Douglas County Commissioners vote to show loss of $2.1M if ban on VHRs imposed

DOUGLAS COUNTY, Nev. - During their Thursday meeting, the Douglas County Commissioners heard the financial implications should a resident-initiated ban on vacation home rentals (VHRs) be approved by voters in 2024.

This step was required due to a possible annual financial loss to the county of $2.106M which comes from Tourist Occupancy Tax (TOT) of $1.294M, and a loss of other revenues through fees and charges of $881,000. Some travelers could move into available hotel rooms, though many of the busiest months for hotels are the highest demand for VHRs, and the youth athletics use at the Tahoe Events Center aren't prime users of casino rooms. The county assumed a nine percent increase in hotel occupancy when figuring net losses.

Besides the casinos, the Douglas County hotels at the lake include Edgewood Tahoe, Zephyr Cove Resort, and Pine Cone Resort, along with timeshares.

"That would cut services to our seniors and parks and recreation, and that troubles me," Commission Chair Mark Gardner said.

Last year, the collected room tax in Douglas County was $4.49M. This includes what is taken in at the casino lodging properties. From the 2023 funds raised, $1.02M went to county parks and recreation, $297,000 to Tahoe Transportation District, and $2.7M to lake promotions among other funds.

As a board, they couldn't take into consideration the $5 per night surcharge for Tahoe Township that supports the repayment of the Tahoe Events Center bond. Last year that was almost $289,000.

The commissioners and public were reminded a few times during the discussion by the district attorney's office that the agenda item was not to discuss how funds are used but to discuss the fiscal impact should the citizen petition be approved by voters.

There would be financial impacts to residents who are employed in the industry, and other entities including the Tahoe Douglas Visitors Authority and Lake Tahoe Visitors Authority.

Should the measure be passed, only one currently active VHR in Tahoe Township would be allowed - the unit above Dart Liquor. There are ten possible locations that would be eligible as VHRs in Tahoe Township but they are not current VHRs and are in the commercial areas at the bottom of Kingsbury Grade.

There are currently 580 permits in the Tahoe Township area of Douglas County of the approximately 5,600 dwellings. There is a maximum of 600 permits available.

If passed, the measure would allow a shift of VHRs to the valley floor part of the county. During Thursday's meeting, the commissioners heard that the voter's initiative would allow VHRs in a set of commercial and tourism zoning areas, including the valley. At this time there are about 166 properties in total in those zones that could be VHRs in the county, but most are currently commercial buildings or mixed-use properties.

County staff reached out to the South Lake Tahoe enforcement staff to get details on the effects of Measure T, the ban on VHRs passed by voters in 2018 that eliminated VHRs in residential neighborhoods.

A removal of VHRs could impact the ability of TDVA to pay down the debt service of the Tahoe Events Center.

There is a lot of guesswork in figuring out potential losses, so commissioners could only look at the data available. Room tax revenue is volatile - there has been a dramatic loss in gaming revenue over the last 20 years, the pandemic, an increase in day-trippers, room rate increases, and weather/road closures.

Commissioner Wes Rice said if VHRs are eliminated at the lake, the unregulated use of home vacation rentals could return just as they were 30 years ago and enforcement would still be needed.

Commission Chair Mark Gardner was concerned about the loss of $811,000 in the fees charged through permits that cover enforcement and sheriff's deputies.

Commissioner Danny Tarkanian told his fellow commissioners that the casino room occupancy would go up when VHRs went away so they wouldn't need to worry about a drop in revenue to the extent presented.

There is no evidence that Douglas County vacationers would turn to a casino hotel for their outdoor recreational vacations.

"Everything you say I won't listen to," Tarkanian told Commissioner Sharla Hales who questioned his arguing against VHRs instead of discussing potential income changes for the county.

The two were at odds for much of the meeting.

Hales pointed out that South Lake Tahoe has new and updated hotels that have helped take in people not using the VHRs canceled due to Measure T. In her closing comments during the agenda item, she wants the numbers to be very defensible. Hales said she was uncomfortable with the nine percent estimated rise in hotel occupancy rates at the casinos and Edgewood.

In Douglas County, there has been an ordinance in place since 2005, and it has been updated several times. A VHR advisory committee was created to address concerns and hold meetings with the public to fine-tune details that they have brought back to the Commissioners for a vote.

As with all VHR discussions around Lake Tahoe, the public comments and passions were on display Thursday.

South Lake Tahoe Councilman Scott Robbins spoke during public comment, saying TOT revenue went up after Measure T due to higher room rates and increased use. He told the commissioners to not let pro-VHR people scare them with what he said was faulty information.

In South Lake Tahoe, collected TOT in 2019/20 was down $3.6M at $14,445,021. 2020/21 it was $16,919,134, 2021/22 - $18,014,305, and 2022/23 to date is $14,223,727. The TOT reports don't specify room nights and room rates.

One speaker, Heidi Gunter who is co-owner of a property management company, reminded commissioners that money will leave the economy in ways other than VHRs and associated fees - grocery shopping, entertainment, cleaning, and property staff. She also said the increase of TOT during COVID was an anomaly and those numbers may not be seen again.

Another speaker said the effect on neighborhoods and residents' ability for peace and quiet can't have a price put on them.

"I can see financial disaster if we do away with VHRs at the lake," said Rice.

In the end, the commissioners voted 3-2 with Tarkanian and Walt Nowosad against the motion that the initiative may have an anticipated financial impact on Douglas County if passed.

Since that passed, they needed to also adopt a description in a statement that would accompany the initiative to ban them should they get enough signatures for the November 2024 ballot. The financial impact in the statement would show a net loss from fees of $881,865, from TOT at $1,294,678, for a total loss of $2,106,543.