Some have argued that a recent Supreme Court case, Sheetz v. El Dorado County, 601 U.S. 267 (2024), casts doubt on Florida local governments’ ability to continue charging impact fees to ensure that growth pays for its impact on public facilities. Actually, the standard in Sheetzhas its origins in state caselaw, dating back decades in Florida, and in century-old principles in the statutes of most states. Sheetz does not appreciably change the legal standards applicable to Florida impact fees.

Legislation enacted by El Dorado County, California, required developers to pay traffic impact fees as a condition of receiving a building permit. Pursuant to that legislation, Sheetz was required to pay a traffic impact fee in the amount of $23,420.00 to obtain a permit to build a home. Impact fees are a 50-year old answer to two primary responsibilities of local governments: land use regulation and the provision of public facilities. Requiring new development to pay for and install the community facilities that it needs is not a new idea. The Standard City Planning Enabling Act of the 1920s, subsequently copied almost verbatim by most states, required as a condition precedent to the approval of new development the provision of streets, water mains, sewer lines, and other utility structures. Impact fees have been an instrumental tool in getting new development to pay for the infrastructure needs it creates. These fees can be defined as single payments required to be made by builders or developers at the time of development approval, calculated as the development’s proportionate share of the capital cost of providing major capital facilities (roads, sewers, sewage and water treatment plants, parks, etc.)[1].

Sheetz argued that the County fee was not based on the costs of traffic impact specifically attributable to his particular project, but rather was improperly assessed according to a rate schedule based on a type of development and its location within the County that lacked proportionality to his impact. California caselaw has long held that legislatively established fees were not subject to challenge on this basis. Sheetz held that the California courts were wrong, and that legislatively imposed fees were not categorically exempt from review.  It remanded for the California courts to consider whether the County fee met the proportionality standard, as they had not yet considered that issue.

Individual developments have often challenged impact fees as being unfairly applied, when the amount of fee being charged is compared to the impact of that development on the infrastructure for which the fee is being charged (e.g. a new development paying a fee based on the cost of a new connector road, even though that road will also serve other development). Pursuant to Sheetz, impact fee programs that are imposed as part of the development review and approval process are subject to the “dual rational nexus” test. This test requires that the fee must have an “essential nexus” to the government’s land use interest, and “rough proportionality” to the development’s anticipated impact on local infrastructure. It is important to note that the case that created the federal rough proportionality standard, Dolan v. City of Tigard, 512 U.S. 374 (1994), was clear that it does not mean mathematical certainty.

Florida local governments have been legislatively levying impact fees for nearly 50 years using rate schedules based on land use and on amount of development, similar to those used in the County fee. Florida statutes have encouraged their use since the 1980s. See Section 163.3202(3), F.S. In contrast to California, Florida impact fees have long been required to meet the dual rational nexus dictates of Florida courts. Florida’s Impact Fee Act, Section 163.31801, F.S., was enacted in 2006, thirty years after the proportionality standard was first announced in Contractors & Builders Ass’n of Pinellas County v. City of Dunedin, 329 So. 2d 314 (Fla 1976). Long before the enactment of the Act, Florida courts required that local governments demonstrate that their impact fees bear a reasonable connection, or rational nexus, between the need for additional capital facilities and the growth in population generated by the development. In addition, the government must show a rational nexus between the expenditures of the funds collected and the benefits accruing to the development (Hollywood Inc. v. Broward County, 431 So.2d 606, 611-12 (Fla. 4^th DCA 1983), review denied, 440 So.2d 352 [Fla. 1983]). Mathematical studies and analyses, relying on professionally accepted methodologies and standards, have always been used to establish the legitimacy of the rate schedules in Florida impact fees.

The Act simply echoed the existing caselaw standard by requiring local governments to ensure that the impact fee is proportional and reasonably connected to, or has a rational nexus with, the need for additional capital facilities and the increased impact generated by the new residential or commercial construction. Section 163.31801 (4) (f), F.S. Additionally, the Act echoed caselaw requirements that the impact fee charged by a local government to be proportional and reasonably connected to, or have a rational nexus with, the expenditures of the funds collected and the benefits accruing to the new residential construction. Section 163.31801 (4) (g), F.S. Later amendments to the Act have further strengthened the requirements for a valid impact fee in Florida.

The Sheetz holding introduces a new layer of protection of property rights in California by requiring legislatively adopted fees to meet the proportionality standard. However, this layer of property rights protection is something that has already been required in Florida for nearly 50 years. The impact fee bed in Florida does not need Sheetz, as the protection it provides to those subject to the imposition of impact fees has been in existence in Florida for many years.