CA Appeals Court Holds Impact Mitigation Fee was Not Subject to the Heightened Scrutiny of the Nollan/Dolan Test

CA Appeals Court Holds Impact Mitigation Fee was Not Subject to the Heightened Scrutiny of the Nollan/Dolan Test

This post was authored by Matthew Loescher, Esq.

In this case, plaintiff George Sheetz challenged the $23,420 traffic impact mitigation fee (“TIM fee”) imposed by the defendant El Dorado County as a condition of issuing him a building permit for the construction of a single-family residence on his property in Placerville. Sheetz appealed from the judgment entered after the trial court sustained the County’s demurrer without leave to amend and denied his verified petition for writ of mandate. On appeal, Sheetz contended for reversal was required because the TIM fee was invalid under both the Mitigation Fee Act and the taking clause of the United States constitution.

The court first found that the trial court properly determined that the TIM fee was not subject to the heightened scrutiny of the Nollan/Dolan test. The court found that the subject fee was not an “ad hoc exaction” imposed on a property owner on an individual and discretionary basis, but was a development impact fee imposed pursuant to a legislatively authorized fee program that was generally applied to all new development projects within the County. The record reflected that this fee was calculated using a formula that considered various factors. As such, the validity of the fee and the program that authorized it was only subject to the differential “reasonable relationship” test embodied in the Mitigation Fee Act.

On appeal, Sheetz argued the trial court erred in concluding that he could only state a cognizable claim under subdivision (a) of section 66001, rather than under both subdivision (a) and (b) of the statute. Specifically, Sheetz claimed that the County was required to evaluate the specific traffic impacts attributable to his particular project before imposing the fee. The court noted that there were two ways that a local agency could satisfy the Mitigation Fee Act’s “reasonable relationship” requirement for the imposition of development fees; subdivision (a) applied to quasi-legislative decisions to impose development impact fees on a class of development projects; and subdivision (b) applied to adjudicatory, case-by-case decisions to impose a development impact fee on a particular development project. The court found that for a general fee applied to all new residential developments, a site-specific showing was not required. The court found instead that this showing could be derived from district wide estimates concerning new residential development and impact on school facilities. Because of this, the court held that the trial court properly determined that section 66001, subdivision (b) did not apply to Sheetz’s development project.

Sheetz next argued the trial court erred in determining that his fourth and fifth causes of the action failed as a matter of law because the sole remedy for “as applied” challenges to local agency action was administrative mandamus, rather than declaratory relief. The court noted that it was well established that a declaratory relief cause of action is an appropriate method for challenging a statute, regulation, or ordinance as facially unconstitutional or otherwise invalid, but that the administrative mandamus is “the proper and sole remedy” to challenge a local agency’s application of the law.

Here, the record reflected that the County considered the relevant factors and demonstrated a rational connection between those factors and the fee imposed. The limited portions of the record relied upon by Sheetz did not demonstrate that the fee was arbitrary, entirely lacking in evidentiary support, or otherwise invalid. The court therefore held that Sheetz failed to show that the record before the County clearly did not support the County’s determinations regarding the reasonableness of the relationship between the fee and its development project. Accordingly, the judgment was affirmed.

Sheetz v County of El Dorado, 2022 WL 10993726 (CA App. 10/19/2022)