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California Impact Fees Case Comes Before Supreme Court

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Planning + Development

California Impact Fees Case Comes Before Supreme Court

The case, which asks how far cities and counties must go to justify impact fees, could have major consequences for housing in California and across the nation

January 10, 2024
End of paved road where dirt road begins
Image: Chad Robertson / stock.adobe.com

On Jan. 9, a dispute between a Placerville, Calif., retiree and El Dorado County came before the U.S. Supreme Court. The case, which involves a $23,420 impact fee on the construction of a small manufactured home on a vacant tract, could have huge consequences for local government budgets and housing markets not only in California but across the nation, the East Bay Times reports. 

Impact fees in California can add hundreds of thousands of dollars to new-housing projects, and the case's plaintiff, George Sheetz, wants some guardrails on those fees by requiring governments to show the proportionality between fees demanded and the alleged impacts of a new development. That would make life much harder for California local governments, which rely heavily on impact fees to pay for infrastructure such as roads and sewer lines. 

The lawyer representing the county countered that officials had done the legally required due diligence to justify the fee. But even if they hadn’t, they added, fees passed by local elected bodies that apply equally to all applicants — as opposed to one-off exactions levied on a specific development — don’t warrant such close judicial scrutiny.

Requiring cities and counties to enact fees only after they’ve done a thorough, property-specific analysis of the impact a proposed development would have on local roads, for example, “would disrupt if not destroy their ability to fund capital intensive infrastructure necessary to serve new development, bringing such development to a grinding halt,” said Aileen Marie McGrath, the attorney for El Dorado.

With so much potentially at stake, the case has drawn the attention of a wide array of competing interests. Building industry groups, conservative property right defenders and Yes In My Backyard advocates have all filed briefs pleading with the court to force local governments to clear a higher bar before charging for the right to build.

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