South Tahoe housing project seeks funding; Code amended to incentivize similar development

Claire McArthur
Tahoe Daily Tribune
A rendering of the Sugar Pine Village project in South Lake Tahoe. (Provided / Studio T-Square)

SOUTH LAKE TAHOE, Calif. — Fundraising is underway for a 248-unit affordable housing project in South Lake Tahoe approved in record time, while new code amendments incentivizing housing development in the basin just rolled out from the Tahoe Regional Planning Agency.

They are steps in the right direction, say community advocates, but it’s just the start of addressing Tahoe’s deeply ingrained housing crisis.

As part of an executive order from California Gov. Gavin Newsom, South Lake Tahoe was selected as one of the first locations to build affordable housing on state-owned surplus lands. The multi-family, mixed-use development, dubbed Sugar Pine Village, is slated to be built on two parcels of California Tahoe Conservancy asset land at the “Y” — a 9.7-acre lot at 1860 Lake Tahoe Boulevard and the neighboring 1.6-acre parcel at 1029 Tata Lane.

In June 2020, the conservancy and the state selected Related California, the state’s largest developer of mixed-income housing, and St. Joseph’s Community Land Trust, a locally-based affordable housing nonprofit, to design and construct the project.

The Sugar Pine Village site plan. (Provided / Studio T-Square)

The development received approval from the city of South Lake Tahoe and the TRPA in just six months — the fastest turnaround for a project of this scale — and is now seeking funding through a combination of low-income housing tax credits, loans, grants and public financing.

“We were hoping to start in 2022, but the state froze all of their funding for nine months and it threw off our calendar,” said Meea Kang, senior vice president of Related California. “The start date is likely 2023, but we’re aiming for as soon as possible.”

Construction of the nine residential buildings, consisting of studio and 1- to 3-bedroom units, and the two community spaces will be completed in phases but is anticipated to be finished in 2025. All units will be deed-restricted affordable housing.

“Depending on how many people are in your household, how many dependents, how many people with incomes, you need to make between 30-60% of area median income to qualify for a unit,” explained Kang. ” People can look up their income and household size based on the [U.S. Department of Housing and Urban Development] metric.”

At present, only 25% of the population of South Lake Tahoe can afford to buy a median priced home or pay median rent, according to data from the Tahoe Prosperity Center.

Transit and social services

Sugar Pine Village will also have a “community hub” building with childcare on the ground floor and shared nonprofit space on the second floor.

“We’ve been working with a number of South Shore nonprofit organizations and social service agencies to refine the use of the community hub portion,” explained Jean Diaz, executive director of St. Joseph’s Land Trust. “We are modeling it after the hub navigator concept where there are ‘navigators’ that are specially trained to understand all of the social services that are being provided in a community so that when somebody comes in and explains what their needs are, they can direct them to the appropriate services.”

There will also be community gardens, ample greenspace, play areas for children, and secured indoor and outdoor bike storage for residents. A multi-use trail will cut through the development and connect Lake Tahoe Boulevard to Delta Street, while sidewalks will be constructed along the property on Julie and Tata lanes.

The developers hope to add more “green” features through a grant from Affordable Housing Sustainable Communities, which looks to reduce greenhouse gas emissions by building transit-oriented housing.

“Because of the project’s location near the ‘Y’ and the transit hub, this makes it an ideal candidate,” noted Kang. “We’re optimistic with that. It will help us bring in some other sustainable features and will help us support some solar and also help us support some of the city’s objectives as well.”

Reducing development barriers

The rapid approval of Sugar Pine Village was a boon for the project and a process that many hope will set a precedent for future affordable housing development in Tahoe.

“The main aspect that allowed that project to move forward so quickly and efficiently was a multi-agency stakeholder group that met every week to identify issues and the best way to solve them,” said Jeff Cowen, TRPA public information officer. “The group worked collaboratively on grants to fund the project.”

At the beginning of August, the TRPA — the agency responsible for balancing development and conservation in the basin — took another big step when it announced changes to its code aimed at incentivizing more affordable housing development.

Among the amendments are changes that expand the number of properties in Tahoe that can build accessory dwelling units, also known colloquially as in-law suites or granny flats. ADUs can now be constructed on single-family residential lots of any size with approval, as opposed to the previous 1-acre requirement (however, this rule still remains in Washoe and Douglas counties due to local regulations).

Additional incentives are available for ADUs restricted to affordable rates and located near transit or a town center. To eliminate the possibility of short-term rentals, these new ADUs can only be rented for 30 days or more.

Another notable amendment is the ability for motels to keep their density when up for redevelopment into residential units — a move that should help make housing projects more financially feasible for developers.

“Many older motels on small lots have tourist densities exceeding the allowable 40 units per acre. Under the existing code, if these properties redevelop, they can keep the grandfathered density if the use does not change,” explained Cowen. “However, when they redevelop and convert to residential, they lose a significant number of units since the maximum residential density allowed is only 25 units per acre and units above this must be banked and transferred off the property.”

Cowen points to a 17-unit motel in Stateline that was being considered for conversion into residential units. Ultimately, the developer was deterred by the fact that, under the existing code, they would only be allowed to construct six residential units once they converted the tourist accommodation units to residential units.

“The approved revision allows this example to redevelop to residential and keep the existing density, resulting in 17 residential units onsite,” said Cowen.

But are these changes enough? Not nearly, according to the Tahoe Prosperity Center, a nonprofit that has taken a data-driven approach to illuminating Tahoe’s housing crisis.

“Construction, especially deed-restricted affordable construction, is super important but we can’t build our way out of this problem,” said Chase Janvrin, TPC program manager.

Janvrin points to a 20-point action plan released by the TPC to address housing issues on the South Shore, including second home to long term rental conversion, further development code simplification and more local funding streams.

“When you’re applying for affordable housing credits, you need local funding sources and we don’t have one right now,” Janvrin said. “That can be along the lines of things like new taxes, which aren’t always popular, but the El Dorado Community Foundation is rolling out a cool program for a voluntary transfer tax that could turn into a local funding stream, so we need more stuff like that.”

Janvrin also says there are more policy changes that can be made to incentivize housing within our existing infrastructure. TPC believes that the construction of junior accessory dwelling units — units held within the existing footprint of a home like a space above a garage — should not require additional development rights (and corresponding costs) to be converted into housing.

“The TRPA’s made some great progress, but we at TPC don’t feel like it’s enough,” added Janvrin. “The density changes just approved for motels will hopefully allow developers to pencil some of our older dilapidated motels into long term residential, but time will tell.”

A rendering of community open space amenities. (Provided / Studio T-Square)

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