Supreme Court Rules in Favor of Property Rights

April 12, 2024 1:32PM

According to a Beacon poll released this week, the rising cost of housing is among the most significant barriers that Tennesseans face on the path to financial stability and growth. The Supreme Court’s decision this morning in Sheetz v. El Dorado County will help. 

The rise in housing costs is due in no small part to the rise in permits and fees. Government can prohibit builders from building on their property until the builders acquiesce to extortionate government demands. In a landmark case from 1987, the Court rebuffed the California Coastal Commission’s efforts to force property owners to give up a third of their property for beachfront access. The Commission’s logic for withholding the permit was that further construction would impose a “psychological barrier” for passing motorists who wished to see the ocean, and that property owners must remedy that “problem” by allowing beachgoers to pass through their property. 

It’s unsurprising that the Supreme Court rejected the Commission’s arguments in the 80s, but much more surprising is what some courts have done since. Many courts have drawn an exemption for “legislative exactions.” In other words, property owners could win in court if an unelected bureaucrat placed unreasonable conditions in the permitting process, but not if their elected legislature did the same thing. 

The Supreme Court solved that problem today in Sheetz. In a unanimous decision, the Court rejected the arbitrary exemption for legislative exactions. It held that a county’s decision to charge a $23,420 traffic impact fee for a residential building permit would be subject to constitutional scrutiny even though a legislative body imposed the fee. 

If all this sounds familiar, it’s because Beacon’s clients recently tackled the same issue and won. In Knight v. Metropolitan Government of Nashville and Davidson County, Beacon and the Southeastern Legal Foundation secured an important Sixth Circuit decision rejecting an exemption for legislative exactions. The Sixth Circuit invalidated Nashville’s sidewalk ordinance—enacted by the Metro Council— that required property owners to pay for the construction of sidewalks miles away before they could build on their own property. The Knight decision deepened disagreement in the lower courts on this issue and helped get the Supreme Court to strike a blow for property rights in today’s ruling. Indeed, the Supreme Court cited Knight in its opinion, and the victory for Mr. Sheetz (represented by Pacific Legal Foundation) will benefit property rights nationwide. 

What’s next? We know legislative exactions are subject to constitutional analysis, but whether any exaction is constitutional is a question for another day. One thing is for certain: government will continue to try and extort property owners in the form of permit conditions, but those property owners—now armed with precedents in Knight and Sheetz— will be well-positioned to fight back. Beacon will continue to represent Tennesseans free-of-charge in cases to help keep down the cost of housing and to elevate fundamental property rights.