George Sheetz applied for a building permit to construct a small, prefabricated home on his residential parcel of land in El Dorado County, California. To obtain a permit he had to pay a local traffic congestion fee for a single-family residence in the amount of $23,420. Based on the Court’s decisions in Nollan v. California Coastal Comm’n, 483 U. S. 825 (1987), and Dolan v. City of Tigard, 512 U. S. 374 (1994), Sheetz challenged the fee as an unlawful “exaction” under the Fifth Amendment Takings Clause. The California Court of Appeal rejected that argument because the traffic impact fee was imposed by legislation, and, according to the court, Nollan and Dolan apply only to permit conditions imposed on an ad hoc basis by administrators. The Supreme Court disagreed stating that The Takings Clause does not distinguish between legislative and administrative permit conditions.
Sheetz argued to the California Court of Appeal that the County had to make an individualized determination that the fee amount was necessary to offset traffic congestion attributable to his specific development. The County’s predetermined fee, Sheetz argued, failed to meet that requirement.
The Court concluded that its decisions in Nollan and Dolan address this potential abuse of the permitting process. There, the Court set out a two-part test. First, permit conditions must have an “essential nexus” to the government’s land-use interest. Nollan, 483 U. S., at 837. The nexus requirement ensures that the government is acting to further its stated purpose, not leveraging its permitting monopoly to exact private property without paying for it. Second, permit conditions must have “rough proportionality” to the development’s impact on the land-use interest. Dolan, 512 U. S., at 391. A permit condition that requires a landowner to give up more than is necessary to mitigate harms resulting from new development has the same potential for abuse as a condition that is unrelated to that purpose.
The Court resolved that 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.