South Tahoe’s VHR-restricting Measure T impacting businesses, not lodging
SOUTH LAKE TAHOE, Calif. — With the first quarter of 2022 in the rearview and an expected busy summer ahead, South Lake Tahoe officials, agency leaders and business owners are reflecting on what a post-Measure T city looks like following about 1,000 vacation home rental owners losing their permits in the past year.
Lodging numbers have remained stable but business owners, such as Debbie Brown, owner of Cold Water Brewery and Grill, are feeling the hit of losing VHRs near their businesses.
One of the driving factors in passing Measure T, which voters approved in November 2018, was the feeling that the neighborhoods didn’t belong to the locals anymore.
While it hasn’t been a perfect transition, the city’s VHR enforcement team is always on the look out for illegal rentals.
“The amount is small, the complaints are not daily but when we get them we respond to them and we continue to monitor advertisement websites,” Irvin said.
The city has not updated their enforcement log since Feb. 28 but in the first two months of 2022, there were only two listed complaints, compared to the first two months of 2021 where there were about 40.
Despite the loss of the VHRs, visitation to the region has remained high.
According to City Manager Joe Irvin, transient occupancy tax will meet the projected budget through March.
“A lot of that is attributed the fact that average daily rates have gone up and there’s been a greater demand in hotels and motels and there has been an increase in daily rates,” Irvin said.
The raise in rates has allowed the city to see consistency in TOT despite the loss of VHR income.
This season was interesting to say the least due to massive storms early in the winter, the least amount of snow ever from January through March, and a spike in COVID that temporarily wiped out much of the workforce.
Tom Foley is director of operations for DestiMetrics Resort Intelligence, a company that looks at destination travel analytics.
“For the most part, we saw a remarkably good season across the west and to me, what makes it remarkable is that it wasn’t really a season anyone would hang a hat on any other year that didn’t have pent up demand,” Foley said.
According to the Lake Tahoe Visitors Authority website, in January, the number of rooms rented was up almost 18% in El Dorado County and up 1.7% in Douglas County compared to 2020-21. However, both counties are still down from 2018-19 numbers which was the year with the highest numbers over the past eight years.
Foley echoes Irvin’s perspective on room rates.
“Room rates were incredibly high across the industry and lodgers were able to capitalize on that for a big win from the point of revenue even if occupancy didn’t top the charts,” Foley said.
With so many factors at play, its hard to really tell the real impact Measure T is having on lodging, especially since VHRs are still allowed in the tourist core.
“There might have been a migration from VHR’s to hotel rooms and California VHR’s to Nevada VHR’s, but that’s not something we could determine,” said Carol Chaplin, LTVA president/CEO. “Business levels have remained strong and honestly, the comparison of year over year, with COVID, fire, epic snow, no snow, inflation, gas prices and war becomes more difficult all the time.”
New lodging projects, such as Desolation Hotel and Hampton Inn, will help bring a boost to the tourist core and will make up for the loss of rooms elsewhere in the city.
“As a community, that’s a priority focus for us, is how do we continue to invest in and develop the tourist core in a manner that supports the demand for visitation,” Irvin said.
However, for business owners who don’t own businesses in the tourist core, like Brown, this push of visitors to the corridor has been the biggest negative impact of Measure T.
Brown, who lives in the Tahoe Keys, said her neighborhood used to have many VHRs but now it feels empty.
She said undoubtedly there has been a dip in business because of Measure T and it’s because there are hardly any visitors staying within the immediate vicinity of her business.
Visitors who are staying in the tourist core aren’t interested in driving out of that area and Brown said she doubts many people are taking public transit to visit Cold Water.
Brown said, all that Measure T has done is push business into the ends of the city, in the tourist core and into the unincorporated parts of El Dorado County where VHRs are still allowed. Now, there isn’t an even spread of business throughout the whole city.
“It was not a good financial decision,” Brown said.
Brown has owned Cold Water for seven and half years and during that time, she’s seen great snow years, terrible snow years and her business has survived COVID. Looking at her books, she said this year looks very different from any other year. Brown is connected in the business community and said she’s heard similar things from other businesses in the area.
“I know my business and I know I’ve been affected by Measure T,” Brown said.
It’s not just numbers either. Brown loves talking to her guests and she’s noticed an absence of guests who say they are staying in the area.
“We need workforce housing but that’s not what this did,” Brown said.
According to Irvin, about 30% of Measure T impacted homes have transitioned to medium to long-term rentals, rentals that last 30 or more days.
Irvin also said about 50% of the Measure T impacted homes have transferred to new owners, although there aren’t precise numbers of how many of those are second homes versus primary homes.
“Has it directly and positively created inventory for locals? I’m not seeing a strong correlation but I think there is some inventory that has opened up to locals,” Irvin said.
Landing Locals, a company that has partnered with the city to offer monetary incentives for people to rent their homes long-term to locals, has seen a similar trend.
They have about 200 homeowners that have expressed interest in participating in the program and about half of those were former VHR owners.
Colin Frolich, founder/CEO of Landing Locals, said one of the issues with VHR owners using their program is the affordability cap. The whole goal of Landing Locals is to get affordable, long-term housing for the local workforce.
Houses that are four bedrooms or more typically do not fall within that affordability cap or homeowners would be operating at a loss compared to what they made doing nightly rentals.
Still, Landing Locals has already unlocked 20 bedrooms in South Lake Tahoe and some of those did come from former VHRs. With the region’s housing crisis being what it is, anytime additional housing for the workforce is helpful.
With the “Zoom Boom” allowing more people to work remotely, some former VHR owners are using their homes as their primary residence, or at least spending more time there. So while that doesn’t open up inventory to current locals, it does help contribute to the local economy.
“I think we have new residents because of this” Irvin said. “And I think we’re likely going to see more permanent residents.”
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