After 36 years living in the area, Janet and Mark Brady are Tahoe/Truckee veterans.
Veterans in the local business sphere — Janet operates her own jewelry store; veterans in the school district as Mark approaches his 36th year of teaching, and his 20th at Truckee High School.
They’re veterans in the vacation-renting game, too, Janet Brady reckons; they started renting out a room in their house across the street from Donner Lake back in 1996/97, a couple of years after they’d finished building the place.
“We always called it the ‘mother-in-law unit’ because we built it in case our parents ever needed care and couldn’t live independently anymore,” Brady told Moonshine Ink. Instead of housing their parents, the Bradys hosted numerous family friends for a few days here and there in the extra room, which includes its own bathroom, kitchen, and separate entrance.
When Airbnb hit the market, the Bradys were early adopters and listed their unit on the rental platform. Though they never planned on renting out the extra space to serve as substantial income, they’ve come to rely on the money flowing in each month, most of it via Airbnb. When required, the couple registered the unit as a short-term rental with the Town of Truckee, paid the appropriate Transient Occupancy Tax amounts each year, and followed the orders to shut down services during the Covid-19 pandemic. The $5,000 to $7,000 they earn monthly from the unit is going toward paying their son’s significant college tuition as well as into a retirement fund.
It’s been a useful addition to the Bradys’ house and lives.
Their veteranship was shaken, however, with an email Janet Brady received on Feb. 18. It was in response to her STR application that she had filed with the Town of Truckee.
“We looked into the accessory dwelling unit that was proposed for the short-term rental and unfortunately the space is not permitted from our building records,” wrote Rosie Johnson, administrative analyst at the town. “… We are unfortunately unable to approve the application for the space to be short-term rented. We ask that you do not list the space as a short-term rental and to please remove the listings for this property. Failure to do so will result in a violation.”
Mother-in-law units (or granny flats or backyard cottages) are formally known as accessory dwelling units, or ADUs, and include their own cooking and sanitation facilities.
The seemingly sudden disallowance of the Bradys to short-term rent comes from a 16-month-old development code update that prohibits ADUs and Junior ADUs not permitted prior to Jan. 1, 2020 from being rented out fewer than 31 consecutive days.
It’s an echo of recent state law to relax requirements on ADUs in an effort to address the raging housing crisis across California. The idea is to increase their numbers but slate them for long-term rentals. But also within the new rules was a choice given to jurisdictions whether or not they want to allow illegal ADU operators to come into compliance and continue short-term renting.
Truckee’s town council voted Jan. 26 against such an amnesty program, opting instead for an incentive path to encourage both new ADUs and currently existing unpermitted ones to become legal, future long-term housing options.
“The whole reason the state is encouraging and allowing flexibility to create these ADUs is to provide a solution for long-term housing for California residents,” explained Jaime LaChance, senior planner at the town. “It’s not necessarily so people who already own a home can make more money off of that. It’s because the state has declared we are in a housing crisis.”
ADUs that have acquired or will acquire a building permit after Jan. 1, 2020 may still be rented out once fully compliant but only long-term.
The action happened after years, decades even, of ADUs like the Bradys’ operating unpermitted. Same with the ADU in Tal and Sara Fletcher’s Truckee home, which has been around since 1999. Tal Fletcher purchased the home in 2003 and has housed both long- and short-term renters in the additional space above the garage ever since.
“The building is safe and legal, everything’s built to code, we’re totally legitimate,” he said. “If we’re off on one tiny little permit, give us a time period to come into compliance … But don’t just cut us off. This has turned into … a really important third income for us that allows us to continue to be locals in Truckee, raising a kid who’s going to graduate from Truckee High in 15 years. We’re long-term locals, too, and it’s going to hurt us.”
And so, a plan to secure more workforce housing by the town brings grief to existing households who depend on short-term rental income. This issue perfectly illustrates the complexities of a community facing a housing crisis, showing, as the old adage says, the devil is in the details.
Laying down the law
Truckee’s ADU ordinance was most recently updated and became effective on Jan. 7, 2021. The path to meet those updates had several interim steps. In December 2019 and in response to state law changes, Truckee amended its development code with emergency ordinance 2019-10, which included a ban of short-term renting ADUs not permitted prior to Jan. 1, 2020.
