By: Elizabeth Miller

George Sheetz wanted to build a small fabricated home, an alternative to the high housing prices he would face if he built from scratch on his lot in El Dorado County, California. However, the county where he resided charged a $23,420 traffic impact fee as a condition for granting the building permit. Sheetz’s efforts to build an affordable home went out the window, creating a dispute that has gone all the way up to the U.S. Supreme Court. 

Sheetz’s home would have been built off-site and then assembled on his rural residential lot. However, El Dorado County was in the middle of a large project to improve the area’s roads and instituted a hefty impact fee to fund the project. 

Sheetz paid the fee, but under protest, and for the past seven years has fought for just compensation, arguing that the permit was unlawful. On April 12, 2024, George Sheetz got one step closer to winning his case against El Dorado County.

When Sheetz’s case made it to the California Supreme Court, the court ruled that the impact fee was justified because it was a legislative fee and, therefore, didn’t need to have an essential “nexus test” or “rough proportionality,” a rule that requires fees to be directly tied to the actual impact of the project on public services, utilities, or infrastructure. Impact fee programs typically must have an essential nexus, meaning a rational connection to the road or house being built, and the cost of impact fees must be roughly proportional and reasonable to the development’s impact on land-use interest. 

The court ruled this way because previous cases only involved administrative fees. In California, administrative fees are payments charged and regulated by the local government, while legislative fees are regulated at the state level.

However, land-use regulations must be rational, reasonable, and advance legitimate government purposes, according to federal law.  So, Sheetz appealed the decision and took it to the United States Supreme Court (SCOTUS) in the Fall of 2023. In April of 2024, SCOTUS ruled in favor of Sheetz, re-emphasizing the crucial distinction between administrative and legislative fees with implications for Sheetz and impact fees across the country, including Florida.

Although the U.S. Supreme Court’s judgment was set aside and remanded back to the California Supreme Court, the opinion stated that legislative and administrative fees should be treated the same under the Takings Clause of the 5th Amendment to the U.S. Constitution. So, Sheetz argued that holding his building permit until he paid the impact fee was a taking of his property and contended that the $23,420 fee was unreasonably high and disproportionate. 

However, in July of 2025, the California Court of Appeals upheld the impact fee, arguing it passed the essential nexus and rough proportionality requirement and rejected Sheetz’s claim that the exaction was a taking of his property. The Court concluded the essential nexus was satisfied because the County’s interest in reducing traffic congestion from new development provided a logical connection to the impact fee. In addition, they upheld the rough proportionality requirement, concluding that the fee does not need a specific calculation in terms of the project’s impact.

Despite the loss, Sheetz’s case will significantly impact how impact fee programs are viewed and justified by local governments throughout the U.S. and in Florida. The case emphasized the need for essential nexus and rough proportionality requirements and could motivate other homeowners or developers to challenge impact fees that fail to meet these requirements. 

The case also established a burden-shifting regime, which allows the plaintiff to challenge the Court’s reasoning on the relationship between the amount of the fee imposed and the burden created. If the Court’s evidence is sufficient, the burden of proof is passed to the plaintiff to show that the evidence and determinations of the argument are invalid. Developers and property owners can use this to their advantage in challenging unclear nexus and proportionality requirements. 

This ruling will also strengthen local decision-making power in places like Florida, where local governments curate their impact fees due to home rule authority. Home rule authority essentially allows Florida to curate laws to its unique needs. So, Florida local governments should consider this Supreme Court ruling when enacting impact fees and use their local decision-making power to create fees that are reasonably connected to the impact of development. 

References:

This article is a product of the Housing Affordability Intiative at the DeVoe L. Moore Center under the supervision of DMC Research Director Dr. Crystal Taylor and Housing Manager Parker Ridaught.

Edited by Michaela Galligan and Chloe Offutt

Elizabeth is a research intern on the Housing Affordability team for the DMC and has worked on a variety of projects on housing choice vouchers and impact fees. She is a senior studying public policy and political science and hopes to work at a think tank after graduation.

Published by DeVoe Moore Center

The DeVoe L. Moore Center's economic research and policy analysis addresses the role of the private sector in the economy with primary interests in state and local policy issues. The DMC is located in the College of Social Sciences and Public Policy at Florida State University on the main campus in Tallahassee. As an educational institution the DMC provides professional research experiences to undergraduate and master’s students through an extensive program of internships and independent study to prepare them for the professional workplace or further graduate study in economics, public policy, urban planning, public finance, or entrepreneurship.

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