Return to Sheetz: California Court of Appeal Upholds Traffic Impact Fee Following Supreme Court Remand
By James I. Anderson, Esq.
On July 29, 2025, the California Court of Appeal for the Third District issued its long-anticipated decision in Sheetz v. County of El Dorado (“Sheetz II”), following remand from the United States Supreme Court’s decision in Sheetz v. County of El Dorado (2024) 601 U.S. 267 (“Sheetz I”).
In Sheetz I, the Supreme Court resolved a narrow but significant constitutional question: Does the Takings Clause of the Fifth Amendment apply to legislatively imposed development fees, or only to those imposed on an ad hoc, discretionary basis?
The Court held that legislative exactions — such as impact fees imposed uniformly by ordinance — are subject to the same constitutional scrutiny as administrative or individualized conditions. This decision overturned a long-standing distinction drawn by many courts, including in California, and signaled broader application of the Nollan/Dolan “essential nexus” and “rough proportionality” tests to more types of land use exactions.
The Court did not rule on the constitutionality of the fee itself. Instead, it remanded the case to the California courts for further proceedings consistent with its holding. That brings us to Sheetz II.
What Happened in Sheetz II?
In Sheetz II, the California Court of Appeal reconsidered whether a $23,420 traffic impact mitigation fee (TIM Fee) imposed on a rural single-family home project constituted an unconstitutional taking under the Fifth Amendment.
The Court affirmed the lower court’s decision, finding that the fee was not an unconstitutional condition and did not violate the Takings Clause. In doing so, the Court applied the Nollan/Dolan standard, as required by the U.S. Supreme Court.
Key Legal Findings in Sheetz II
1. Monetary exactions are subject to Nollan/Dolan – but not all are unconstitutional
The Court acknowledged, following Sheetz I, that the TIM Fee is a monetary exaction subject to heightened scrutiny, even though it was imposed pursuant to a generally applicable ordinance. This was a shift in California law, which previously exempted such legislative fees from takings analysis.
2. Essential nexus between fee and government purpose
The Court found that the TIM Fee had an essential nexus to the County’s stated purpose: mitigating traffic impacts caused by new development. The Court accepted that managing traffic congestion is a legitimate government interest, and new development, including a single-family home, contributes to cumulative traffic burdens.
3. Rough proportionality between fee and development impact
The Court also found rough proportionality between the fee amount and the development’s projected impact. Although the plaintiff argued that the uniform application of the fee lacked individualized analysis, the Court emphasized that the County had relied on region-wide traffic studies, cost modeling, and expert analysis when adopting its fee schedule. This provided a sufficient evidentiary basis to support the fee's proportionality.
What This Means for Projects
The Sheetz decisions (I and II) together clarify and reaffirm that impact fees — whether adopted legislatively or imposed individually — can be subject to takings analysis but are not inherently unconstitutional. Importantly:
Jurisdictions must be able to demonstrate that fees imposed on development satisfy the Nollan/Dolan standards — even if imposed by ordinance.
Fee schedules based on robust, data-supported studies are more likely to survive judicial scrutiny.
With heightened legal scrutiny of certain development fees, developers and landowners can consider challenging those fees, particularly in regions where impact fee ordinances are based on outdated or unsupported assumptions.
The door is now open to challenge legislatively enacted fees if they cannot meet constitutional standards. However, those fees will likely be upheld, as in Sheetz II, where jurisdictions have conducted solid nexus studies and fee justification reports.
Need Guidance on Impact Fees or Exactions?
Everview advises clients on all aspects of fee challenge strategies, development conditions, and takings law compliance. For help evaluating whether your project’s fees may be unconstitutional — or for support navigating local fee structures — contact James Anderson at Everview Law.
This post is for informational purposes only and does not constitute legal advice. For legal guidance tailored to your project or jurisdiction, please consult Everview attorneys directly.