But there was no targeted push to inform residents about the rule change until STRs in general received increased attention during Covid-19’s summer 2020 tourist flare. At that point, staff took a hard look at town guidelines. Both Truckee’s STR and ADU ordinances were updated in 2020 — the STR one ultimately passed in October, the ADU ordinance on Dec. 8.
The local laws followed in the wake of significant state adjustments to ADU law to quell the state’s housing crisis. Assembly Bill 68 made the permitting process faster; AB 670 prohibits homeowners associations from banning or restricting ADUs (with the idea coming from the Town of Truckee, mind you); and AB 3182 requires automatic approval of ADU creation by local agencies after 60 days, to name only a few.
Greg Nickless is a housing policy specialist for the California Department of Housing and Community Development (HCD) and said of the ADU update, “It has helped immensely, to the tune of thousands and thousands of housing units through ADUs.”
Yet, interpreting the state law has caused a bit of confusion. LaChance at the Town of Truckee said that ambiguity and unanswered questions inherent in the ADU bills have plagued implementation.
“To be very honest, the state legislation is not very well written; it’s being interpreted differently pretty much in every jurisdiction throughout the state,” she said.
Neither El Dorado nor Placer counties allow the short-term rental of ADUs while Nevada County prohibits such units operating as STRs unless associated with agritourism or within the Soda Springs Rural Center. (Over in Nevada’s Washoe County, ADUs may be short-term rented.)
Nickless didn’t deny the potential for confusion, pointing out that if each of the 539 cities and counties across the state chooses to enact an ADU ordinance beyond the standard state law, that’s the potential for 539 different interpretations.
“What law is not that way?” he asked. “Pick a law that’s not that way; it’s interpreted one way or another. Every time we think we have heard every scenario, we get three more later in the day. Everyone’s thinking about, ‘How can I do this?’ … Sometimes it might work and sometimes, no, it’s not the intent of the law, that’s not what the law allowed.”
Jurisdictions can have the HCD review their draft ADU ordinances before bringing it to city councils or boards of supervisors, though it’s not required. The Town of Truckee did not provide a draft to the HCD in advance of the Jan. 7 update, though recommendations from the department on a previous statute were incorporated. Once an ordinance is adopted, the city or county must submit a copy to the HCD within 60 days.
However, department staff doesn’t have the time nor manpower to review and verify that every jurisdiction interprets the law correctly. “We pick those ordinances up when we have it reported to us that there are noncompliance issues,” Nickless said.
If an ADU ordinance is found to be out of alignment with state law by the HCD, the department will issue its findings to the owning jurisdiction, which then has 30 days to respond.
“If they don’t or it’s not satisfactory — they don’t make revisions or explain why they think their ordinance is in compliance — we are allowed to then submit that complaint to the state’s attorney general,” Nickless said. “[But] we want to avoid that.”
Nickless tapped Truckee’s ordinance for review after a phone call with Janet Brady, curious about her concerns. As of press deadline, Nickless confirmed that the HCD had an older version of the town’s ADU ordinance on file, one from December 2019. Based on the Jan. 7, 2021 date of the ordinance update, the town should have submitted its latest version by March 8.
LaChance at the town informed Moonshine Ink that staff has a separate point of contact with whom they’ve been coordinating with regarding the updated ordinance.
Last fall, seeing the writing on the wall, the Bradys reached out to JRG Attorneys at Law to review the town’s proposed change. In a Sept. 22, 2020 letter on behalf of the Bradys to the town council, attorney Jason Retterer asserted five reasons to stall the decision: supervised ADUs are the most ideal type of STRs; ADUs do preserve local workforce housing; travelers are seeking STRs during Covid-19; the ADU prohibition is arbitrarily singling out one type of STR; and that the decision was a violation of equal protection.
“The 14th Amendment provides that no state shall ‘deny to any person within its jurisdiction the equal protection of the laws,’” the letter stated in part. “… Allowing those who own single family homes the ability to STR while also prohibiting ADU owners those same rights without presenting any data or research to back up the decision is a constitutional violation.”
