(Editor’s note: The following is Attorney Bruce Inman’s legal opinion letter to Katherine Hess regarding the legitimacy of the Davis Based Buyers’ Program.)
Dear Ms. Hess:
Our client has asked us to review and comment regarding “Taking Care of Our Own, The Davis Based Buyers Program” the proposed sales and marketing plan for the West Davis Active Adult Community. We understand this plan describes a sales and marketing plan for the proposed West Davis Active Adult Community which will, as the name implies, specifically restrict the initial sale of 90% of the new residences to individuals with a preexisting relationship with the City of Davis. As further discussed in this letter, we believe the “Taking Care of Our Own, The Davis Based Buyers Program” proposed sales and marketing plan is lawful and legally consistent with Federal, California and City of Davis legal requirements.
As an initial observation, we note that the Davis Based Buyers Program conforms to one of the stated goals of The Citizens’ Right to Vote on Future Use of Open Space and Agricultural Lands Ordinance, (Davis Municipal Code 41.01. et seq., commonly known as “Measure R”):
41.01.010 (a) Purpose.
(1) The purpose of this article is to establish a mechanism for direct citizen participate in land use decisions affecting city policies for compact urban form, agricultural land preservation and an adequate housing supply to meet internal city needs, by providing the people of the City of Davis, the right to vote, without having to evoke referenda, on general plan land use map amendments that would convert any agricultural, open space, or urban reserve lands, as designated on the land use map of the City of Davis general plan, dated August 1, 1999, to an urban or urban reserve land use designation and on any development proposal on the Covell Center or Nishi properties. (emphasis added).
The phrase “an adequate housing supply to meet internal city needs” is not further defined in Measure R and was not defined in Measure J, the voter-approved predecessor measure passed in 2000. We believe the voters’ decision to not include a definition of this phrase is recognition that the “internal city needs” is a concept that may change over time. For example, apartments focused on student housing has recently been deemed an “internal city need.” With an aging population and more than 4,000 single-family homes owned by owner-occupants age 50 or older, a housing project focused on senior citizens reasonably meets the internal city need requirement of Measure R. In addition to the 6,000 new students anticipated in the UC Davis Long Range Planning Document (LRPD), more than 2,300 additional faculty and staff will be hired by the University. The additional faculty and staff will require housing as well, some of which can be provided in the West Davis Active Adult Community. The Davis Based Buyers System will specifically serve this housing need.
The West Davis Active Adult Community’s proposed Davis Based Buyers Program implements Measure R’s stated purpose of addressing “an adequate housing supply to meet internal city needs,” as it will give existing city residents and those with a preexisting relationship with the City of Davis the right to purchase homes within the West Davis Active Adult Community. This arrangement will allow existing “empty-nest” senior citizen homeowners within the City to relocate within the City, thereby permitting the existing homes to be purchased and occupied by families seeking to enroll students in City schools.
Measure R’s consideration of the internal city needs applies only to scarce resource – property seeking annexation into the City for development purposes – and does not apply to the existing homes and businesses within the City. If annexed, West Davis Active Adult Community will increase the housing within Davis by approximately 2%, which leaves approximately 98% of the housing in Davis will not be subject to Measure R or any Davis Based Buyers Program.
We have reviewed the legal framework which regulates residential real estate sales programs such as the Davis Based Buyers Program and we believe the Davis Based Buyers Program is legal and permitted under California law. The Davis Based Buyers Program conforms to the Unruh Civil Rights Act (California Civil Code Section 51 et seq.), and the California Fair Employment and Housing Act (California Government Code Section 12900 et seq.).
California courts have consistently held that a purpose of California’s antidiscrimination laws is to prevent arbitrary and anti-social discrimination. The Davis Based Buyers Program, which complies with Measure R’s stated purpose of addressing an “adequate housing supply to meet the internal city needs” is an example of the types of preferences California law specifically permits.
Consider, for example, Sargoy v. Resolution Trust Corp., (1992) 8 Cal. App. 4th 1039, where the court considered whether a savings and loan association that offered higher interest rates to senior citizens engaged in arbitrary discrimination of the Unruh Civil Rights Act.
The trial court implicitly found that Valley Federal’s practice was consistent with California’s well established public policy of assisting senior citizens as reflected in innumerable public and private sector discount and benefit programs. Relying on Koire v. Metro Car Wash (1985) 40 Cal.3d 24, a California Supreme Court opinion that tacitly approved such age=based discounts, the trial court found that Valley Federal’s practice did not constitute the type of insidious or arbitrary discrimination prohibited by the Unruh Civil Rights Act.
Should this court reverse the trial court’s decision, every discount or preference offered senior citizens would be placed in jeopardy by eliminating countless socially beneficial practices. Such a result would have a profound impact on the quality of life enjoyed by senior citizens throughout this state. The fundamental purpose of the Unruh Civil Rights Act is the elimination of antisocial discriminatory practices – not the elimination of socially beneficial ones. Reversal of this case would only serve to pervert the good intentions of the Unruh Civil Rights Act. Accordingly, the trial court’s decision to sustain the demurrer is affirmed by this court. (Emphasis added)
The holding in Sargoy is consistent with numerous judicial decisions which have held that the “objective of the [Unruh] Act is to prohibit businesses from engaging in unreasonable, arbitrary or invidious discrimination” Sunrise Country Club Association v. Proud (1987) 190 Cal.App.3rd 377. Considering McClain v. City of South Pasadena (1957) 155 Cal.App.2d 423, 435 held “A classification is reasonable [not arbitrary or invidious] if it has a substantial relation to a legitimate objective …. “, it follows that that the Davis Based Buyers Program, which seeks to address the “internal city needs” proscribed by Measure R is reasonable.
The Davis Based Buyers Program’s preference arrangement, which gives preference to the city’s residents and those with a pre-existing relationship to the city, is consistent with “certain types of discrimination [that] have been denominated ‘reasonable’ and therefore not arbitrary” Koire v. Metro Car Wash (1985) 40 Cal. 3rd 24. In addition, because the Davis Based Buyer System will apply only to the initial sale of a residence and will not apply to any subsequent resale of the residence, such one-time restriction, imposed by the property owner for the initial sales only, does not constitute an unreasonable restraint on alienation subject to California Civil Code Section 711.
Not only is the Davis Based Buyers Program not arbitrary, it is a reasonable and socially beneficial means of implementing Measure R consistent with the existing common practice of regional communities use of local preferences with respect to residential housing. For example, the City of Roseville’s affordable housing program states, “The City of Roseville Affordable Housing Program gives preference to applicants who currently live or work in Roseville or if the head of household or spouse is a Veteran.” 1 The City of West Sacramento’s First Time Homebuyers Program states, “Preferences will be given to persons living or working in West Sacramento”
The Davis Based Buyers Program is also consistent with the City of Davis’ DMC 15.020.060 Local Vendor Preference, which is a city ordinance that permits the city to grant preferences to local vendors for purchases by the city which are not subject to bids for public contracts.
Measure R requires the policies related to proposed housing projects address the internal needs of the City of Davis. The Davis Based Buyers Program specifically implements Measure R’s policy objectives in a manner that is consistent with all applicable legal requirements, including Unruh Civil Rights Act and applicable Fair Housing laws, is consistent with regional housing policies local preferences, and is consistent with the City’s own ordinance granting local preferences for certain types of purchases made by the City.
We hope the information provided above adequately addresses each of the issues raised by the City. If you have any questions regarding any aspect of this letter, please do not hesitate to contact me.
Inman Law Group LLP