Airbnb economy, vacation rentals spur fight within Lake Tahoe's neighborhoods

Peggy Bourland is fed up.

For the last 15 years, the longtime South Lake Tahoe resident says she has watched vacation home rentals steadily claim more and more of her neighborhood.

“Residential housing is being absorbed by mostly out-of-town investors who buy so-called second homes to turn them into investments as vacation rentals,” Bourland said. “Ironically, we have full-time residents living in motels and our tourist visitors now staying in our residential neighborhoods.”

These days, Bourland is part of an initiative that wants to push vacation rentals out of residential neighborhoods — at least those owned by people who live out of state. The Tahoe Neighborhoods Group is trying to collect enough signatures for their November ballot initiative, which will restrict such vacation rentals to the South Lake Tahoe tourism core.

Not every Tahoe resident is on board.

In response to the initiative, the Lake Tahoe South Shore Chamber of Commerce joined forces with other groups to form the Sustainable Community Alliance.

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The organization’s focus is to oppose efforts to ban vacation rentals outside of tourist core areas. The group is also starting to push back on regulations that it believes could harm the area’s tourism-dependent economy. This includes parts of a stricter South Lake Tahoe ordinance that took effect on Dec. 22. One of the changes involves handing $1,000 fines to visitors for simple offenses such as parking — a fine that typically balloons to $2,000 because vacationers also must pay for a second accompanying fine that is usually levied against property owners.

“People come to Lake Tahoe to vacation and they’re very excited to be here but then you hear stories where they’ve only been here a few minutes … and they get a $1,000 fine (for parking on the street),” said Steve Teshara, CEO of the Lake Tahoe South Shore Chamber of Commerce. “That’s not visitor friendly.”

The heated debate between both sides of the vacation rental divide shows the challenges that local governments face in trying to reach a middle ground on the issue. As sites such as Airbnb and Homeaway gain more traction with the vacationing public, many towns, cities and counties find themselves playing catch up to a disruptive force that continues to upend the traditional vacation and lodging industry.

Although the city of South Lake Tahoe decided to forge ahead with stricter penalties and caps that specifically target vacation home rentals, some Tahoe counties are opting against using a heavier hand. Instead, counties such as Placer and Washoe will continue to use existing nuisance laws to regulate the industry. One key reason is that many local governments depend heavily on the tourist dollars that visitors bring in. This is especially true for places such as Placer, which is more dependent on tourism.

“I do believe it’s a balancing act,” said Jennifer Merchant, deputy county executive officer of Placer County. “It’s fair to say that we get those phone calls from people (complaining about vacation rental users) but it’s hard for a community that’s really built on a tourist economy to turn away tourists.

“We have other secondary markets but tourism is our key economic driver.”

INTERACTIVE MAP: Complaints and citations from the first three months of South Lake Tahoe's updated vacation home rental ordinance. (Data provided by city of South Lake Tahoe. Map by Brian Duggan/RGJ)

No small change

For Placer County, which includes King’s Beach and Tahoe City, short-term rentals are an important source of funding.

Placer, which collects 10 percent of every dollar generated in room revenue, received $18 million dollars from transient occupancy taxes — also known as TOT — during its previous fiscal year, Merchant said. Transient occupancy taxes are collected from room stays of 30 days or less. That taxable revenue includes money collected from vacation home rentals.

The city of South Lake Tahoe is no exception.

In December alone, South Lake Tahoe collected $1 million worth of transient occupancy taxes, according to city records obtained by the Reno Gazette Journal. Of that number, almost $259,000 came from professionally managed vacation home rentals while more than $201,000 came from VHRs managed by individual property owners. Taxable rent generated by VHRs during the same month totaled $4.7 million.

The money generated from short-term rentals is a big deal for counties such as Placer. Sixty percent of Placer’s revenue from transient occupancy taxes goes back into capital improvement projects and developing transit service, Merchant said. This includes bike trails, wayfinding signage and other amenities requested not just by tourists but locals as well.

Vacation home rentals also help fill a need in the area for lodging, especially for folks who are looking for an experience that feels less commercial, Merchant said.

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“We haven’t had a new hotel in Tahoe City and King’s Beach since the early ’60s so we’re working hard to incentivize hotels to move back into the historic tourist destinations to build the tourism market there,” Merchant said. “But you also have vacationers who want to feel like they’re part of the community and not just sitting in some high rise, which is something that Airbnb and other vacation home rental platforms provide.”

