Legal Opinion Letter to City on Legality of Davis Based Buyers Program

(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.

Signed,

Bruce Inman

Inman Law Group LLP



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39 Comments

  1. Eric Gelber

    I can’t help but point out that the photo accompanying the letter includes maybe one person who would qualify to purchase or live in 80% of the homes in the proposed development. Consider that deceptive photo in evaluating the legal opinion.

    1. Keith O

      Eric, I was just about to post the same thing but you beat me to it.  I doubt there’s even one person in that photo that qualifies for the senior housing.  Talk about a full press when it comes to pushing this project.  I wonder which side the Vanguard will come down on for the approval of this development.  I think we already know.

        1. Ken A

          My guess is that “grandpa” (with the gray hair) is just 48 and his 38 year old first wife is the mother of the 7 year old boy and 5 year old girl in the photo (the African American couple probably adopted the half latina half white girl).

          We were just talking with a 95 year old Davis grandma who was telling us that half the girls in her Stanford sorority were engaged “before” graduation and the rest were engaged and married within a couple years.

          Today there are a few people that marry a college sweetheart after graduation but it seems like most college educated women don’t get serious about getting married until they are in their late 20’s and most men that go to college are waiting until their late 30’s.

    2. Howard P

      Eric… Inman knows CCR’s and applicable law cited, better than you know the back of your hand… notice the ‘caveats’ in his writings, some of which I highlighted @ 7:37.

      The piece, as a whole, could be misleading… but, technically correct.

      Am surprised Inman signed the letter, as written…

    3. Eric Gelber

      I also have to add that the caption, “Taking Care of Our Own” brings to mind the slogan, “America First,” with its not entirely dissimilar implication.

  2. Howard P

    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.

    “nuff’ said”… almost…

    Can think of half a dozen ways to “game” that…

    1. Eric Gelber

      Howard – With all due respect to your legal expertise, that’s hardly “nuff’ said.” Here’s the complete language of Civil Code section 711:

      Conditions restraining alienation, when repugnant to the interest created, are void.

      I’d say there’s a lot more to be said before reaching the conclusion stated in the letter.

        1. Eric Gelber

          Key words… “initial sale”… 

          Howard – Not sure how that’s key. If a housing practice is discriminatory or otherwise unlawful, it doesn’t matter that it only applies to the initial sale.

      1. Howard P

        To be clear Eric… the manner in which the letter was written, and the way it is ‘meant’ to be used, via release to the VG, should raise a healthy dose of scrutiny and skepticism…

  3. Todd Edelman

    This arrangement will allow existing “empty-nest” senior citizen homeowners within the City to relocate within the City

    [‘s periphery, at a distance that the Draft EIR projects will facilitate only 2.85% of journeys outside the development for shopping, socializing etc. not by private car, with a bicycle modal share of perhaps 1%, 3000% lower than the goal for bicycle modal share in Davis by 2020, and similarly marginal walking numbers],

    thereby permitting the existing homes to be purchased and occupied by families

    [and anyone from anywhere]

    seeking to enroll students in City schools

    [or actually anything, including keeping homes empty for speculative purposes].

    1. Ron

      To paraphrase a famous movie, “pay no attention to the . . .” (glaring weaknesses regarding this idea/proposal) that Todd noted in his comments.

      (Yeah, focus on “legality” instead, even if the idea itself makes no sense.) 🙂

  4. David Greenwald

    One of the issues that arose out of Cannery is that people believe that there is internal demand for housing in Davis that is basically unmet.  When Cannery was proposed, it was to serve that segment.  But there were a number of errors including the fact that the houses were too expensive that led to the perception (I’m using that word because i haven’t seen the actual data) that Cannery is not serving internal pent up demand, but rather simply providing housing for people escaping the Bay Area.  There is nothing wrong with people from the Bay Area, but that wasn’t the expressed purpose of the development.

    So the developers here are trying to use senior housing as a means to allow people who want to come here to live near their family or people who live here and want to downsize to do so and they postulate that by restricting the housing to those who have ties to town, they can accomplish.  Again I don’t see the cynical motivation that some are suggesting.  Maybe it’s the wrong approach, time will tell. (The post that I was initially responding to was removed but I wanted to expound upon this point).

        1. Ron

          I realize the point, but good luck with that.  (As Todd and others have noted, regarding the houses being “vacated”.) 

          (More “minidorms”? Purchased by speculators or those sending their kids off to college? Kept for family members, to maintain low property taxes for the former occupant’s children?)

          1. David Greenwald

            The addition of apartments in town and on campus figures to end a lot of that speculative buying.

        2. Ron

          Maybe.  Probably not, for locations close to campus.  Nothing will stop that, as it will remain cheaper, closer, and more appealing to students.  (As with most folks, they’d probably rather live in a house, vs. a megadorm. For lots of reasons.)

