Editor’s note: Jan. 23 at 10 a.m.: Updated to reflect that the North Shore specifically hasn’t had new hotels constructed since the 1960s.
As economy that is majorly reliant on tourism, Lake Tahoe sees a great deal of visitors come its way. The hotels in South Lake house many of them, but in Truckee and on the North Shore, that latter of which hasn’t seen a new hotel constructed since the 1960s, short-term rentals — people renting out their own residences — have proliferated as the lodging option.
They’re next door, they’re upstairs, they’re down the street; STRs are, quite literally, everywhere. Concern over STR use around the Tahoe Basin heightened over recent years among community members, surging in 2020 as Covid-19 sent people suddenly able to work remotely up to the region, whether to recreate, long-term visit, or make the big move of relocating their home. Jurisdictions heard the cry and responded with a series of restrictions and moratoriums on the operations of STRs.
The issue, though, does predate Covid. In 2018, South Lake Tahoe residents approved Measure T, which phased out vacation home rentals from residential and multi-family properties by the end of 2021. Caveats: In 2020, concessions were made for qualified full-time residents to rent part of their home and litigation against the measure is ongoing.
In January 2021, El Dorado County established a registration cap for vacation rental permits in its Tahoe reaches at 900.
In Eastern Placer County, the board of supervisors repealed and replaced the existing STR ordinance on Jan. 25, 2022, to institute a cap at 3,900 and address community concerns with STR nuisances (like trash, parking, and noise).
The Town of Truckee created its first STR permit process in the summer of 2020, then the following year fashioned an ordinance establishing an STR registration cap of 1,255 and a slew of other requirements that went live May 12, 2022.
Incline Village’s Washoe County enacted an ordinance in May 2021 to formalize a permitting process for STRs. There is currently no cap on STR permits in Washoe.
The intention behind these efforts is to balance the region’s tourism-based economy with maintaining community character. The restrictions are also meant to address the shortage of affordable housing, the theory being that by making the purchase of homes less appealing to those who wanted to short-term rent and can’t, housing prices could drop to more affordable levels for the local workforce. We hear these stated reasons from numerous council and board members, business owners, and community members alike.
During coming months, both Truckee and Eastern Placer staff will make recommendations to clean up and clarify current language for STR ordinances and caps, still in their pilot periods. Community members are both frustrated and encouraged by the changes.
“Really, the goal is to continually improve the program. No ordinance is ever perfect, so we learn as we go,” said Emily Setzer, a principal planner and manager of the Placer County’s short-term rental program.
In addition to federal inflation and the winding down of the pandemic (see How’s the Market on p. 35), effects of the restrictions are making themselves known: In November, median prices of single-family homes dipped below $1 million for the first time since January 2021, and real estate agents are seeing a slowdown of buyer demand — some of whom are reportedly, according to local expert Christy Morrison, not buying specifically because of the STR restrictions. Morrison isn’t the only real estate agent frustrated by the impositions.
Capped, with room to spare
Interestingly, STR restrictions are playing out differently in Truckee and Eastern Placer.
In the town, where 9% of the housing stock functions as STRs, all of the currently allowed 1,230 registration certificates are spoken for, with a waitlist of 164 interested parties and 25 additional future slots allocated for those who can provide long-term workforce housing on a separate property (the latter is a conversation that went before town council Jan. 10).
New owners of a residence must wait one year before signing up to short-term rent.
“The 365-day waiting period when a new owner purchases a property before they can even sign up for the waitlist [was] to disincentivize the kind of the purchasing of a home strictly to short-term rent,” said Rosie Johnson, a program analyst with the town’s STR division.
Other requirements in the Town of Truckee ordinance include phasing out STRs in accessory dwelling units, increasing penalties for violations, and more. In the lead-up to establishing its current regulations and to allow time for examining the situation, the town imposed a moratorium from September 28, 2021, to June 15, 2022, on new STR registration certificates.