When Moonshine Ink asked the town about this specific concern, the agency issued a joint response written by LaChance; Seana Doherty, the town’s housing program manager; and Hilary Hobbs, management analyst at the town.
“The town is confident that enforcement of STR regulations is not an equal protection violation. The equal protection clause addresses individuals being treated differently because they are a member of a protected class (e.g., race or gender), and does not cover ADU ownership,” the statement reads. “Regulating land use is clearly within the town’s purview. Jurisdictions throughout California enforce regulations on short-term renting, including short-term renting of accessory dwelling units.”
Communication is key
In addition to the town choosing to forego a grace period for unpermitted ADUs, pain-points for these unit owners center around two other main themes: The town never outrightly required the permitting of ADUs before, and the wrong STRs are being targeted.
“The town granted us our TOT certificate, our short-term rental certificate, and has been happily taking our money for years,” Brady said. “That’s what’s frustrating.”
Regardless of what seemed allowable by the town, unpermitted ADUs were always illegal to operate. Doherty offered an explanation of why things have now changed: The right departments are finally talking to each other.
“[Previously], you could come to the Town of Truckee and go through the administrative department and register your short-term rental and there was no deep dive into ‘You’re saying you’re renting four rooms, but your house is only permitted for three rooms …’” Doherty said. “Now the planning department and building department and the short-term rental team are talking to each other to make sure that we don’t end up with additional impacts by creating a short-term rental that is trying to rent to six people, but the design of that house was only for three bedrooms and two parking spots.”
Establishing Jan. 1, 2020 as the do-or-die date came from the bundle of state ADU bills passed in the fall of 2019 that became effective with the new year. These bills required ADU rentals to be for a term longer than 30 days; thus Jan. 1 became point of reference.
But as state laws go, agencies can interpret leniency from there.
“It’s up to each city and county to establish whether they want to restrict short-term rentals,” Nickless said. “… The law allows local agencies to be less restrictive. They cannot be more restrictive; they can’t exceed the standards with constraints. As an example, ADU law says a new detached is limited to 1,200 square feet. Less restrictive would mean, and some agencies and jurisdictions do this, they say no, we want to allow … 2,000 square feet. That is less restrictive, and they may do that.”
Property owners now have new guidelines when registering a short-term rental with the town. Previously, 1,400 short-term rental properties were logged in town records; under the new STR ordinance, 700 units have signed up thus far, and more are expected.
A major question in reaction to the December 2019 emergency ordinance was whether ADUs could register as short-term rentals. Staff recommended that units already permitted could be an STR, while those permitted in the future could not. Council agreed.
It wasn’t until the mid-to-late 2020 discussions were underway that unpermitted ADU owners in Brady’s camp became fully aware of their units’ futures.
Town staff estimates that there are 10 to 20 people within Truckee who have unpermitted ADUs that are already registered as STRs. Janet Brady believes the range to be 30 to 40.
“We obviously have no idea how many actual unpermitted ADUs are out there,” LaChance added. “We hear about more every day.”
The town’s goal for ADU numbers is to permit 20 new units a year for five years, with nine each year deed-restricted to locally employed tenants making no more than 120% of the area median income. (For a family of two, that would mean a total income of $88,700.)
Seventy-seven ADU permits have been issued by the town since 2015 and of those, 30 have earned a final certificate of occupancy. (The town switched databases in 2014, thus pulling information about earlier ADU permits is not immediately possible.) The end goal is for ADUs to increase local long-term rental inventory.
Numbers aside, the Fletchers, who are registered TOT payers alongside the Bradys, believe the town to be targeting the wrong group, that they’re not the source of the problem.
“We’re not the ones blocking locals from long-term rentals; and we’re not the ones leaving trash on the street; we’re not the ones having loud parties; we’re not the ones welcoming 10 people into a tiny little room,” Tal Fletcher said. “We’re the opposite of that … We’re not the source of problem they’re trying to solve.”
