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Tahoe imposes new rules for Airbnbs and other short-term rentals amid housing crisis

SF Gate logo SF Gate 1/27/2022 Julie Brown
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Six months into a moratorium that halted short-term rentals permits in North Lake Tahoe, Placer County is considering a new set of rules to rein in the proliferation of vacation rentals and protect what little housing inventory remains for locals.

The new ordinance would cap the number of short-term rentals in eastern Placer County, permitting about 25% of current housing stock on Tahoe’s North Shore and West Shore, from Kings Beach to Homewood, and Olympic Valley and Northstar, to operate as short-term rentals. 

Local residents say the new rules don’t go nearly far enough. Many want the county to crack down on short-term rentals even more.

Nearly 200 people, in person and via Zoom, attended the public hearing for the new short-term rental ordinance, held at a Placer County Board of Supervisors meeting in Tahoe City on Tuesday. 

Dozens of commenters, most full-time Tahoe residents who have been in the area anywhere from a couple of years to several decades, spoke up at the meeting, urging the board to take stronger action. Instead of granting more short-term rental permits, as the proposed ordinance would do, local residents pleaded with the board to reduce the number of permits, bring balance back to neighborhoods that are overwhelmed by vacationers and alleviate pressure on a housing crisis that is displacing the workforce, disrupting businesses and sinking the quality of life for local residents.

“I know so many contributors to this community — teachers, people who work in hospitals, people who work in utilities, people who work in restaurants — that are not able to either rent here or buy homes, and it is absolutely heartbreaking,” said Ellie Perry, a North Tahoe resident, at the meeting. “Every time one of those houses is turned into, essentially, another hotel, that’s one less home for somebody who’s actually contributing to this community.”

Lake Tahoe has been trying to regulate and enforce the proliferation of Airbnbs across the basin for years, and the rules are anything but consistent. There are five separate counties in the basin, each with their own jurisdiction and philosophies. Last year, the city of South Lake Tahoe prohibited short-term rentals in residential neighborhoods. The town of Truckee is also in the midst of its own moratorium and debate on how to reign in short-term rentals.

The stakes are high. The need to regulate short-term rentals began as a nuisance issue, responding to noise, parking and trash violations. Then the pandemic hit, and Lake Tahoe experienced a surge of visitors unlike anything else in its history, as people heeded doctors’ recommendations to go outdoors while COVID raged. 

The fallout has transformed the way of life for most local residents, and it's easy to see how that happened by looking at the real estate numbers. In April 2020, the median price of a single family home in North Tahoe was $660,000, according to a report compiled by Placer County staff. By November of 2021, that figure jumped 178% to a $1.175 million median sale price. Of all the homes sold in 2021, nearly 40% were cash offers, according to the Sierra Board of Realtors.

The mass arrival of Bay Area residents with Silicon Valley salaries drove up the cost of living, which pushed Tahoe into a devastating housing crisis that is displacing local residents and straining businesses that cannot find people to hire. The cost of rent or a mortgage eclipses local wages. Today, a two-person household in North Tahoe must earn 425% of the area median income to afford a median priced home, according to a report from Placer County staff. Studies show that short-term rentals correlate with the rising cost of housing, both on rentals and for sale properties. 

With the hot real estate market, longtime property owners seized the opportunity to sell. A new round of second homeowners has settled in, thinking they could subsidize the high cost of housing by listing their property on Airbnb. About 80% of the housing stock in North Tahoe is second homes. 

“Within a short period of years, Lake Tahoe, California, went from a rural ski town with plenty of affordable long-term rentals to Beverly Hills, Manhattan Beach home values and it will never go down unless it burns,” said Pat Dillon, a 42-year North Tahoe resident. “My opinion is that short-term rentals are a commercial operation being permitted in a residential area by my county representatives. For the tax dollars.”

In 2021, Tahoe witnessed the chaos that ensued when a natural disaster and an emergency collided with visitors who had previous, nonrefundable Airbnb reservations — not once, but twice. During the Caldor Fire, when air quality in the Tahoe Basin was quite literally the worst in the world, visitors with Airbnb reservations still showed up. Over Christmas, as a historic snowstorm descended on the area, Tahoe was still overwhelmed with tourists coming and going, despite emergency declarations and road closures.

On Tuesday, the board settled on a cap of 3,900 permits, down from the originally proposed 4,300. That’s about 25% of the region’s 15,000 homes. Before the moratorium was implemented, just over 2,500 short-term rentals in North Tahoe were permitted, though, according to Transient Occupancy Tax data, Placer County staff estimates the actual number of short-term rentals is closer to 3,900. The discrepancy likely stems from homes that were exempt under the old set of rules and, with the new ordinance, would be required to get a permit. Other rentals may be operating illegally without a permit. 

