U.S. SUPREME COURT RULES TRAFFIC IMPACT FEES UNCONSTITUTIONAL; LIKENS IDENTICAL HELEN RAMIREZ SCHEME TO "EXTORTION"

By Juan Montoya

Just four days after the United States Supreme Court declared traffic impact fees as a condition of issuing building permits on new residential housing and and commercial development assessed by El Dorado County in California unconstitutional, the City of Brownsville Commission passed an identical ordinance on first reading. 

The second and final reading is scheduled for the city commission's May 7 regular meeting.

A second reading will amend Ordinance Number 2024-1739 – Chapter 314-Impact Fees, Article V-Impact Fees, Roadway Capital Recovery Fee – to establish the 2023 Brownsville Roadway Capital Recovery Fee (CRF) and its integration into Chapter 314-Impact Fees as part of the city's code of ordinances. It is part of the city's Road Capital Improvement Program.

The city commission unanimously approved the amendment to the ordinance during a regular meeting on April 16 on the recommendation of  Eddie Haas, a consultant from Freese and Nichols Inc. of Ft. Worth, members of the Capital Improvement Advisory Committee, and city manager Helen Ramirez, unaware that four days before, on April 12, the Supreme Court ruled unanimously that traffic impact fees were unconstitutional and vacated and remanded and overturned a decision of the the Third Appellate District in the case Sheetz vs. County of El Dorado, California. 

The traffic impact fees contained under the proposed amendment to the ordinance by the City of Brownsville are identical to those of El Dorado County in California. It establishes categories and rate schedules for private dwellings and commercial development and establishes different zones for the fee schedule. City building permits for new development – both residential and commercial – are conditioned on the payment of the  Capital Recovery Fees (CFR).

In the Sheetz case, the fee was part of a “General Plan” enacted by the County’s Board of Supervisors to address increasing demand for public services spurred by new development. The fee amount was not based on the costs of traffic impacts specifically attributable to Sheetz’s particular project, but rather was assessed according to a rate schedule that took into account the type of development and its location within the county, identical to Brownsville's CFR scheme. Sheetz was required by the County of El Dorado to pay a $23,420 traffic impact fee before it would grant him a residential building permit for his new building.

The city's passage of the CRF resolution states that the "Texas Local Government Code, Chapter 395, authorizes Cities to adopt and amend capital recovery fees for the purpose of financing capital improvements for public infrastructure required by new development to the extent new development places demands upon public infrastructure...those demands should be satisfied by sharing the responsibility for financing these facilities from the public at large to the developments creating the demands."

Under a project called Capital Recovery Fee, people applying for building permits will be assessed an average of $2,000 to pay for an estimated $27 million the city wants to have in an account to be ready for an expected increase in population estimated at more than 248,600 by 2033, compared to a little more than 211,000 today.

The number of units are projected to rise from 61,018 now to 75,702 by the year 2033. The fees would change as the plan calls for dividing the city into 19 sections.

For a large commercial business, such as a big box measuring 159,000-square-foot, the fee would be $31,000 or more.

In California, Sheetz paid the fee under protest and obtained the building permit. He later sought relief in state court, claiming that conditioning the building permit on the payment of a traffic impact fee constituted an unlawful “exaction” of money in violation of the Takings Clause.

He contended that the law required the county to make an individualized determination that the fee imposed on him that was necessary to offset traffic congestion attributable to his project. The lower courts sided with El Dorado County which contended that precedent applied only to permit conditions imposed on an ad hoc basis by administrators, and not to a fee like this one imposed on a class of property owners by board-enacted legislation.

The Supreme court ruled that when the government wants to take private property for a public purpose, the Fifth Amendment’s Takings Clause requires the government to provide the owner “just compensation,” regardless of which jurisdiction applies it. 

"The Takings Clause saves individual property owners from bearing “public burdens which, in all fairness and justice, should be borne by the public as a whole and when the government withholds or conditions a building permit for reasons unrelated to its legitimate land-use interests, those actions amount to extortion,"  states the unanimous decision  written by Justice J. Barret, and concurrent opinions delivered by six other members of the court.

The effective date of the Capital Recovery Fees will be May 7, 2024, upon passage of the second reading. With at least two attorneys already champing at the bit to file lawsuits upon its passage, will the City of Brownsville thumb its nose at the U.S. Supreme Court?

Click on link below to read decision and concurring opinions:

https://mail.google.com/mail/u/0?ui=2&ik=643034ff4a&attid=0.1&permmsgid=msg-a:r6687101227348477762&th=18efcff445bf7b55&view=att&disp=inline&realattid=18efcf802f3e695b4001