Will Supreme Court Case Lead to Lower Impact Fees — or Just More Studies?

Everybody seems to think that the recent case from California could lead to dramatically lower fees — and lower housing costs. But that's not what the court decided.

1 minute read

April 26, 2024, 8:00 AM PDT

By billfulton00

People gathered in front of US Supreme Court building in Washington, D.C.

JudithAnne / Adobe Stock

The U.S. Supreme Court has struck down California’s unique rule — embedded in the Mitigation Fee Act — that exactions and impact fees don’t have to be “roughly proportional” to the impact of the new development project under consideration if they are imposed as part of a general plan policy or other program-level effort.

But now the question becomes whether the way California jurisdictions actually calculate those program-level fees is specific enough to meet the “rough proportionality” rule – and that question will be determined by California courts. Some have said this will inevitably lead to lower impact fees. Given the history of impact and mitigation in California, however, it seems more likely that it will simply lead to the use of a more sophisticated methodology in nexus studies that justify the fees. Cities and counties in California aren’t likely to give up impact fee revenue that easily.

This article provides a detailed explanation of how El Dorado County came up with the impact fee challenged in the case and discusses options for how cities and counties around the country may have to calculate similar fees in the future.

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