SOUTH LAKE TAHOE, Calif. — The city is heading toward mediation with the backers of a lawsuit seeking to strike down Measure T.

The hope, according to city officials and an attorney involved in the lawsuit, is to reach a compromise on the vacation home rental issue rather than fight a legal battle in court.

“Hopefully we can figure something out for our community’s sake,” City Manager Frank Rush Jr. told the Tribune.

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However, the approach could prove divisive for a segment of the community who see the issue as settled.

Measure T was a citizen-driven initiative crafted in 2018 by Tahoe Neighborhoods Group in response to a perceived failure on the part of the city to adequately manage South Lake Tahoe’s vacation home rental industry.

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The measure limits VHRs to the tourist core — which mostly runs along U.S. 50 from the state line to the Ski Run Boulevard area — and commercially zoned areas starting Jan. 1, 2022. The measure does make a limited exception that grants full-time residents the ability to rent out their home up to 30 days per year.

Measure T also included more restrictive occupancy limits and a requirement that any future changes to the city’s VHR regulations be put before voters.

The measure ultimately passed by a slim 58-vote margin in the November 2018 election.

A little more than a month later, a group calling itself the South Lake Tahoe Property Owners Group filed a lawsuit claiming Measure T was unconstitutional.

The property owners group and the city have since reached an agreement to pause enforcement of the new occupancy limits while the legal process unfolds.

The rest of Measure T is currently in place — meaning the city, among other things, is not issuing new VHR permits.

City officials say their enforcement of the measure, minus the occupancy limits, reflects their commitment to carrying out the will of the voters.

But given Measure T’s slim margin of passage and with a lawsuit seeking to strike down he entire measure, those same officials hope that a compromise with broader appeal can be reached.

“I think that the council is supportive of the passage of Measure T and the will of the voters,” Mayor Brooke Laine told the Tribune. “However we also are very concerned about how split the community is and it’s never good to make policy that doesn’t have a better grounding of support. And so we are hopeful that maybe there is a position that, as you would say, is a compromise position that would garner greater community support.”

That approach has support from the group behind the lawsuit, said Andrew Pierce, an attorney representing the South Lake Tahoe Property Owners Group.

Pierce foresees formal mediation starting later in the summer. A compromise, he added, can take into account both the desires of concerned residents and the business community that depends on tourists.

However, not everyone in the community sees the issue in the same light.

Undermining trust?

If a compromise is reached, it would have to be approved by voters. The city hopes to do that in 2020.

There are two primary ways for a question to make it on the ballot. One involves citizens collecting a number of valid signatures based on the percentage of registered voters, which is the process that put Measure T on the ballot.

The other, and arguably the easier, way is for City Council to put the question on the ballot.

While people are free to go out and collect signatures, the city’s potential involvement in putting a measure on the ballot could inflict irreparable harm on its reputation in the eyes of some residents.

“If the opposition to Measure T wishes to pursue another initiative for the 2020 election that is their legal right, but for the city to facilitate a ballot measure that may be contrary to what the majority of the voters have passed sends the wrong message and undermines any trust the community may still have in local government,” Peggy Bourland, a member of the Tahoe Neighborhoods Group, told the Tribune in an email.

City officials are aware of that potential, Rush told the Tribune. That is why he is hoping to bring input from all sides to the table. He has met in person with the Tahoe Neighborhoods Group three times since being sworn in as city manager in December.

In some light, Rush sees the current situation as an opportunity to solve one of the most contentious problems plaguing the community.

“I’m fearful if we don’t reach a compromise we’ll be mired in conflict for years to come,” he said.

Others in the community share that desire to avoid future conflict.

“It’s a vicious cycle because whoever is losing is going to keep fighting,” Mark Salmon, a member of the Sustainable Community Alliance and local Realtor, told the Tribune.

The Sustainable Community Alliance, which is not a party to the lawsuit according to Salmon, put forward a competing initiative in 2018 that would have made minor changes to VHR regulations while maintaining the city’s cap of 1,400 VHRs outside the tourist core.

That initiative failed to gather enough valid signatures to make the ballot in 2018.

As Salmon sees it, failure to reach a compromise will likely mean the lawsuit will go forward and depending on the legal outcome more ballot initiatives will likely follow.

That multi-year battle would be detrimental to the community, he said.

To defend or not to defend?

If a compromise can’t be reached then the property owners group is prepared to proceed with the lawsuit, Pierce said.

On the opposite end, if the compromise approach fails City Council will have to decide if it is going to mount a legal defense against the suit.

When a ballot measure dealing with the Loop Road was legally challenged in 2016, the city ultimately did not defend the measure and it was struck down by the courts.

Laine told the Tribune council has not discussed that question yet. And she is hoping that it won’t have to.

“I am very hopefully and very optimistic that we can come up with a plan that will actually significantly deal with the quality of life issues that the residents have brought forth and are tired of and at the same time allows for a continual revenue stream that provides some of our most basic services,” she said.