That day [the Truckee moratorium went into effect], we lost seven transactions, about $60,000 worth of commissions.”
~ Christy Morrison, real estate agent
On June 13, 2022, the day the STR waitlist went live, over 100 applications poured in within the first 10 minutes, Johnson said.
“Placer County moved forward with their moratorium urgency ordinance [from July 31, 2021, to March 31, 2022] prior to the Town of Truckee,” Johnson said. “In response to their urgency ordinance, we also moved forward with a moratorium and urgency ordinance for short-term rentals because it was also changing the real estate market in our area. People already were seeking Truckee to purchase to short-term rent, but more so, it was because we didn’t have any further parameters in place, we already saw the market changing.”
Placer’s cap, at 3,900, has not been met, to the surprise of county staff.
As of publication date, there are 3,011 registered STRs in the Tahoe portion (meaning 15.8% of its eastern county housing stock operates as an STR), 256 applications pending, and no one on the waitlist.
“We were using estimates based off of data from [Transient Occupancy Tax] and I think we were a little surprised that we didn’t have that many come in,” Setzer explained. “But I think that also offers some flexibility and opportunity for our board to decide if that cap is really what they want.”
Placer’s cap does not include the roughly 160 primary owner-occupied properties that occasionally STR (Truckee’s cap does), though that may change. Setzer told Moonshine that Placer staff is considering bringing that group into the cap, “but we would be looking to carve aside a segment of that total cap number just for them.”
There is no year-long cooling period currently for Placer County sales, though staff is actively considering the concept and it could be brought forward as an ordinance amendment, Setzer said.
Until the board reviews the success and changes of the STR restrictions at the end of winter, Placer is looking to staff up its code compliance and short-term rental teams, improving the logistics of the online application process, and continuing to meet with a stakeholder working group formed specifically for STR goings-on.
Real estate of mind
There’s a fairly strong consensus with real estate agents that the STR restrictions hinder, not help.
“That day [the Truckee moratorium went into effect], we lost seven transactions, about $60,000 worth of commissions,” said Christy Morrison, a real estate agent of 23 years in the area and founder of the recently launched Home & Slate Real Estate. Morrison has lived in the area since she was 13 years old. She added that “nine times out of the 10 buyer calls I get, all are asking about the fact, can they short-term rent?”
Morrison is a member of the Tahoe Sierra Board of Realtors, which formally opposed the town’s restrictions in a February 2022 letter, citing in part a need for town council consideration of whether it “has any place inserting itself into a complex, fragile, tourism-based outdoor economy; especially without fully fleshing out all the downstream consequences to property devaluation, tourism accessibility, and desirability.”
Specifically, Morrison finds fault with the assumptions that STRs are to blame for the region’s housing crisis, and that restricting people from short-term renting means they’ll opt to long-term rent. She pointed out that people buy second homes in Tahoe to use them, not to rent them out long-term (an idea supported by others in A Numbers Game: Short-Term Versus Long-Term Renting and Why People Are Choosing Which, an Ink story from February 2022).
“Because the Town of Truckee is so disorganized and puts up such roadblocks for people, that is why we have a housing shortage,” Morrison said, referring to challenges for people to build accessory dwelling units on their properties. “We have a housing shortage because people take their homes off the [long-term rental] market because they’ve had bad experiences and it’s really hard for us to create new inventory when you have to deal with the Town of Truckee and deal with, like, these kinds of inconsistencies, these costs, and the time.”
As an example, one of Morrison’s clients is renovating her home to add an ADU and has spent between $30,000 and $40,000 trying to get everything permitted through the town. The jurisdiction, Morrison presses, should reward people installing ADUs — which in turn can house the local workforce long-term — not make them pay tens of thousands of dollars to get units permitted. The town does not allow ADUs not permitted prior to Jan. 1, 2020, to register as STRs as it considers these units more suited to long-term workforce housing.
