Danielle Hankinson lives next door to a short-term rental in Kings Beach and she claims its impacts are significant. This summer, the 24-year resident called the fire department to report an open flame in a barbecue, the sheriff’s office for multiple after-hours noise complaints, Placer County’s STR hotline to have the fire and noise complaints on record, and the homeowners of the five-bedroom Airbnb rental to let them know about the noise and that a charcoal barbecue was illegal during a red flag day. Her main complaint is the number of people coming and going constantly, and that she cannot get in touch with the homeowners when things get noisy at the rental.
“This isn’t a hotel, this is a residential neighborhood,” said Hankinson, noting that nearly every other house on her street is a short-term rental. “Something needs to change. I’m not against STRs, but the density does impact you and you don’t have a neighborhood anymore.”
Stories like Hankinson’s abound in North Lake Tahoe, which is why Placer County District 5 Board Supervisor Cindy Gustafson wanted to address the issue when she was appointed to the board in April 2019. She told Moonshine Ink that even at that time “there was a huge amount of nuisance issues involving STRs,” including noise, trash, too many people occupying units, and safety hazards. Although many short-term rentals already existed, the county had no ordinance in place, nor a system to track the units. Gustafson said the fire department pointed to cases where a renter died of smoke inhalation in Incline Village, and renters in Dollar Point were exposed to carbon monoxide in 2019 because there was no code enforcement of short-term rentals. She saw clearly that there was a need for regulations.
“This is the biggest issue for this region, and certainly the biggest issue that divides our community up here,” Gustafson said of short-term rentals. “It has become a huge issue for discussion.”
PLACER COUNTY STARTS STR PROGRAM
The county began its short-term rental program in Jan. 2020 to establish permits and rules for vacation rentals in unincorporated areas of Eastern Placer County, and the first permit cycle began during the Covid pandemic. The ordinance set rules and regulations for short term rentals, including occupancy limits, parking regulations, maintenance of a local contact, requirement of bear boxes and trash service, quiet hours, and fire inspections. In 2020, approximately 2,600 short-term rental units were permitted, according to a county staff report. Home sales spiked, and more people were looking to buy in the area.
“We were hearing about what was going on with the housing market,” and that year-round locals were displaced from long-term rentals so the house could be sold or turned into a short-term rental, Gustafson said. “There were lots of emails from residents and businesses that said they were displaced and had no place to live … A lot of people reached out to me and said, ‘You’re right; this is out of control.’”
While revisions were made to the ordinance to address reoccurring complaints, Gustafson knew more needed to be done, quickly. She wanted to study what was going on in other tourist areas and jurisdictions, and what could work in Tahoe. In July, the board approved a 45-day moratorium on new permits. On Aug. 31, the board extended the moratorium to March 31, 2022, so it could devise a new short-term rental ordinance. The board will hear an update at its Dec. 14 board meeting, including an economic analysis on how STRs are affecting property values. Placer County Board of Supervisor Board meeting agendas can be found here.
“We have heard from a number of people who said they couldn’t afford property without rental income, which proves our point a bit,” Gustafson said. “The most important thing is to find balance with every opposing viewpoint. I am so committed to this community and in getting it right.”
Before the moratorium went into effect July 29, the county had approved 2,446 total STR permits for the year, including renewals from the previous year. Approximately 1,700 of those were in the Tahoe Basin, according to an Aug. 31 county staff report to the supervisors. Overall, Eastern Placer County has 15,747 housing units, which includes occupied homes, second homes, long-term rentals, and STRs.
“Additionally, based on continual research conducted by Revenue Services, it is estimated that there are approximately 230 properties renting on a short-term basis without a STR permit, which the county has been tracking for compliance,” the report states.
HOME BUYERS ARE NERVOUS
With the moratorium on new short-term rental permits in place and updated regulations being drafted in Placer County, some potential home buyers are holding off on purchasing until the rules solidify. The impact is also felt in neighboring Truckee, where the Town of Truckee approved its own moratorium on new STR permits in September to revise its STR ordinance. Truckee’s moratorium is in effect until June 15, 2022.
“We know houses fell out of escrow,” after Placer approved the moratorium, said Dave Wilderotter, owner of Tahoe Dave’s Skis & Boards, who was looking at two different homes in Kings Beach to purchase for employee housing. “Two homes got purchased out from under me. Then when the moratorium went into effect, they went back on the market.”
