Judge Allows Fee Extortion Lawsuit Against Teton County to Proceed

Couple Challenges $24,325 Housing Fee

CHEYENNE, Wyo. — A federal lawsuit claiming Teton County “extorted” a fee from homeowners seeking to build on their own land will move forward after a judge rejected the county’s attempt to dismiss the case.

Vernon “Trey” and Shelby Scharp filed suit in May in U.S. District Court for Wyoming, accusing the Teton County Commission of violating their constitutional rights by charging them a $24,325 fee in 2022. The couple paid the fee as a condition of obtaining a permit to build a home on their five-acre property in the Hoback Junction area.

The Scharps argue the charge was unconstitutional under the Fifth Amendment, which prohibits taking private property for public use without just compensation. They contend that the county’s workforce housing fee system is not reasonably tied to the actual impacts of their homebuilding project.

Judge Rejects Dismissal

U.S. District Judge Kelly Rankin ruled Thursday that the case could proceed, rejecting the county’s claim that the Scharps failed to use alternative administrative remedies.

Rankin cited U.S. Supreme Court precedent holding that property owners may bring constitutional claims directly against government entities without first exhausting administrative options. He noted that, at this early stage, the court must accept the Scharps’ allegations as true.

“(When they paid) the affordable housing fee as a condition precedent to obtaining a building permit, Plaintiffs suffered actual injury by Defendant’s action,” Rankin wrote.

Housing Fee Dispute

The dispute centers on Teton County’s land development rules, which calculate impact fees based on the number of workers each new house might require. The county says the system helps address its severe shortage of affordable housing for the local workforce.

In Jackson, the county seat, the average home price reached $8.6 million last year. The county has long struggled to balance housing needs for workers with the influx of wealthy property owners.

The Scharps, however, claim they were already residents contributing to the community. They argue the fee penalized them unfairly, despite their efforts to provide rental housing by converting their smaller cabin into a rental unit.

County’s Defense

Teton County officials defend the program, pointing to a 2023 affordable housing study supporting the nexus between new development and demand for workforce housing.

“Teton County strongly stands by our most recent affordable housing nexus study completed in 2023,” Civil Deputy Attorney Keith Gingery wrote in a May email cited in court filings. “The county’s adoption of affordable housing mitigation fees is fully compliant with all constitutional provisions requiring an essential nexus and proportionality.”

Broader Implications

The lawsuit seeks more than reimbursement for the Scharps. It asks the court to declare the county’s regulations unconstitutional on their face and as applied, potentially affecting all property owners subject to similar fees.

The Scharps also seek damages, attorneys’ fees, and an order blocking enforcement of the fee structure against other builders.

The case remains ongoing as the couple continues construction of their new 3,776-square-foot home, which they hope to finish by Thanksgiving.