Sheetz and Takings Law Revisited

El Dorado County Traffic Development Fee Survives Scrutiny on Remand

Following the U.S. Supreme Court’s decision in Sheetz v. County of El Dorado, 144 S.Ct. 893 (2024), which held that the Takings Clause applies to legislatively imposed development impact fees, California’s Third District Court of Appeal issued its opinion on remand, providing guidance but still leaving unresolved questions for local governments and developers navigating the post-Sheetz landscape.  (Sheetz v. County of El Dorado (2025) ___ Cal.App.5th ___, 2025 WL  2116363.)

The Supreme Court’s Decision in Sheetz

On April 12, 2024, the U.S. Supreme Court issued a unanimous opinion in Sheetz v. County of El Dorado, California, 144 S.Ct. 893 (2024), clarifying that the Takings Clause applies to legislatively established land use permit conditions, like development impact fees.

The Supreme Court stopped short of providing a definitive answer on whether the legislatively enacted El Dorado County traffic impact mitigation (“TIM”) fee at issue in Sheetz satisfied the “essential nexus” and “rough proportionality” tests established in Nollan v. California Coastal Commission (1987) 483 U.S. 825 and Dolan v. City of Tigard (1994) 512 U.S. 374. The issue was remanded back to the state courts so they could address the issue in the first instance. Brownstein’s alert summarizing the Sheetz decision and outlining its ramifications can be found here.

The Court of Appeal’s Decision on Remand

In a resounding victory for El Dorado County and public agencies in California generally, the Third District Court of Appeal found that the TIM fee at issue did not violate the Takings Clause. The court clarified that a legislatively imposed permit condition imposed on a class of properties, such as the county’s TIM fee, can indeed be tailored to satisfy the “essential nexus” and “rough proportionality” tests established in Nollan and Dolan. However, questions remain regarding the appropriate standard of review for a legislative fee program under Nollan/Dolan.  

The Court of Appeal found that the TIM fee satisfied the Nollan test and had a clear essential nexus to the county’s legitimate interest in managing traffic congestion generated by new development. The court noted that the county uses the TIM fee to finance improvement to its public roadway system that is necessitated by increased traffic attributable to population and job growth from new development.

Under Dolan, the court examined whether the fee amount assessed to Sheetz for his proposed single-family home ($23,420) was roughly proportional to the impact of the proposed development. The court rejected Sheetz’s arguments that the county was required to undertake a project-specific analysis, looking at the specific impact of his single-family home development on traffic and imposing a roughly proportional fee based solely on that impact.

In applying the proportional test under Dolan, the court established a burden-shifting regime stating that “the County has the burden of demonstrating the required degree of connection—’rough proportionality’—between the challenged land-use exaction and burden or projected social costs/public impacts of Sheetz’s proposed project.”  (Slip opin. at 18.) If El Dorado County meets its burden, then the burden shifts to Sheetz to establish that the fee is invalid, meaning it is “not reasonably related to the development project on which the fee is imposed or the amount of the fee bears no reasonable relationship to the cost of the public facility attributable to the development.” (Id. at 19.)

The county adopted the TIM fee after consideration of a detailed memorandum prepared by the Department of Transportation that explained, “the purpose of the fee, the use to which the fee was to be put, and the methodology used to calculate the fee rate for each type of new development.”  (Slip op. at 20.) The county relied on technical reports that considered the different land use characteristics of each geographical zone, the percentage of new traffic growth attributable to each respective zone, and the percentage of new traffic growth attributable to each respective zone for each type of new development. The court found that El Dorado County met its initial burden to demonstrate that it used a valid method for imposing the TIM fee, one that established a reasonable relationship between the fee charged and the projected burdens of Sheetz’s development of a single-family home.  

Once the county carried that burden, then Sheetz was required to produce evidence that the fee was not reasonably related to his development’s impact. The court held Sheetz failed to meet his burden and “the limited portions of the record relied upon by Sheetz in the trial court and on appeal did not demonstrate that the fee constituted an unconstitutional taking in violation of the Fifth Amendment.” (Slip op. at 21.) The court found that Sheetz failed to rebut the county’s evidence but stopped short of defining a standard for how a plaintiff in a future case could rebut such evidence.  

As a result, the court affirmed the original judgment, upholding the fee and rejecting Sheetz’s Takings claim.

Why the Sheetz Opinion Matters

This decision is the first appellate interpretation of the U.S. Supreme Court’s Sheetz ruling and provides an initial signal that development impact fees can survive constitutional scrutiny, even when imposed by legislation, if jurisdictions can demonstrate a clear essential nexus and proportionality between the fee and the development’s impact.

Practical Implications

• Local governments should review and, where necessary, update their impact fee programs to ensure they are supported by robust nexus and impact studies sufficient to satisfy the “roughly proportional” constitutional standard under Dolan.
• Developers and property owners should be prepared to scrutinize jurisdictions’ fee justifications and develop evidence to challenge fees that lack a clear nexus or proportionality.
• The decision leaves open questions about the level of specificity required in fee calculations, suggesting further litigation may be on the horizon.

Looking Ahead

While the Court of Appeal’s ruling provides a roadmap for compliance, it also underscores the heightened scrutiny that all exactions, legislative or otherwise, must now withstand. The opinion provides important guidance, but an appeal and further review by the California Supreme Court remains a distinct possibility. Stakeholders across California and beyond should continue to monitor how courts apply Sheetz in future cases.