Wilderotter, who has purchased properties in Tahoe City and Truckee to house employees of his five shops, ended up buying a triplex in Kings Beach in October. He said the moratorium has “let everyone take a deep breath” and allow the county to study what the real issues are at hand. He sits on a citizens advisory ad-hoc committee that gives suggestions and input to the county on the STR ordinance.
“The moratorium didn’t effect home prices, but it did effect the frenzy” of home sales, Wilderotter said. “This doesn’t end it, but it moves the conversation forward … We don’t want to lose our community and neighbors.”
Realtor Alison Elder with Elder Group Tahoe Real Estate, Corcoran Global Living, said she hasn’t had escrows canceled in Placer County since its moratorium, but has had it happen in Truckee since the town’s own moratorium went into effect on Sept. 28. She said the difference is that Placer County allows a transfer of an existing STR permit with a home sale, while the Town of Truckee does not. She said she had $5 million in potential sales volume pull out.
Of Truckee’s 13,674 housing units, 1,079 are registered short-term rentals, which is 7.9% of the town’s housing units, according to an Oct. 20 Town of Truckee Short Term Rental Advisory Committee meeting summary. As of Oct. 15, 58 units were operating out of compliance in Truckee.
“People that are wary or need rental income have stepped out,” said Alder, who completes 125 to 150 real estate transactions a year in Truckee and North Lake Tahoe. “It has put a pause; they are nervous.”
Elder projects that home sales will be impacted by the new STR regulations in both Placer County and Truckee. She also believes one set of rules for all jurisdictions makes sense, noting that having different regulations in the area is confusing to consumers.
“We will see an impact to real estate,” Elder said. “I do see a soft impact now. It definitely will have a much bigger impact if these counties are not aligned.”
Placer County will hear a first draft of its revised ordinance in late January 2022 during a meeting in Tahoe, with adoption expected by March. Supervisor Gustafson said county staff has been meeting with small groups consisting of homeowner associations, hotels, property managers, businesses, and community members to hear their concerns and ideas. In addition to neighboring counties, Gustafson said Placer is also looking at what the cities of La Quinta, Santa Cruz, Moro Bay, and Steamboat Springs, Colo. have done to address the issue.
“We are looking at a whole range of solutions,” Gustafson said. “It is a crisis; it’s really changed our housing structure.”
Gustafson said she is in favor of setting “some level” of a cap, possibly shortening quiet hours from 10 p.m. to 9 p.m., and imposing higher fines for those who don’t follow the county’s rules.
Tahoe Moon Properties Owner Jill Schott has attended several community meetings, including those with her fellow property managers. She is optimistic about the new ordinance.
“I think the moratorium was a really good thing,” said Schott, who manages 80 properties on the North Shore. “About five years ago, everything changed. It’s when people started renting out their houses without local representation. A ton of people who rent their homes live four to five hours away.”
Schott, who has owned her business for 22 years, said she is committed to the issue and finding solutions. As a property manager, she says “we look at how we can set the standard” on how to run a short-term rental. Her focus is on the homeowners who do not follow the county’s rules on short-term rentals and believes larger fines should be levied for operating without a permit.
“Property managers are looking at how we can help this,” Schott said. “This is our livelihood, but we know people are suffering.”
Other STR ordinances around the region
Town of Truckee: Truckee enacted its short-term rental program in Jan. 2021. The town currently has a moratorium on new permits until June 15, 2022 while it reviews its program.
El Dorado County: The county enacted its Vacation Home Rental program in January 2019. On Aug. 24 of this year, the El Dorado County Board of Supervisors adopted an updated Vacation Home Rental Ordinance, which adds a 500-foot buffer around all permitted VHRs, which went into effect Oct. 1. In December 2020, the board approved a 900-unit cap in the Tahoe Basin; the limit was reached five months later. As of Sept. 16, there were 95 applications on the waitlist.
Washoe County: The county’s short term rental ordinance, which went into effect in August, applies only to unincorporated areas, which includes Incline Village. (Permits within city limits of Reno or Sparks are not available at this time.) The county is focusing on those STRS without permits or applications on record, then will move to properties with documented chronic nuisance issues.