Associated Home Builders of the Greater East Bay, Inc. v. City of Newark

Opinion

DRAPER, P. J.

Plaintiff is an incorporated association of contractors engaged in the construction of residential buildings. In this declaratory relief action, it seeks to establish the invalidity of a license tax ordinance (No. 91) of defendant, a general law city. This ordinance, concededly solely a revenue measure, imposes a tax upon the business of constructing dwellings. The measure of the tax is the number of bedrooms in the units to be constructed. It is required to be paid before the building permit is issued, and the fees received are to be deposited by the city in a “capital outlay fund.” Another ordinance (No. 98) imposes a license tax upon substantially all businesses, including construction. Plaintiff association attacks the ordinance as a discriminatory denial of equal protecuon oí toe law. The trial court held that the tax is based upon a reasonable classification, and thus is not discriminatory or arbitrary. Plaintiff appeals.

The power “ ‘to make classifications ... for the purpose of taxation is very broad. ... A statute is presumed to be constitutional until the contrary appears.’ ”

(Fox etc. Corp.

v.

City of Bakersfield,

36 Cal.2d 136,141 [222 P.2d 879].)

Appellant’s core argument is that the tax discriminates unreasonably in taxing residential construction at a substantially higher rate than the building of commercial and industrial structures. (3) But when a legislative enactment is attacked as violative of the equal protection clause, “if facts reasonably can be conceived that would sustain it, their existence is presumed, and the burden of showing arbitrary action rests upon the one who assails the classification.”

(Burks

v.

Poppy Construction Co.,

57 Cal.2d 463, 475 [20 Cal.Rptr. 609, 370 P.2d 313].) These and many other decisions have upheld classifications for tax purposes against like attacks (e.g.,

Willingham Bus Lines, Inc.

v.

Municipal Court,

66 Cal.2d 893 [59 Cal.Rptr. 618, 428 P.2d 602];