El Dorado County Imposes Impact Fees for Development
To address increased traffic congestion resulting from population growth, El Dorado County added a provision to its General Plan that required developers to pay a "traffic impact fee" (TIM fee) as a condition of receiving a building permit. George Sheetz and his wife felt the brunt of this TIM fee first-hand when they decided to build a single-family home on their property within the County. As a condition to approving the Sheetz's permit application, the County charged them a TIM fee of $23,420. Sheetz paid the fee under protest and obtained the permit. But after the County ignored Sheetz's request for a refund, Sheetz filed a lawsuit against the County to challenge the validity of the TIM fee.
Sheetz argued that the TIM fee was an unlawful "exaction" of money in violation of the Federal Takings Clause. More specifically, Sheetz argued the "essential nexus" and "rough proportionality" standards set forth in Nollan v. California Coastal Commission, 483 U.S. 825 (1987) ("Nollan") and Dolan v. City of Tigard, 512 U.S. 374 (1994) ("Dolan") (commonly referred to as "the Nollan/Dolan test") required the County to make an individualized determination that the fee amount ($23,420) was necessary to offset the traffic congestion attributable to Sheetz's specific development. According to Sheetz, the County's TIM fee failed that test.
The Court of Appeal Rules in Favor of the County but the SCOTUS Vacates That Decision
In 2022, after the trial court rejected Sheetz's claim, the Court of Appeal affirmed and held that the challenged TIM fee did not violate the takings clause as a matter of law. The Court of Appeal held that "the requirements of Nollan and Dolan did not apply where (as here) the challenged impact fee was a legislatively imposed permit condition that generally applied to a broad class of permit applicants through formulas or schedules that assessed the impact of entire classes of development (e.g., single-family residential, commercial)." Sheetz v. County of El Dorado, 2025 WL 2116363, *2 (July 29, 2025). Instead, the Court of Appeal held that the Nollan/Dolan test only applied to "an impact fee that targeted a particular development and was imposed on an ad hoc and discretionary basis upon an individual permit applicant through administrative action (i.e., government agency action)." Id. (citing Sheetz v. County of El Dorado, 84 Cal.App.5th 394, 410, 414 (2022)).
After the California Supreme Court denied review, the U.S. Supreme Court granted certiorari to resolve a split among the state courts on the question of whether the requirements of Nollan/Dolan applied to legislatively imposed permit conditions'like the TIM fee'as it does to administratively imposed permit conditions. Sheetz v. County of El Dorado, California, 601 U.S. 267, 273 (2024). In an opinion written by Justice Barrett, the Supreme Court unanimously held that it does and "[n]othing in constitutional text, history, or precedent supports exempting legislatures from ordinary takings rules." Id. at 276. In reaching that conclusion, the Supreme Court vacated the federal takings analysis of the Court of Appeal's 2022 decision and remanded the matter for further proceedings.
The Court of Appeal Applies the Nollan/Dolan Test and Again Rules That the TIM Fee Is Not a Taking
The upshot of the Supreme Court's decision was that the Court of Appeal now had to subject the TIM fee to the Nollan/Dolan test. On July 29, 2025, the Court of Appeal held that the "TIM fee does not constitute an unlawful monetary exaction under the Nollan/Dolan test" and that...
