Letter: Tahoe needs housing solutions, not a vacancy tax

Tahoe has a housing problem. This is the one thing that we can all agree on.

Our community is leaving town at increasing rates as they continue to get priced out. “Locals for Affordable Housing” has been very vocal in publicly advocating for what they claim is a solution: a vacancy tax.

It is not. The truth is, those in our community who need housing solutions the most would be hurt significantly if this tax measure passed.

But we do need a housing solution, right? That begs the question: what levers are actually at our disposal to pull? Well, I’d like to talk to you a little about a real progressive issue, it’s called exclusionary zoning.

We have an artificial supply and demand bottleneck that breaks down as a fundamental equity issue. Who owns the most development rights and coverage in Tahoe? The California Tahoe Conservancy. Who regulates the zoning and building on this land? TRPA (page 4).

What if we, as a community, thought more holistically about zoning, development rights, and coverage?

Rather than ghettoize certain neighborhoods, what if we approached zoning from a mixed-income perspective? What if we changed the permitting process to financially incentivize multi-unit properties throughout South Lake over mega-mansion builds? What if our state agencies stayed true to their mission statement?

To build a house or apartment of any size in Tahoe you first need a permit. So, you buy what’s called a Residential Unit of Use. Similarly, to build one hotel room, you need one Tourist Accommodation Unit. If you are a developer looking to optimize profit and you have a choice between building a mega-mansion at the cost of a single development right or building a multi-unit home at the cost of multiple rights, which would you do? I don’t blame someone who’s making straight-forward business decisions.

But what if we changed their incentives? What if we created an avenue for developers to make more money on multi-family units than these mega-mansions? As we know, development rights in Tahoe are limited. What if developers could only access certain development rights if they built apartments and multi-family homes?

Recently, the TRPA allowed for conversion of TAU’s into Residential Units of Use. It’s a workaround in the development cap. The City of SLT currently has 70 TAUs that it has set aside and is giving away for free to developers who agree to use it towards building multi-family and deed-restricted apartments.

The Conservancy, a California state agency whose mission is to serve the public, is currently holding onto development rights and is not selling them. What if they also gave their development rights, including the over 1,600,000 square feet of coverage they have for free to developers dedicated to building multi-family units? What if they worked alongside our city’s housing division to incentivize the exact kind of developments needed to solve the housing crisis in South Lake?

This near-immediate increase in housing would have a substantial impact in our community. All while developers still develop and realtors still sell. Every boat is lifted in this rising tide.

Conversely, the premise of the vacancy tax being put forth by the “Locals for Affordable Housing” is deeply flawed and is not a viable solution to SLT’s housing problem.

First, they suggest 20 percent of homes will be sold, and 80 percent will pay the tax, promising us $34M in annual revenue. While this sounds great in theory, there is no evidence to support this conjecture, and these aspirational figures do not account for several important factors. Not only does the $34M figure assume 100 percent compliance, it does not take into consideration the significant monetary costs and drain on local resources that would be required to ensure compliance.

“Locals for Affordable Housing” has touted the city of Vancouver as a model city for how a vacancy tax would work. However, if we examine the data from Measure T or Vancouver’s vacancy tax programs, it is a fact that most vacant homes will avoid compliance on all levels. Vancouver has been dealing with significant levels of tax evasion. The city even commissioned a report and found that “the evasion requires more resources for performing compliance work and thus increases the impact of unintended consequences.” So much so, they are now looking to pull back on their vacancy tax in an upcoming ballot measure.

“Locals for Affordable Housing” has not factored in any of the costs of the administrative or compliance work, which unfortunately means that the $34M annual revenue figure, does not account for the significant costs to execute the program and the drain on community resources. Touting revenue projections that completely ignore the costs of execution creates a false narrative and will lead to unrealistic expectations in our community on what the actual financial benefit would amount to.

They are promising you funds based on the assumption that everyone will comply, and no staff time will be needed to do anything associated with administering this tax.

The reality is that we will need to hire extra staff to monitor. And even then, we will likely only catch and fine a very small percentage of vacant homeowners. This is the current reality of Measure T. When you factor in that it’s even harder to monitor vacancies, it’s unclear if we walk away with a profit at all.

Another consequence that has completely been ignored in the vacancy tax proposal, is that all other similar initiatives have been met with significant litigation. This means our city staff and attorneys could likely be focused for the next 5-10 years on litigation, which is another huge drain on financial and local resources before we even see a penny in revenue.

South Lake Tahoe needs to have meaningful conversations around this important issue and the time to act is now. The solutions are there. We’ve come together as a community in the past to solve tough problems, we can do it again. Let’s not let false promises and fabricated solutions distract us. We know what our values are - we are a small community that takes care of each other when times get tough. Let’s start thinking critically about how we can use those values to shape a more inclusive and equitable Tahoe that everyone in our community can enjoy.

Something to think about

- Ayana Morali

Ayana Morali is a full-time South Lake Tahoe resident. Before moving to Tahoe, she was an award-winning journalist with over 20 years of experience covering policy issues and government corruption.