Court of Appeal Upholds Traffic Impact Fee Post-Sheetz: Class-Based Development Fees Can Survive Takings Scrutiny

The United States Supreme Court’s April 12, 2024 decision in Sheetz v. County of El Dorado unanimously rejected longstanding California precedent. The Court’s decision further solidified that fees imposed as a condition of property development are subject to Takings Clause scrutiny under the Nollan/Dolan framework—even when those fees are imposed by legislation and apply broadly through formulas or schedules.

Under prior California law, Nollan/Dolan scrutiny applied only to development conditions imposed on a particular project through individualized, discretionary (i.e., administrative) action. The Sheetz decision eliminated that distinction, extending heightened takings scrutiny to legislatively imposed development fees. However, the Supreme Court left unresolved how the “rough proportionality” standard should apply to class-based fee schedules. The Court remanded the case to the California Court of Appeals for further analysis.

On July 29, 2025, the California Court of Appeals issued its decision on remand and concluded that the Traffic Impact Mitigation (TIM) Fee at issue did not constitute a taking—even under the Nollan/Dolan framework. The Court held that class-based, legislatively imposed impact fees can satisfy the Takings Clause if they are supported by credible data and applied through a reasonable methodology. Critically, the Court clarified that local agencies are not required to make parcel-specific determinations to justify each individual fee.

A.    The County Demonstrates Both “Essential Nexus” and “Rough Proportionality”

The Court of Appeal applied the two-part Nollan/Dolan test to evaluate whether El Dorado County’s Traffic Impact Mitigation (TIM) Fee amounted to an unconstitutional taking:

Essential Nexus. The Court found a direct and logical connection between the County’s legitimate interest in mitigating traffic congestion and its decision to impose the TIM Fee. Because Sheetz’s proposed single-family home would generate additional vehicle trips, requiring payment of a traffic mitigation fee was reasonably related to the County’s land use objective. As the Court noted, this threshold presents a “relatively low bar,” which the County easily met.

Rough Proportionality. The more substantive inquiry focused on whether the amount of the fee ($23,420) was roughly proportional, in nature and extent, to the traffic impacts caused by Sheetz’s proposed development.  

In conducting this analysis, the Court reaffirmed a burden-shifting framework. The County met its burden by relying on a detailed administrative record, including expert traffic studies, cost forecasts, and zone-specific modeling. These analyses quantified the expected vehicle trips generated by different types of development and apportioned infrastructure costs accordingly. The burden then shifted to Mr. Sheetz, but he could not point to any record evidence sufficient to demonstrate that the fee itself was unrelated to its purpose, or that the specific amount bore no reasonable relationship to the public cost.

B.    Class-Wide Fee Schedules Can Satisfy Takings Scrutiny

The Court’s decision also clarifies a critical question left open by the Supreme Court: whether class-wide, legislatively imposed fee schedules can satisfy Nollan/Dolan. The Court held that they can—provided that they are supported by sound data and methodology.

Specifically, the Court emphasized that:

• Class-based impact fee programs may satisfy Nollan/Dolan if supported by technical analysis and empirical data;
• Agencies must document a reasonable relationship between the development type and its corresponding infrastructure impacts;
• Use of planning tools such as trip generation rates, traffic models, and geographic fee zones remains valid and appropriate.

Practical Guidance: Agencies should ensure that their development impact fee programs are grounded in a clear and well-documented administrative record, including modeling assumptions and underlying studies. Fees must reasonably reflect the burdens imposed by each category of development.

C.    Future-Proofing Impact Fees

The Court of Appeal’s decision reinforces that impact fees remain a valid and vital tool for local governments following Sheetz. While legislative impact fees are no longer categorically exempt from takings scrutiny, they can withstand constitutional challenge if supported by sound data and rational allocation methods. Agencies should proactively review and update their fee programs to ensure legal defensibility under the Nollan/Dolan standard as clarified by the Court.

For questions on how this decision may impact your agency, please contact Lutfi Kharuf, Dean Atyia and/or Chloe Graham.

Disclaimer: BBK Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation, or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.