the Courtroom
When George bought a plot of land in El Dorado County, California, he didn’t anticipate filing a lawsuit that would take him to Washington. He just wanted to build a home where he and his wife could retire and raise their grandson. However, the County refused to let him build anything on his new property until he shelled out more than $23,000 for a “traffic impact fee.”
Local governments ordinarily charge impact fees to offset the cost of infrastructure updates needed to accommodate new development in the community. Major projects like new grocery stores and gas stations have high price tags. But the fees imposed on new homes are typically a small fraction of the fee the County charged for George’s permit.
George proposed building a modest, prefabricated home on a rural residential lot—by any rubric, a project with minimal traffic impacts. So why was his fee so high? The County wanted to use impact fees to subsidize commercial development, forcing George and other homebuilders to pay for the impacts of major projects, like retail and office buildings, in addition to the minimal impacts of their own small homes.
Unfortunately, under California law, George couldn’t build his home without paying what the County demanded. He paid, protesting the exorbitant sum and the County’s decision to levy a fee on his building permit in the first place. When the County ignored his protest, he resolved to challenge the scheme in court, filing a lawsuit in June 2017. He took his case to the U.S. Supreme Court for the first time in May 2023.
George’s Legal Theory v. Local Governments’ Loophole
George’s lawsuit argued that the County violated his rights and key Supreme Court precedent by imposing an unconstitutional condition on his access to a permit.
His legal theory rested on the Supreme Court’s rulings in Nollan v. California Coastal Commission, Dolan v. City of Tigard, and Koontz v. St. Johns River Water Management District. Together, these rulings state that the government can only impose conditions on permits when the conditions are directly tied to the project’s impact on the area and proportionate to that impact. In other words, the government can charge some fees, when they are warranted to offset the impact of a project, but that allowance isn’t a blank check.
However, some local governments employed a legal loophole to continue demanding excessive payouts for permit access. They argued that these three Supreme Court rulings addressed administrative conditions on permits, but did not explicitly place the same limits on legislative conditions.
George’s lawsuit aimed to close that loophole to defend property owners’ rights. He asked the Supreme Court to clarify that exactions that go beyond the actual cost of a private building project, like his rural home, are unconstitutional whether the demands are issued by bureaucrats or lawmakers.
In an April 2024 ruling in George’s favor, the Supreme Court agreed. In a major victory for property owners across the country, the Court held,
“There is no basis for affording property rights less protection in the hands of legislators than administrators. The Takings Clause applies equally to both—which means that it prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits.”
The Start of the Next Battle
The win should have been the triumphant conclusion to George’s legal battle. After all, the County readily acknowledged that the fee wrongly required him to pay for developments far beyond the impact of his new home. But shortly after George’s Supreme Court victory, a California appeals court undermined the ruling by resuscitating the very rule the Supreme Court had overturned.
The Supreme Court had ruled that the government must prove that a permit condition is proportionate to the project’s projected impact on the area. If the government can’t prove proportionality, then the impact fee is unconstitutional and invalid. But the appeals court swept this standard aside in favor of the same analysis it had used in its old, overturned ruling. The appeals court claimed that the government only had to prove it used a “reasonable” legislative procedure to enact the law under which it eventually imposed an exaction—abandoning the Supreme Court’s requirement that the government prove the exaction itself is roughly proportionate to the burdened project.
Based on this logic, the appeals court once again upheld the County’s $23,000 exaction, leaving George exactly where he was when he first filed suit in 2017.
George saw that the appeals court’s decision would tip the scales in the government’s favor in future lawsuits over extortionate exactions. He petitioned the California Supreme Court to review the decision, urging the court to enforce the U.S. Supreme Court’s unanimous command that legislative exactions must be subject to the same “ordinary takings rules” as all other exactions.
The California Supreme Court refused. Instead, it simply depublished the lower court’s ruling. This change meant that the decision applied only to George, and its incorrect precedent could not be cited in future lawsuits.
But depublishing bad precedent doesn’t eradicate the theories it relied on—it just sweeps the problem under the rug.
George’s Second Petition
Now, George is petitioning the Supreme Court to hear his case again. In a petition filed February 9, George and Pacific Legal Foundation argue that,
“It cannot be true that, after Sheetz, nothing changed…
[The] government’s public purposes—its ends—may lawfully encompass innumerable real or supposed public benefits. The presumption of constitutional validity [to government exactions] becomes very dangerous to private property rights… By focusing on the procedure by which the amount of the fee is set, instead of the impediments imposed on the exercise of the constitutional right, California courts fail to recognize the constitutional requirement that the effect of the fee must, in all cases, offset some adverse consequences of the proposed project.”
Based on these arguments, George urges the Supreme Court to grant his petition and close the loophole defended by the lower court.
In early March, the Supreme Court directed the County to respond to George’s petition. Although nothing is certain until the Court grants or denies certiorari, George remains hopeful that the Court may be considering the petition for a future term.
The post California retiree prepares for second Supreme Court battle appeared first on Pacific Legal Foundation.