Like many areas around Lake Tahoe, Placer also has a long history of people purchasing properties as vacation homes and renting them out for extra income or even helping to pay out their mortgages, Merchant said. In response to complaints that vacation rentals limit housing options for residents, Placer did a joint housing needs assessment with Nevada County and the town of Truckee.

The study showed that more than half of the houses in the Tahoe-Truckee region and North Lake Tahoe — not including Incline Village — are vacant more than half the time as opposed to being rented out. The trend, which matches the history of the area, is one reason Placer has no plans to create an ordinance specifically targeting vacation home rentals.

“So we know that most homes in the area have been purchased for vacation use and have been used in that manner as they have been for the last century,” Merchant said. “Our ordinance reflects that historical use and allows people to use their property in that manner.”

Washoe County, which includes Tahoe’s Incline Village as part of its area in addition to Reno, does not have specific regulations, caps or even license requirements for vacation home rentals. The only exception it has for parking involves limits during high snow days to allow for snow removal in Incline Village, said Bob Webb, the planning manager of Washoe County’s planning and building division.

“Typically, with noise complaints, those are handled by the sheriff’s office as disturbing the peace,” Webb said. “For garbage, those are typically handled by the waste management authority or the Nevada Department of Wildlife if it involves bear problems.”

When dealing with rowdy visitors, Washoe says it will continue to rely on its general nuisance ordinance instead of crafting a separate law for vacation rentals.

HEAT MAP: Hot spots for South Lake Tahoe neighborhoods that receive the most complaints against vacation home rentals. Areas that have more concentration of complaints are highlighted by brighter colors. (Data provided by city of South Lake Tahoe. Map by Brian Duggan/RGJ)

Playing catch-up

Webb admits that, just like many other counties, Washoe is playing catch up with the new web-based exchange economy, including its use with vacation rentals. For Washoe, though, most of the catching up it needs to does not involve passing stricter penalties or caps on vacation home rentals. Instead, the county needs to work on having the proper reporting and collection mechanisms in place to ensure it is receiving taxes from all property owners who rent out their house, Webb said.

Washoe is not the only Tahoe county that is experiencing difficulties in keeping track of every person who rents out their house to vacationers.

“We have a pretty lax ordinance right now, frankly, and we have a lot of people operating under the radar and renting out their property without paying their transient occupancy tax,” said Mary Anne Martin, deputy district attorney of Douglas County.

Unlike Washoe and Placer, Douglas is one of two Tahoe Counties that plan to make changes to their ordinances to specifically address vacation home rentals.

Douglas already has stricter limits on who can rent out their homes to vacationers. Unless a house is located within the Tahoe township, Douglas typically does not allow short-term vacation rentals for properties that are not owner-occupied, Martin said. For those who live in the valley outside of Tahoe, they are only allowed to rent out their property to tourists as an owner-occupied bed and breakfast if it’s zoned for half an acre or more.

“We’re also looking to beef up our ordinance to require fire inspections and enable the county to have more recourse when there are noise and parking complaints or issues related to disturbing neighborhoods,” Martin said.

Eldorado County, meanwhile, came up with eight recommended ordinance revisions to specifically address vacation home rentals. These include a cap on occupants from 10 p.m. to 8 a.m. and fines that scale from $500 to $1,000 then $1,500 for the first, second and third violations. Earlier this year, so many people showed up at a board meeting about the recommended changes that it was shut down by the fire marshall for safety reasons, said spokeswoman Hass. The county already gave conceptual approval to one of the revisions in early March.

Eldorado has been especially impacted by South Lake Tahoe’s updated ordinance. South Lake Tahoe is located in Eldorado and the county has received plenty of phone calls from people asking about South Lake Tahoe’s ordinance, which does not apply to the rest of the county.

“There’s a lot of confusion about what’s going on with the city of South Lake Tahoe and what’s going on within the county of Eldorado,” Hass said. “A lot of people, through no fault of their own, don’t know where the county begins, where the city ends and which entity is responsible for which address.”

Although Eldorado would prefer to have a bit more uniformity its biggest city, the county is also quite aware of the debate surrounding South Lake Tahoe’s updated ordinance. Even though South Lake Tahoe took its time in crafting its vacation rental law, that did not stop it from ongoing criticism from both sides of the debate. As a result, Eldorado County wants to be extra careful in fine-tuning its own vacation rental laws.

“This is not a sit down for a couple of hours and get it all hammered out in a day option for us,” Hass said. “This is going to be an ongoing process over a thoroughly long period of time if we want to make sure we comprehensively address this issue.”