A longtime local without skin in the game agrees. A manager at Bar of America, Amy Norman has lived in the Tahoe area for 33 years, and in Truckee for 21 of those. She has plenty of frustrations with STRs (the noise, trash, and traffic their visiting occupants often bring), but most of all, it’s the lack of community that primary homes used as STRs has bred.
“The idea that someone can come up here and buy a home and never use it and only [STR] it for profit in a neighborhood — to me, that’s a hotel,” Norman said.
If compromises in the STR world need to be made, she says, don’t restrict the ADUs that have an owner on-site. “Why are you limiting [ADUs] instead of a whole unit being an STR?” she asked. “… You’ve got a homeowner right there.”
Carrot on a stick
In an effort to entice residents to transition from short-term to long-term renting their ADUs, the town created an incentive program, which consists of an educational side (webinars and technical assistance) and a financial side (loans and grants).
“For two years, we are providing grants — $1,000 grants — for anybody who comes in and is going through the after-the-fact permit process,” Doherty said. “… Then you can go to our second program, [the Long-Term Rental Program], which is our partnership with Landing Locals, and … you’re going to get a $3,000 grant if you long-term rent to someone in the local workforce.” (The two-year timeframe is for unpermitted units. Four years are afforded to anyone else.)
Participants in the long-term program must specifically provide a housing option to someone for 12 months. Since the Oct. 14, 2020 kickoff, 10 homes have participated, three of which are ADUs.
George Caballero is a current participant of the Long-Term Rental program, and a success story in terms of a formerly illegal ADU turned fully compliant. After years of renting out his unpermitted apartment above the garage to long-term tenants, Caballero properly permitted the unit with the town’s guidance in early 2020, and on March 31 this year, collected the second month’s payment from his new renter.
“Right now, everything is looking good,” Caballero said. “I don’t want to jinx myself, but I’m very happy with the way things are going. I very much appreciate the opportunity to not only help myself but help somebody else.”
Caballero worked with Landing Locals, a private business that pairs local renters with long-term housing options. From their work, Landing estimates that average monthly rents for ADUs in Truckee are $2,000 for two-bedroom units, $1,460 for one-bedrooms, and $1,235 for studios.
Doherty said she understands that short-term renting may provide significantly more in payout, but the town is trying to offer some way to make long-term renting appealing.
“You’re going to end up with a permitted unit, $4,000 from the town, and pretty good rent because they’re really popular,” she said.
“… You’re still going to make income; you’re just going to have to move to a different model.
“There’s all these perks that come with ADUs for the reason of long-term housing,” Doherty added. “Relaxed standards, lower fees, simplified permit process, all these perks come for the intention that hopefully it will create housing inventory.”
It’s a model, though, that just isn’t appealing to all.
“Their carrot is not a carrot; it’s more like a shaving of a carrot, if you will,” Janet Brady said. “That’s exactly what all the other homeowners tell me … [It’s] why basically the majority of ADU owners in Truckee that I’ve met have no interest in ever long-term renting their ADU.”
In fact, she has heard from some ADU owners that they simply plan to operate illegally.
Similar to the HCD, Doherty says the town, too, runs on a complaint basis. That’s one of the ways she expects staff will hear about illegally operating ADUs. Fire inspections, crawling rental platforms like Airbnb and VRBO, and a future compliance code officer to oversee it all are other opportunities for discovery. If an ADU is found to be short-term renting illegally, the owner will receive notice by mail first, and could be fined $500 for an initial violation and $1,000 for subsequent violations.
Short-term renting is still possible for owners of ADUs … if they remove the defining feature that makes it an ADU in the first place: the kitchen. LaChance explained that rooms with wet bar setups (a sink, microwave, refrigerator, cabinets, and a countertop) may still be rented out.
“You can’t have any cooking facilities like a stove or an oven or hot plates or anything like that,” she continued, “but that does provide as much cooking opportunity as many people would like to have when they do travel.”
Janet Brady said she knows of a fellow ADU owner who ultimately ripped out the kitchen unit in her ADU so she could still short-term rent it.
She herself, on the other hand, says she won’t opt to long-term rent, regardless of incentives: “If I remember correctly, the majority of the ADU owners just to spite the town, I hate to say it, myself included, will never long-term rent. Forget it.”