          In any case, it’s “theory”, regarding what retirees would do with their former residences. And, there’s not “one answer”. But, to assume that they’d primarily be sold to (existing) families already living in Davis is probably not a logical assumption.

        3. Ron

          Also, I wouldn’t assume that all minidorms are the result of “speculative” purchases.  Some might still be owned by the original occupants. Perhaps some would do so for other reasons, as well (e.g., to keep the property in the family, long-term).

          Nothing like Proposition 13, is there?

          1. David Greenwald

            The driver for keeping them as “dorms” as opposed to selling or renting to families is still scarcity.

          1. David Greenwald

            Yes and no. Yes in the sense that they are not discussing the topic specifically. No in the sense that the bigger picture is the motivation for why they have proposed what they have proposed.

        4. Keith O

          In other words, the point is not about keeping people out but rather serving a specific need.

          It’s not keeping people out, but it is telling them where they can’t buy if they so choose.  This is just so juicy, we claim to be a sanctuary city where everyone is supposedly welcome unless of course you’re from out of town and want to buy a home in a certain community.

          1. David Greenwald

            So if you’re goal is to use a specific development to create housing to accommodate internally generated needs, do you simply create housing and hope for the best or do you attempt to make sure that the housing serves the needs you intend it to? Understand that I’m not advocating for anything here, I’m simply at least trying to allow people to understand the logic behind the proposal. It may not work, it may be a bad idea, it’s worth at least discussing.

        5. Ron

          David:  There is no “scarcity”, regarding for-sale properties (new, or “pre-owned”).  Anyone with money can find them right now. (Actually, I wouldn’t be surprised if they can find an apartment to rent quite easily, as well.)

          As always, money talks.

          Do you think that those vacating their old properties will necessarily sell them at “bargain prices”, compared to properties that are on the market, right now?

          Howard:  This is on-topic, as it relates to the purpose of the idea presented in the article.

        6. Howard P

          Here’s the deal, folk…

          Whether Davis-Senior, permanently affordable, or any other of the 31 flavors, saying any housing or non-housing uses are “permanent” is specious…

        7. Eric Gelber

          So if you’re goal is to use a specific development to create housing to accommodate internally generated needs, do you simply create housing and hope for the best or do you attempt to make sure that the housing serves the needs you intend it to?

          Aside from the potential legal considerations, the question is, do we address a local need by excluding “outsiders”? Should a city be able to decide who can move there? What if all new local developments adopted a similar rule based on meeting some local need? What if a significant number of cities in the state adopted similar policies? How does this impact the perception of Davis as a non-diverse (perhaps even elitist?) community?

          I’m sure we can find alternatives other than the two you list.

          1. David Greenwald

            “I’m sure we can find alternatives other than the two you list.”

            I asked the question honestly, so I’m all ears on alternatives.

  5. Ken A

    It is not just a “perception” that Davis is an elitist community, for over 50 years most in town have turned up their noses to our neighbors who are not “good enough” to live in Davis and live in Woodland, Dixon in West Sac (you will have a hard time finding a single person from Woodland, Dixon or West Sac high schools that competed against the kids from Davis High in sports who won’t agree that Davis is an elitist community)…

  6. Tia Will

    Ken

    for over 50 years most in town have turned up their noses to our neighbors who are not “good enough” to live in Davis and live in Woodland, Dixon in West Sac “


    Please excuse me since I am a relative newcomer having lived here only 25 years continuously. I did not attend high school here and so I honestly do not know what you mean by “turned up their noses”. Are you suggesting that if a resident of Woodland, Dixon or West Sac had enough money and wanted to live in Davis, no one would have sold to them ? Or do you mean that at sporting events, ugly taunts were used ?

    Neither behavior would be appropriate, but there is a huge difference between economic, social or ethnic taunts, and selectively declining to sell in order to deny people of a given group housing. I have seen evidence of the former, but not the latter in my time here.

    1. Ken A

      It looks like the people that have been doing the former (taunting and looking down on people whose parents didn’t go to college and who can’t afford to buy a home in Davis) for decades are now trying to to the latter (setting up a system to keep people that are not “our own” from buying new homes in Davis)…

  7. Ken A

    It I owned a bunch of land out West of 113 that I wanted the mostly “elitist” voters in Davis to allow me to develop I would have an ad campaign letting people know that we want to fill it with “our own” people like the nice widow of a UCD professor (who went to Radcliffe) that lives next door and the young couple of non tenured Davis professors (who met at Princeton).  I would play down any chance of “out of towners” like the Latino family from Woodland that wants their kids to go to better schools (and lower the average SAT scores for “our own”) or the duck hunting Trump voter from Winters (and his “deplorable” family that won’t have “Davis Values” and might even own a SUV)…

    P.S. I heard the South Park creators visited Davis before writing this (classic) episode:

    https://www.youtube.com/watch?v=gXZeq9eXAys

     

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