Real estate industry persuades Supreme Court that legislative permitting exactions are subject to Takings Clause scrutiny

Client(s) National Association of Realtors®, American Property Owners Alliance, Realtors® Land Institute, California Association of Realtors®, and Californians for Homeownership

Jones Day filed an amici curiae brief in the U.S. Supreme Court on behalf of the real estate industry in a case challenging a California court’s ruling that legislative permitting exactions are not subject to Takings Clause scrutiny. The Supreme Court has long held that permitting exactions must maintain an essential nexus and rough proportionality to the costs imposed by a new development. But some courts ignored this clear instruction and subjected generally applicable legislative exactions to diminished scrutiny. Jones Day’s brief argued that the Takings Clause protects property owners’ right to compensation regardless of the branch of government responsible for the taking. The brief urged the Supreme Court to apply the Takings Clause and the unconstitutional conditions doctrine equally to all branches of government. The U.S. Supreme Court agreed.

In a unanimous opinion, the nine justices accepted Jones Day’s argument and held that the Takings Clause applies equally to legislative permitting exactions and prohibits unconstitutional permitting conditions imposed by legislatures and administrators alike. Under the ruling, legislative permitting exactions are permissible only if they maintain an essential nexus with the proposed development and are roughly proportional to the externalities imposed by the new development.

Sheetz v. County of El Dorado, California, No. 22-1074 (U.S.)