“There’s lots of land around here too that people could build workforce housing [on], but it’s so expensive and the town is so hard to work with that no one’s going to do that,” she added. “The numbers don’t make sense. If the Town of Truckee actually really wanted to increase the housing stock in this area, they would move towards, like, positive ways to increase the inventory and not blame our second-home community of those people that pay property taxes, that pay for our schools, that pay for our roads, and pay for all the amenities that we love up here, and not blame them for our situation right now.”
Do we want to create a space
where people can actually live
and not just have second residences and rentals? … I feel
like it needed to happen.”
~ Stefanie Scapini, real estate agent
Stefanie Scapini is a founder and current agent with Tahoe Agent Group. She considers herself one of the unique real estate agents who’s not angered by the STR restrictions. Rather, she feels that they were necessary.
“Has it slowed down the market? Yeah,” Scapini said. “But do we want to create a space where people can actually live and not just have second residences and rentals? … I feel like it needed to happen … We all need to step outside of our professional viewpoints and see what benefits the people that live in our community, not just what drives a profit margin for a select few.”
She added that those in the real estate business who are frustrated with battening down the STR hatches have a lot of their income based around the types of buyers seeking out the opportunity to short-term rent. “If you’re dealing with that type of a buyer, it’s like an attorney: You’re going to take the side you’re on.”
In coming months
While staffers with the town and Placer County continue to engage with and educate the local communities about STR limitations, they are simultaneously considering whether the ordinances and amendments adequately address the hot-button topic of vacation home rentals.
“Have I heard anything in regard to further regulation?” Johnson with the town posed. “No, but there is always a potential. I feel that this council has been very fair and open to hearing a public commentary.”
In addition to streamlining the ADU process through the town, and thus supplying more housing stock, Morrison sees another solution for improving the housing crisis in lieu of restricting STRs: Allocate second-home ownership and STRs to specific neighborhoods. For example, the Sierra Meadows, Glenshire, and even Prosser neighborhoods traditionally consist of primary homes; while Tahoe Donner is overwhelmingly a second-home mecca.
“I feel like people should have the choice, like if you want to short-term rent, if you want to be a second homeowner, these are the areas that are primarily set up for this. Let’s just not do it in the areas that are more geared toward primary home ownership,” she said.
In Placer County, staff is also pursuing amendments to ease North Tahoe development restrictions through an amendment to the Tahoe Basin Area Plan. Both this update and short-term rentals underscore how difficult it can be to appease the entire community’s viewpoints.
“The feedback we’re hearing on the cap is pretty divided from the community members,” Setzer said. “A lot of the full-time residents here, we’re hearing there’s too many STRs in the neighborhoods. From the people who own STRs or manage STRs, they’d like to wait it out and see if we hit the cap, see how it plays out. We have a lot of mixed opinions and I’m not sure we’ll ever get consensus, so we’re trying to walk that fine line and bring forward some options for our board to consider.”
Opponents of STR caps claim that people buy houses here to use as second homes as well as to rent short term, so that these houses would not become long term rentals. That may be true in some cases but increasingly STR’s are owned by absentee landlords, who, if they could not rent short term, would rent long term. Unlike second homeowners who also rent, absentee landlords are not members of the community. They often do not know their Truckee-Tahoe neighbors or if they do often have an antagonistic relationship with them. These problems could be solved by capping the number of nights per year a house could be short-term rented. Second homeowners would still be able defray the cost of their house by renting it part time, while the absentee landlords would be able to make as much money long-term renting as they could short-term renting for limited nights.
Truckee considered a nights-per-year cap but decided against it, without giving a satisfactory explanation. It was said that the restriction would be hard to enforce, but it would be no harder to enforce than requiring a certificate and paying the transient occupancy tax and easier to enforce than the restriction on the number of occupants. Truckee already uses Host Compliance for discovering unpermitted STRs and making sure the TOT is paid. Enforcing a yearly cap on rental nights could be added to their portfolio. Truckee should seriously reconsider limiting STR rental nights per year, in order to open up long term rentals and to foster neighborhoods where people know each other.