Homes under construction in California, such as this one in Novato, can be subject to local government fees related to costs that the construction is likely to cause. A lawsuit headed to the Supreme Court will determine the legality of such fees.

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The U.S. Supreme Court agreed Friday to decide whether a California man’s rights were violated when his county required him to pay a $23,000 traffic-impact fee before being allowed to build a single-family home.

George Sheetz’s case will determine how far a local government must go to show that fees charged for construction projects are needed to cover the costs that the construction is likely to cause. It could also affect the types of housing that cities and counties allow to be built. A ruling is due by the end of the court’s term next June.

Sheetz applied in 2016 to build a 1,854-square-foot home on his property in Placerville. El Dorado County charged him a fee of $23,420 for road improvements, based on rules adopted by county officials a decade earlier requiring developers to pay for the cost of increased traffic, without requiring the county to show the impact that the new development would have on local traffic and road construction.

Sheetz paid the fee, was granted the permit and then sued for a refund, claiming a violation of his property rights. State courts ruled against him, citing a 1989 California law that allowed local governments to charge fees to builders for "costs attributable to the increased demand for public facilities reasonably related to the development project."

The fee charged to Sheetz was "imposed pursuant to a legislatively authorized fee program that generally applies to all new development projects within the County," Justice Elena Duarte wrote in a 3-0 ruling last October by the Third District Court of Appeal in Sacramento. The state Supreme Court denied review of the case in February.

But the U.S. Supreme Court took up the issue Friday in an appeal by Sheetz that drew support from the California Building Industry Association and the National Association of Home Builders.

"The County demanded payment in spite of the fact that it made no individualized determination that the exaction —a substantial sum for Mr. Sheetz — bore an ‘essential nexus’ and ‘rough proportionality’ to the purported impacts associated with his modest project," Sheetz’s lawyer, Paul Beard, wrote in his appeal.

He was quoting phrases from the court’s rulings in 1987 and 1994 requiring the government to show a connection between the impact of proposed construction and any restrictions the agency is imposing. The first ruling, in Nollan v. California Coastal Commission, rejected the commission’s decision that a couple who wanted to rebuild their beachfront bungalow in Ventura County must allow public access to a strip of land between the bungalow and the beach.

Beard said five other states have laws like California’s 1989 statute that allows local governments to charge fees without showing that they paid for the costs of the proposed development, while other states have contrary laws.

"The issue touches every American who seeks to build a home, business, or other project on his or her land," the attorney wrote.

Christopher Elmendorf, a UC Davis law professor who has written extensively about housing issues, said a ruling in Sheetz’s favor could also allow challenges to "inclusionary zoning" rules in San Francisco and other communities, which require new developments to contain a certain percentage of affordable-housing units. That might encourage more housing construction in the short run, he said, but it probably wouldn’t have a major impact on the housing shortage in California.

"It would probably knock out some barriers to development," Elmendorf said. "But in the longer term, if local governments can’t get the fees they want, they may become even more resistant to approving new housing."

The case is Sheetz v. County of El Dorado, No. 22-1074.

Reach Bob Egelko: [email protected]; Twitter: @BobEgelko

Written By
Bob Egelko

Bob Egelko has been a reporter since June 1970. He spent 30 years with the Associated Press, covering news, politics and occasionally sports in Los Angeles, San Diego and Sacramento, and legal affairs in San Francisco from 1984 onward. He worked for the San Francisco Examiner for five months in 2000, then joined The Chronicle in November 2000.

His beat includes state and federal courts in California, the Supreme Court and the State Bar. He has a law degree from McGeorge School of Law in Sacramento and is a member of the bar. Coverage has included the passage of Proposition 13 in 1978, the appointment of Rose Bird to the state Supreme Court and her removal by the voters, the death penalty in California and the battles over gay rights and same-sex marriage.

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