Tacoma gleefully imposes RACIST requirement on local developer

Historical sign from the Lenox Theatre in Augusta, Georgia. Perhaps Tacoma will hang similar signs soon

Tacoma is requiring that half the units in a new Tacoma multiplex be marketed for sale especially to black people. Racist? Yes. Illegal? Yes. Morally defensible? I suppose the answer depends on whether you believe in generational punishment, affirmative action, and DEI.

What exactly is Tacoma requiring?

The City of Tacoma owns a large undeveloped property in South Tacoma (located at 6729, 6732, 6733, and 6737 South Proctor Street) and wishes to sell this property to developer, Louis Rudolph Homes, LLC. As a condition of sale, the city is requiring that 50% of the new units the developer builds must be marketed and sold to black people. The exact language of the requirement is as follows:

Developer [Louis Rudolph Homes, LLC] shall develop the Property to include, at a minimum, the following:

(iv) The initial sale of a minimum of fifty percent (50%) of the constructed units shall be affirmatively and intentionally marketed to moderate-income Black households to address the disparate homeownership outcomes for Black households identified in the City’s Homeownership Disparity Study.

Download the offending purchase and sale agreement here.

Tacoma’s Housing Division Manager Felicia Medlen further explained these requirements in fairly obtuse and nervous language at the the October 31, 2023 Tacoma City Council meeting:

We’re looking at, based on the zoning right now, it will allow –*cough* excuse me–it will allow 12 units. . . And so we worked out that 50% of those are going to be marketed to black households by, uh, by affirmative marketing efforts that the developer is willing to undertake, um, and actually is wanting to, so it is a minority developer, and they are very interested in furthering black homeownership for folks and providing home-homeownership options. So they’ve [the developer] committed to 50% of those units and really doing their due diligence, um, in affirmative marketing to get those into, um, black homeowner hands.

 Check out the city council meeting here (see agenda item no. 13, ~16:29 min).

In other words, the city will be requiring that 50% of the units constructed by the developer are marketed for sale to black families with the express intent that those units end up in the hands of black owners. The developer, Louis Rudolph Homes, LLC, doesn’t object to this arrangement because it’s a black-owned business.

What’s so bad about this racist marketing restriction?

This blog isn’t really about morality; it’s about the law. However, we’ll take a quick detour out of our area of expertise and into the dangerous terrain of moral philosophy.

We believe Tacoma’s goal of increasing black homeownership is understandable, but misguided. Black homeownership is low—around 40% nationally compared to white homeownership, which is at around 75%. This inequity is attributable to redlining, racial covenants, slavery, and other evil and racist policies that favored whites over blacks. In the absence of these policies, the playing field would have been level, resulting in a more equitable outcome where both races would have around a 65% homeownership rate (the current US average).

Nearly everyone will agree that America did something morally abhorrent here, but what exactly was it? Are racist policies the problem? Or are inequitable results the problem? We think the answer is obvious: racist policies are the problem and inequitable results are just a symptom.

When competing for a scarce resource like housing, the results will always be inequitable because not everyone who wants a house can own one. The same is true for any scarce resource: education, wealth, healthcare, goods, services, etc. The best things we can do are eliminate unfairness in the competition for these scarce resources and reduce scarcity by building more starter homes. In other words: Focus on progress and equality of opportunity, not on equity of outcome.

Tacoma’s racist restrictions are probably illegal

Racial restrictions on the sale of real property are thoroughly illegal at both the state and federal level. However, we can’t say with certainty that Tacoma’s restrictions are illegal until the courts have ruled on it and the parties have exhausted their appeals. In the meantime, we’ll provide a quick overview of some of the applicable statutes and case law.

Tacoma’s racist restrictions are probably illegal under Washington State Statute

Washington State has its own civil rights act under RCW 49.60. The most relevant section is RCW 49.60.224, which prohibits racially discriminatory covenants in real estate documents:

Every provision in a written instrument relating to real property which purports to forbid or restrict the conveyance, encumbrance, occupancy, or lease thereof to individuals of a specified race, creed, color. . . is void

Here, Tacoma seeks to require that 50% of the units in a new multiplex building are marketed solely to black people with the goal of “get[ting] those [units] into black homeowner hands.” This provision is a clear restriction on the conveyance of real property, since hispanics, asians, native Americans, whites, and others are intended to be left out.

Tacoma’s racist restrictions are probably illegal under the Federal Fair Housing Act of 1968

Federal statute, 42 U.S. Code § 3604, made it illegal to advertise housing in a racially discriminatory way. It is illegal:

(c) To make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial status, or national origin, or an intention to make any such preference, limitation, or discrimination.

