Fee protests, nexus studies and AB 602: pushing back on the fee line

Impact fees can be fought; most developers just miss the window. The Mitigation Fee Act's protest machinery (Gov. Code §§ 66020–66022) lets you pay a fee under protest at permit issuance, keep building, and litigate the fee afterward — but only if the written protest lands within 90 days of imposition and suit follows within 180 days of the agency's notice. Facial attacks on the ordinance or resolution that adopted the fee run on § 66022's shorter 120-day clock. Miss the deadline and even a fee that flunks the Constitution stays paid.

Two newer layers make protests more winnable. AB 602 (2021) wrote nexus-study standards and online fee-schedule posting duties into Gov. Code § 65940.1, inside the Permit Streamlining Act — a statutory checklist the agency's study has to meet. And the U.S. Supreme Court's Sheetz v. County of El Dorado (2024) held that legislatively adopted fees face the same essential-nexus and rough-proportionality scrutiny as ad hoc exactions. Pair those with the fee freeze under the Housing Crisis Act and you can bound the fee line from both sides: the schedule cannot move after your preliminary application, and what is on the schedule has to survive scrutiny.

The § 66020 sequence is rigid. Tender payment (or performance) under protest, and serve a written protest stating that payment is made under protest plus the factual and legal grounds — all within 90 days of the fee's imposition, which is typically permit issuance or the approval that first fixes the fee as a condition. The agency then issues its notice, and you have 180 days to sue. Section 66022 is the other track: a facial challenge to the ordinance or resolution adopting or increasing a fee (including water and sewer capacity charges) must be filed within 120 days of adoption, whether or not you have a project yet.

• Underwriting watch-outs:
• The 90 days can start earlier than you expect — fees fixed as conditions of approval can start the clock at approval, not at building permit. Diary both dates.
• A protective protest costs a letter. File one on any line that looks disproportionate; it preserves the refund claim while the project proceeds unimpeded.
• Protest each fee separately and state the amount — a vague "we protest all fees" letter invites a specificity fight.
• Paying without protest is treated as voluntary. There is no equitable do-over for a missed window.

For fees adopted or increased since AB 602 took effect, the nexus study is no longer a black box. The study must be adopted before the fee is imposed; it must identify the existing level of service and the level of service the fee will fund; residential fees are to be calculated per square foot unless the agency makes findings supporting another metric; and larger jurisdictions must connect fee-funded facilities to an adopted capital improvement plan. Every city and county must also post its current fee schedules online.

That checklist is protest ammunition. A flat per-unit fee hitting a 450 sq ft studio, a study adopted after the fee it justifies, a posted schedule that does not match what the counter charges, or a funded facility that appears in no capital plan — each is a concrete § 66020 ground rather than a generalized fairness complaint.

• Underwriting watch-outs:
• Pull the nexus study and the posted schedule during feasibility, before the fee estimate hardens into the pro forma.
• Ask for a written fee estimate on the current schedule and reconcile it line-by-line against what is actually imposed at permit.
• Older fees resting on pre-AB 602 studies still face Sheetz proportionality review — the statute is a floor, not a safe harbor for the agency.

Sheetz closed the loophole that mattered most. For years agencies argued that fees set by legislation — a citywide schedule, a traffic-impact formula — escaped Nollan/Dolan review because no official exercised discretion. The Supreme Court disagreed: a legislature imposing a permit condition faces the same essential-nexus and rough-proportionality test as a planning commission. Schedule-based fees supported by thin studies are now protestable on constitutional as well as statutory grounds.

The SB 330 preliminary application supplies the other bookend: fees are frozen at the schedule in effect at submittal, moving only with automatic escalators already built into that schedule — HCD's Housing Crisis Act advisory walks through the mechanics. The freeze fixes which schedule applies; the protest preserves your claim that the frozen number is itself unlawful. Run both — see the SB 330 vesting guide and the Mitigation Fee Act basics guide for the rest of the framework.

• Practical sequencing:
• File the SB 330 preliminary application before a scheduled fee increase lands — beating a hearing by a week is real money.
• At permit issuance, pay under protest on every contested line and calendar the 90- and 180-day deadlines in the closing checklist.
• A new fee ordinance adopted mid-entitlement starts the 120-day § 66022 facial window even while your frozen project is exempt from the increase — coordinate with counsel quickly if neighbors will not be.