Arizona opinion: Gov. Hobbs can strike a blow against high building fees

Last week, the Arizona Legislature passed a first-of-its-kind reform that says legislative bodies — including local authorities — cannot use the permit process to coerce property owners into paying exorbitant development fees. The bill reflects the U.S. Supreme Court’s unanimous 2024 decision in Sheetz v. County of El Dorado and will protect the people of this state from extortionate fees when they apply for permits for any use or development project.

By signing Senate Bill 1787, introduced by Sen. Warren Petersen and passed by bipartisan majority in the Senate, Governor Katie Hobbs has the chance to both build on previous housing reforms she has enacted and promote transparency in local government permitting processes. The bill protects the property rights of Arizonans and ensures they can remodel, build, and develop the housing they need for themselves, their families, and their neighbors. It does not change health and safety concerns, building codes, or related considerations. It is a simple measure that can have a significant impact by establishing transparency and accountability in the already costly and time-consuming building process.

At the heart of this reform is an expectation that government will show its work when erecting financial barriers to housing, and that individuals will have a way to appeal unfair and unconstitutional fees. The people who are hurt the most by extortionate exactions are those who can afford them the least — young families in need of more space, people living paycheck to paycheck who need more housing options, or the elderly who need to downsize and save money.

In the Sheetz case, Pacific Legal Foundation represented a 65-year-old grandfather who bought a small parcel of land in El Dorado County, California, where he and his wife planned to raise their grandson and enjoy retirement.

Over his career, George Sheetz worked his way up from a $5-an-hour laborer to head of his own engineering contracting company. His wish was modest: Install a manufactured home on the parcel of land he had saved for years to purchase. Unfortunately, El Dorado County was less careful with its money.

The county had begun an $800 million improvement plan — even though it didn’t have $800 million to spend. So, to fund its plan, the county began charging extra fees to anyone who applied for a building permit—regardless of the correlation to the property’s use or impact.

To build a small, manufactured home on his own land, George was charged $23,000, with no demonstrated connection to his home. He asked for answers and was given none.

Determined to provide a place for his family to live, he found a way to pay the fee, but he kept on fighting. After seven years of litigation, the Supreme Court sided with George and affirmed Americans' constitutional right to use their property peacefully and productively without arbitrary government barriers.

The Court ruled that such fees, otherwise known as “legislative exactions,” must satisfy the doctrine of unconstitutional conditions — meaning they must be closely related and proportional to any adverse public impacts caused by building or development — and no more.

Enacting Senate Bill 1787 will bring Arizona into alignment with the court’s ruling and the Fifth Amendment and increase housing production by ensuring transparency and accountability in the permitting process. Arizonans should not have their permits held hostage by unjustified fees. Government officials must take the Constitution into account when enacting limitations on the use of property, and a bill that requires them to be thoughtful when assessing fees should not be controversial.

In a time when homelessness and housing costs are at an all-time high, reforms that protect against increased expenses and barriers to providing homes are both prudent and principled.