Supreme Court May Hear Fifth Amendment Case Involving Small-Business Development

Is demanding money for development a "taking" under the Fifth Amendment?


Call it a tax by another name. Daniel and Andrea McClung wanted to develop some property they owned into business space--including a Subway shop--but they ran into some problems with the city government in their town of Sumner, Washington. The city had to make some infrastructure improvements to the drainage system--but decided those improvements would be made on the backs of developers, even if that means paying for improvements that do not benefit their properties. Ilya Shapiro at Cato has the details:

Unwilling to pay for these costly upgrades, the city enacted an ordinance that placed a condition on new development: Anyone who applied for a permit would have to pay fees for the improvements to the drainage system—even if the proposed development did not have any impact on the existing infrastructure. When the McClungs applied for this permit, the city informed them that it would be granted only if they paid for the improvements, which cost $50,000.

The city ignored the McClungs’ protests that their fees would go towards improving infrastructure not on their property, so their development would have no impact on the drainage system—let alone one worth $50,000. The city did not care; the McClungs were a captive source of revenue.

The Ninth Circuit ruled in favor of Sumner that the ordinance did not violate the takings clause of the Fifth Amendment, but the McClungs appealed. Stay tuned to see if the Supreme Court takes the case.

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