Friday, June 8, 2007
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S.C. Approves Ordinance Designed to Protect Downtown Businesses
Court Unanimously Rejects Merchants’ Argument That Law Unconstitutionally Stifled Competition
By KENNETH OFGANG, Staff Writer
A local ordinance designed to protect businesses located in a downtown commercial district by prohibiting stores in the area where the local mall is located from selling certain types of goods is constitutional, the state Supreme Court ruled yesterday.
Rejecting a contrary ruling of the Fifth District Court of Appeal, the high court unanimously held that the City of Hanford’s 2003 zoning ordinance does not invidiously discriminate against a couple who wanted to sell furniture in their home furnishings store in the “planned commercial” zone.
The ordinance bans certain types of businesses prevalent in the downtown area, including furniture stores, from operating in the PC zone. But it allows department stores in the PC zone containing at least 50,000 square feet of retail space to sell furniture within an area of no more than 2,500 square feet.
Adrian and Tracy Hernandez, operators of a furniture store downtown as well as a home furnishings and mattress business located in a leased building in the PC district, sued on equal protection grounds after the city told them they could not sell bedroom furniture at the latter store.
They complained that several stores in the district—including Wal-Mart, Home Depot, Sears, Gottschalks, and Target—sold furniture at the time or had done so in the past.
Legitimate Purposes
Kings Superior Court Judge Peter M. Schultz upheld the ordinance, but the Fifth District reversed. While the city had a legitimate interest in promoting the downtown district, the panel said, it was irrational to allow the large stores, but not the Hernandezes, to sell furniture.
But Chief Justice Ronald M. George, writing for the high court, said the Court of Appeal had missed a larger point—that the ordinance had two legitimate purposes: “protecting and preserving the economic viability of the city’s downtown commercial district by generally prohibiting within the PC district a particular retail activity...that is a prominent feature of the downtown commercial district, and...” attracting to, and retaining within, the city’s PC district the type of large department stores (which typically carry furniture) that the city views as essential to the economic viability of the PC district.”
Cities, the chief justice explained, may take into account “numerous factors and interests, including economic considerations” in regulating land use. Language in past Court of Appeal decisions suggesting that a zoning ordinance might be held unconstitutional merely because it regulates economic competition “is quite overbroad” and “potentially misleading,” George wrote.
George’s Reasoning
An ordinance that impacts economic competition, whether by accident or design, will be upheld, the chief justice said, as long as “its principal and ultimate objective...is to achieve a valid public purpose such as furthering a municipality’s general plan for controlled growth or for localized commercial development, rather than simply to serve an impermissible anticompetitive private purpose such as investing a favored private business with monopoly power or excluding an unpopular company from the community.”
George went on to say that an ordinance will not be deemed to create an irrational classification solely because it has multiple objectives that may conflict. He cited Fitzgerald v. Racing Assn. of Central Iowa (2003) 539 U.S. 103.
The Supreme Court in that case upheld Iowa’s 1994 law that allows racetracks to operate slot machines, which had previously been allowed only on riverboats, but taxed the racetrack machines at up to 36 percent of the take, compared to a 20 percent maximum tax on riverboat slots.
The Iowa Supreme Court held that the higher tax rate for racetrack slots violated the Equal Protection Clause, saying it was not rationally related to the law’s principal objective, which was to help the racetracks.
In reversing, the nation’s highest court said the state could rationally aid the racetracks by allowing them to have slots, but at the same time protect the riverboat operators and the communities along the river by taxing the riverboat slots at the existing, lower rate.
George said the Hanford ordinance had a similar dual purpose, rejecting the Court of Appeal’s conclusion that if the city continued to allow department stores to sell furniture in 2,500 square feet of space, it had to allow all retail stores in the district to do likewise. That resolution, the chief justice said, “would have undermined the ordinance’s overall objective of permitting the sale of furniture in the PC district only to the extent such activity is necessary to serve the city’s interest in attracting and retaining large department stores in that district.”
The attorneys who argued the case in the Supreme Court agreed that the decision was a significant victory for local governments.
Russell K. Ryan, the Fresno attorney who represents the Hernandezes, said he was considering a petition for certiorari to the U.S. high court, but that he had “slim” hopes of it being granted. If yesterday’s ruling stands, he said, equal protection challenges to zoning ordinances will become impossible as long as the legislative body “states a public reason” for its action.
Steven Mayer of San Francisco, the attorney for Hanford in the case, said he expected to prevail but was surprised that the decision “was as strong as it was.” He told the MetNews he was particularly pleased the court explicitly rejected the “troubling language” of the earlier cases regarding economic competition.
He said he was “quite confident” a certiorari petition would be denied. “The U.S. Supreme Court is not going to set itself up as a super zoning board,” he commented.
The Pacific Legal Foundation filed an amicus brief supporting the plaintiffs, while the League of California Cities and the California State Association of Counties supported Hanford.
The case is Hernandez v. City of Hanford, 07 S.O.S. 3028.
Copyright 2007, Metropolitan News Company