In theory, the cap would contain the number of short-term rentals to current levels, but most people who spoke up at the meeting saw the move differently. 

The vast majority of attendees who spoke during the public comment period vehemently opposed any action that would increase the number of short-term rentals in North Tahoe. 

Commenters painted a clear picture of how the quality of life in Lake Tahoe has deteriorated in recent years, due to the ceaseless wave of visitors and Airbnb pushing the basin’s capacity beyond its limits. There’s the gridlocked traffic, the dog poop that doesn’t get picked up, the all-night parties full of college kids, booming music that can be heard blocks away and the extended-family barbecues that take over the street. Cars spill out of driveways when 10 people show up to a four-bedroom house. City drivers speed past homes, while children play in the driveway. One commenter described people riding snowmobiles through his yard. 

“I’m sick and tired of seeing dogs poop in my yard and not have it picked up,” said Chris Hager, a Tahoe City resident, at the meeting. “No ordinance will cover every possible violation and no ordinance will be perfectly enforced. The only way to minimize some of these problems is to minimize the number of short-term rentals in residential neighborhoods.”

A petition that circulated in early January protesting Airbnb and short-term rentals collected more than 1,600 signatures from Tahoe residents.

“I live next door to a five-bedroom one, so it impacts my life immensely,” said Danielle Hankinson, a Kings Beach resident.

Others oppose the cap on short-term rentals, namely real estate agents and second homeowners. John Falk, a representative from the Tahoe Sierra Board of Realtors, expressed sympathy for the nuisance concerns raised by his neighbors and the workforce housing shortage. However, his organization advocated against any attempt to limit the number of short-term rentals.

“We have to look at what drives our local economy,” Falk said. “And frankly, our local economy is, by and large, driven as a tourism-based outdoor recreation economy. And as such, we need heads in beds.”

A few second homeowners and Airbnb hosts stepped up to the podium at the hearing, too.

“I’m just here to let you know that not every short-term rental owner is a bad person,” said Maren Pagliaso, a short-term rental operator and second homeowner. “Some of us care about the community. Right? Not all of us are evil. Not all of us are investors. I have two small children, 6 and about to be 8. I get up here as much as I can. But it's an asset that's sitting there.”

Pagliaso said he has notices all over his listing on Airbnb that say no parties.

“I work really hard with my neighbors, who I think have all trained their dogs to poop in my yard and on my driveway — I’m not lying,” he said. “But I've worked with them over the years to say, ‘I hear your concerns.’”

There is also a small group of local homeowners who rent out rooms in their primary house on Airbnb to subsidize their mortgage, making it possible for them to afford the extraordinarily high cost of housing. About 3% of short-term rentals in North Tahoe are owner-occupied. This group will not be included in the cap, making it possible for local residents to continue to earn money through this revenue stream. They will still need a permit, and will be subject to other aspects of the new ordinance, including fire and defensible space inspections.

The moratorium expires March 31, and the ordinance must be in effect by that date, giving the Board of Supervisors a narrow time frame to make any revisions and respond to public feedback. On April 1, the county is expected to start accepting applications for permits. 

Placer County Supervisor Cindy Gustafson, who is the chair of the board and represents North Tahoe, expected this amount of feedback on the ordinance. She and her staff have been engaged in numerous meetings with other boards and committees in the Tahoe region, as well as town halls, one-on-ones. Multiple surveys went out to various stakeholder groups to get feedback. 

“We're not going to get it right,” Gustafson said. “We're not going to be able to address all the issues that we heard. And throughout this process, we know we need to continually refine what we've done. So many of these may come back for future suggestions and revisions. But how far can we go right now within our current timeline?”

The cap was originally set at 4,300 with the intention of bringing every short-term rental operator into compliance with the ordinance. But after the day’s hearing, Gustafson suggested they reduce the figure by 10%, setting the cap at 3,900.

“We really felt at the time there's probably that many [rentals] operating currently that aren't permitted and aren’t being tracked and we were trying to bring everybody into compliance,” Gustafson said. “It was never my intent to say let's have more.”

The board approved the ordinance, with the lowered cap, in a unanimous vote. A second reading is scheduled for the next board meeting on Feb. 8. After the ordinance goes into effect 30 days later, a task force would be established to continue to monitor short-term rentals in North Tahoe so that regulations can continue to adapt to local needs.

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