Again, Tacoma is requiring Louis Rudoph Homes, LLC to market half of the new units exclusively to one race. That appears to be a pretty blatant violation .

Tacoma’s racially restrictive marketing provision are probably illegal under the Federal Constitution’s Fourteenth Amendment and Article I, Section 12 of the Washington State Constitution

What Tacoma is trying to do here is seems very similar to affirmative action at universities, except Tacoma’s efforts are even more blatantly racist. Whereas affirmative action at universities used race as one element of a “holistic” review process, Tacoma is using race as the only factor and setting a hard racial quota–50% of new units.

As you’ve probably heard, affirmative action was held to be illegal in the recent United State Supreme Court case, Students for Fair Admissions Inc. v. President & Fellows of Harvard College. The entire majority opinion is relevant, but the most relevant portion comes towards the end. In this section, the Court found that by advantaging one race, universities are inherently disadvantaging the others in violation of the Federal Constitution’s Fourteenth Amendment (aka Equal Protections Clause).

We have time and again forcefully rejected the notion that government actors may intentionally allocate preference to those “who may have little in common with one another but the color of their skin.” Shaw, 509 U. S., at 647. The entire point of the Equal Protection Clause is that treating someone differently because of their skin color is not like treating them differently because they are from a city or from a suburb, or because they play the violin poorly or well.

The Court reasoned that the “use of race” led to “fewer Asian American and white students being admitted,” with, in particular, an 11.1% decrease in the number of Asian American’s admitted. As part of its analysis, it rejected Harvard’s defense that race was not a negative as “hard to take seriously” because  “[c]ollege admissions are zero-sum. A benefit provided to some applicants but not to others necessarily advantages the former group at the expense of the latter.”

Housing is a zero-sum game too. Here, the developer is expected to build 12 units. By reserving half of those units for black people, Tacoma is to banning every other race from owning those same units. This is a clear violation of the Equal Protections Clause, and by extension, Article I, section 12 of the Washington State Constitution (for which Washington Courts use the Equal Protections Clause analysis).

What should Tacoma have done instead?

When a city has surplus real property, it often sells the property to a developer at a discounted price on the condition that a portion of the new units qualify as affordable housing. To qualify as “affordable,” units must usually be rented or sold to buyers that make less than 50-80% of the area median income (AMI). In other words, the condition of sale is that the developer must discriminate against higher-income families in favor of lower-income ones.

Is this income-based discrimination legal? Absolutely. A buyer’s income is not a legally protected trait, so it’s perfectly legal  to discriminate against wealthier buyers to help give lower-income buyers a leg up. Honestly, we think this is a great way to incentivize affordable housing construction.

Weirdly, Tacoma actually did a version of this with this very development. The developer agreement stated:

Developer shall develop the Property to include, at a minimum, the following: . . . (ii) Initial sale of 50% of the units shall be restricted to a moderate-income homebuyer (80% area median income for the Tacoma Pierce County Metro area or below);

Instead of trying to implement illegal, racist covenants, Tacoma could have insisted on deeper affordability for those 50% of units or perhaps required that 100% of the units be offered at 80% AMI. Income thresholds like these are a good and legal way to help disadvantaged people who need it.

Was the Tacoma City Council asleep at the wheel again?

In a word, yes. Not a single councilperson voiced any questions about restricting sale of housing units to just one race. On the contrary, Mayor Woodards and councilperson Walker characterized the illegal restriction as “exciting,” while councilperson Daniels praised it as “super super super exciting.” The council unanimously voted the restriction through. 

The council certainly deserves blame, but perhaps the bigger culprit is the Tacoma City Attorney’s Office. It’s not the council’s job to determine whether a proposal is legal or not–that’s the job of the city attorney’s office.

These facepalm moments seem to be a trend. Recently, we broke a similar story about how the city attorney’s office provided the city council with bad advice, paving the way for the Landlord Fairness Code to be voted into law. Perhaps there’s a staffing issue, as a recent job postings suggest that a lead Tacoma City Attorney’s Office position is up for grabs.

Anyway, it’s frustrating that we’re breaking local news of this stature. We yearn for the day when this website can go back to providing the boring legal commentary our readers know and love.

How can Tacoma fix this?

Ideally, Mayor Woodard or the Tacoma City Council will read this article and revise the purchase and sale agreement to formally rescind the racist marketing requirement. Perhaps they’ll also hire someone competent for their vacant city attorney position.

If Tacoma chooses to do nothing, it may have a civil rights lawsuit on its hands. The developer should expect to be roped in too.

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