The Pacific Legal Foundation recently announced that the U.S. Supreme Court ruled unanimously that legislatures cannot use the permit process to coerce owners into paying exorbitant development fees. They say this ruling is a major victory for property rights, remove costly barriers to development, and help combat the housing crisis. The case began in 2016 when a man bought a vacant lot in rural El Dorado County, California, and planned to build a small home where he and his wife would live and raise their grandson. But he was told he would have to pay a so-called traffic impact fee of more than $23,000 in exchange for the building permit. The County claimed he was required to pay under local legislation that sought to shift the cost of addressing existing and future road deficiencies onto new development. The Court ruled that the case must return to the lower court to determine whether the $23k fee was an exaction subject to the unconstitutional conditions doctrine.
Specifically, the Court held 9-0 that such fees, otherwise known as “legislative exactions,” must satisfy the doctrine of unconstitutional conditions — meaning they must be closely related and proportional to any adverse public impacts caused by development and no more.
“Holding building permits hostage in exchange for excessive development fees is obviously extortion,” said Paul Beard, partner at Pierson Ferdinand. “We are thrilled that the Court agreed and put a stop to a blatant attempt to skirt the Fifth Amendment’s prohibition against taking private property without just compensation.”
Click here to read more at the Pacific Legal Foundation.
