Opinion ID: 2612255
Heading Depth: 2
Heading Rank: 5

Heading: reduction in price

Text: The last issue we consider is the constitutionality of the provision in Ordinance 79-53 that provides for a five percent reduction in the sale price of a parcel for each year of residency in the Borough, up to a maximum reduction of fifty percent in the sale price. [8] This issue was not raised by the parties in their cross-motions for summary judgment, nor was it considered by the superior court when it rendered its decision. Under these circumstances, we normally would not consider it. E.g., Anchorage Asphalt Paving Co. v. Lewis, 629 P.2d 65, 70 (Alaska 1981); Hill v. Ames, 606 P.2d 388, 390 (Alaska 1980); Jeffries v. Glacier State Telephone Co., 604 P.2d 4, 7 (Alaska 1979). This is not, however, a typical case. Since the superior court entered its judgment, the United States Supreme Court has issued its decision in Zobel III, 457 U.S. 55, 102 S.Ct. 2309, 72 L.Ed.2d 672 (1982). Zobel III so obviously calls into question the constitutionality of reducing the price in the sale of government lands based on length of residence, we have chosen to address the issue in this case. See Wright v. Vickaryous, 598 P.2d 490, 499 (Alaska 1979) (This court ... may notice a claim not raised below to prevent a miscarriage of justice.). Accordingly, we requested the parties to file supplemental briefs discussing the impact of Zobel III on this case. We also invited the state to file a brief as amicus curiae because the Alaska Land Act, AS 38.05.005-.370, contains a similar provision granting discounts based on length of residency. [9] In Zobel III, the United States Supreme Court held that the initial distribution plan for the permanent fund dividend program, AS 43.23.010, violated the equal protection clause of the fourteenth amendment because it did not rationally further any legitimate state purpose. We believe the same infirmity exists in the discount provisions of Ordinance 79-53. The state correctly notes that the majority opinion in Zobel III only held that the retrospective award of payments, based on number of years of residence since statehood in 1959, was unconstitutional. The Court specifically stated, We need not consider whether the State could enact the dividend program prospectively only. 457 U.S. at 64, 102 S.Ct. at 2315, 72 L.Ed.2d at 680. The dicta in that opinion, however, and the concurring opinions of Justice Brennan (with whom three other justices joined) and Justice O'Connor strongly suggest that the Court would hold such a program unconstitutional if it were to decide the issue. In his concurring opinion, Justice Brennan states, A scheme of the sort adopted by Alaska is inconsistent with the Federal structure even in its prospective operation. 457 U.S. at 67, 102 S.Ct. at 2316, 72 L.Ed.2d at 682 (Brennan, J., concurring) (emphasis added). Justice O'Connor indicated that she believed the entire dividend program was unconstitutional because it violated the privileges and immunities clause of article IV of the United States Constitution. 457 U.S. at 78, 79, 102 S.Ct. at 2322, 2323, 72 L.Ed.2d at 689, 691. (O'Connor, J., concurring). Thus, five justices  a majority of the court  indicated that they would hold even a prospective program unconstitutional. The state contends that price discount programs are distinguishable from the permanent fund dividend disbursement program struck down in Zobel III because the discount programs do rationally further a legitimate government purpose; namely, inducing residents to remain in their communities and/or Alaska. The state suggests that there were initially two purposes sought to be fulfilled by price discount programs: first, rewarding residents for past contributions, and second, providing an incentive for residents to remain. The state concedes that in view of the holding in Zobel III  that residents cannot be rewarded for past contributions measured simply by length of residence in the state  the first purpose cannot be relied upon to justify the price discount programs. The state argues, however, that the second purpose  inducing residents to remain  is a legitimate government purpose and the price discount programs rationally further it. We cannot agree with this analysis. It is undoubtedly true that some persons may remain in their community or in the state to take advantage of the increasing discounts available to them in the purchase of government lands and thus the price discount programs do further the purpose of inducing residents to remain. This incentive, however, is produced by creating various classes of concededly bona fide residents, based on how long they have been in the state or in their community. We read Zobel III as prohibiting this. As the state indicates, the Court in Zobel III struck down a program that created fixed, permanent distinctions between an ever increasing number of perpetual classes of concededly bona fide residents, based on how long they have been in the State. 457 U.S. at 59, 102 S.Ct. at 2312, 72 L.Ed.2d at 677. There are only ten classes of residents created by the price discount provision of Ordinance 79-53, inasmuch as the maximum discount of fifty percent, granted at five percent per year, is reached upon ten years of residency in the Borough. Furthermore, the classes are not fixed or permanent because, after ten years, all residents receive the fifty percent discount and are thus treated equally. Ten years, however, is a substantial period of time for `some citizens [to be] more equal than others.' 457 U.S. at 58, 102 S.Ct. at 2312, 72 L.Ed.2d at 685 (Brennan, J., concurring). [T]he Citizenship Clause of the Fourteenth Amendment expressly equates citizenship only with simple residence. That Clause does not provide for, and does not allow for, degrees of citizenship based on length of residence. And the Equal Protection Clause would not tolerate such distinctions. 457 U.S. at 69, 102 S.Ct. at 2317-18, 72 L.Ed.2d at 683-84 (footnotes omitted). To the extent that discounts are granted for years of residence completed prior to the enactment of the ordinance, it is not even a close question that Ordinance 79-53 is unconstitutional. Paraphrasing the Court in Zobel III, Assuming arguendo that granting [five percent discounts] for each year of continued [Borough] residence might give some residents an incentive to stay in the [Borough] in order to reap increased [five percent discounts] in the future, the [Borough's] interest is not in any way served by granting greater [discounts] to persons for their residence during the [ten] years prior to the enactment. 457 U.S. at 62, 102 S.Ct. at 2313, 72 L.Ed.2d at 678-79 (footnote omitted). Thus, the avowed purpose of inducing residents to remain in the Kenai Peninsula Borough is not rationally furthered by granting price discounts to persons for their years of residence antedating the enactment of the ordinance. We further hold that it is impermissible for the Borough to apply its price discount program prospectively, as well, because the program cannot be implemented without creating a multitude of classes of residents that receive a benefit correlating to their length of residence. With respect to the purchase price of government lands, no legitimate interest justifies the disparate treatment of bona fide residents based solely upon the length of their residence. [10] We accordingly hold that the provision of Ordinance 79-53 granting reductions in the purchase price of Borough lands based upon length of residence is unconstitutional as violating the equal protection clauses of the United States and Alaska Constitutions. [11] AFFIRMED in part and MODIFIED in part.