Will Impact Fees Be Scrutinized?

IRVINE, CA-A new US Supreme Court ruling that places significant new limitations on the imposition of monetary exactions in exchange for the issuance of land-use permits in California may cause a backlash of scrutiny among the development community here. As a result of this anticipated scrutiny, local governments that depend on monetary exactions for land-use permits as part of their revenues may suffer from partial loss of these revenues, and more struggles may ensue between developers and permit-issuing agencies.

Last week’s ruling in Koontz v. St. Johns River Water Management District is the latest in a series of cases that deal with the Fifth Amendment, which prohibits the government from taking private property without just compensation, Bill Devine, an attorney with law firm Allen Matkins here, tells GlobeSt.com. “The Court sometimes refers to this as the ‘unconstitutional doctrine’—when the government is allowing a particular use, one of the conditions of that use cannot be unconstitutional. The Court will look at types of conditions being imposed, land use and the amount someone pays for permits for entitlements to develop that property. Is the local government, in conditioning their approvals, imposing conditions that would result in a violation of the Fifth Amendment?”