South Lake Tahoe Planning Commission to examine taxes to fund affordable housing

SOUTH LAKE TAHOE, Calif. - Most can agree that South Lake Tahoe and most communities across the country need better affordable housing options for residents. A problem with the needs is that funding needs to be made available to build the needed units.

The South Lake Tahoe Planning Commission will examine two options for funding at its 3 p.m. meeting Thursday in a workshop format: A rise in Transient Occupancy Tax and a new Real Estate Vacancy Tax. The meeting will be in person in City Council chambers at the airport, as well as on zoom (see here).

To meet the City Council’s adopted 2021-2026 Strategic Plan, a set of housing programs are being developed to address the spectrum of housing needs within the city limits. In order to fund this broad-spectrum approach, the Strategic Plan identified exploring the feasibility of a local discretionary funding source as an action item.

The establishment or increase of these taxes would require voter approval.

City staff will make a presentation during the workshop, and comments will be collected from the public and commissions about these two potential funding sources. There are other options that may be considered in the future: real estate transfer tax, sales and use tax, alternative business taxes, inclusionary housing in-lier fee, and a commercial linkage fee.

Transient Occupancy Tax (TOT) is currently at 12 percent for South Lake Tahoe except for properties in the tourist core area which is at 14 percent. The workshop will seek comment on raising it another two percent to fund affordable housing. The last increase in 2016 (Measure P) was two percent to go to building the new recreation center and other recreational needs. City staff estimates the extra two percent would raise $2.8M-$3.3M in revenue. Currently, Placer County TOT is at 10 percent, and Douglas and El Dorado counties are at 14 percent.

Real Estate Vacancy Tax has been tossed around in the public for a few years, but City staff will present a $3000 per unit fee if held vacant for seasonal or occasional use. Staff estimates $11.4M a year would be raised. Also on the program is a commercial fee for vacant buildings. A $1,000 - $10,000 fee would be imposed per 1,000 square feet of gross leasable space if vacant. Staff estimates this would raise $335,000 to $3.4M annually.

After this public workshop, there will be focused stakeholder meetings on this subject on April 6 for invited participants. The City Council will get a presentation at a later date.