City Council prioritizes becoming a charter city over other new taxes for funding affordable housing

SOUTH LAKE TAHOE, Calif. - There is a need for affordable housing in South Lake Tahoe, and during its meeting on Tuesday, City Council discussed possibilities to finance the construction of housing including an increase to the Tourist Occupancy Tax (TOT) and a vacant building tax.

Many members of the public spoke on the subject, providing ideas and input on the current housing situation and solutions.

There was no vote on this item, just guidance from the Council to staff on how they'd like them to proceed on the next steps.

Second home ownership at Lake Tahoe has been a thing for over one hundred years. The number of year-round residents was low, especially on the South Shore. When more homes were built in the 1950s and 1960s, having a second home was a dream many sought.

Fast forward to 2023, and there is still a large percentage of homes used as second homes at the same time local residents struggle to find housing they can afford. This isn't just a Lake Tahoe problem as resort towns across the country are faced with the same scenario.

During the City Council meeting, Zach Thomas, the City's housing manager laid out possible housing initiatives being funded locally by the two possible taxes. He explained the Housing Funding Feasibility Study paid for by the City, and the outreach completed with some stakeholder groups in South Lake Tahoe.

Unlike other communities, South Lake Tahoe cannot build its way out of a housing problem due to minimal space and restrictions so the utilization of what is already in the community is necessary.

In order to create affordable housing, the City looked at funds from available government programs. This isn't always the cheapest way to go with the Sugar Pine Village Project a perfect example. Each unit in Phase 1 will cost about $808,823, even with the building of the modular units off-site in Sacramento. The cost includes all soft costs (i.e. predevelopment, design, financing, grant acquisition, administration, etc.) and construction (prevailing wage) costs. The City’s loan contributions of $821,116 equate to roughly $12,000 per unit in initial cost to the City.

Sugar Pine Village will provide 248 residential 1-, 2- and 3-bedroom units when completed. The 60 units in Phase 1 will be assembled this summer with utilities and parking lots being added with opening in 2024. Millions of dollars are dedicated to this project through different public sources.

During the meeting, it was brought up that nobody really knows how many units are needed. Thomas spoke of 936 people being on waiting lists for the projects the City already built, including The Aspens, Kelly Ridge, and Sky Forest Acres. It is unknown how many of these names are duplicated, or if they are still actively searching for housing. There was a previous estimate of a need for 2,000 housing units, but with very few building allocations left in the Tahoe Basin, that number cannot be built.

Adding to new housing is the new dormitory at Lake Tahoe Community College which will house 100 students.

One thing not discussed was the amount of rent people pay, much of the time being much higher than wages earned locally. In many cases, renters are paying double what they were just two years ago. There is no data on how many would find appropriate housing if rents matched local incomes.

Mayor Pro Tem Cody Bass said they need data to solve the problem so he suggested asking staff to find the best way to get that done, perhaps having a registry of residents actively seeking housing as well as an accounting of eviction notices. "We need a target, a pulse," said Bass of the need for accurate data.

What can be done is to expand the Lease to Locals program that matches renters to second homeowners for an annual lease, or more. There are currently 69 people in South Lake Tahoe housed due to this program that financially rewards the homeowner to rent to locals. A possible expansion of this program could match seasonally vacant homes to seasonal residents who move to south Lake Tahoe to work the ski resorts or fulfill summer job openings.

Measure T, which banned short-term rentals in the non-tourist core area of South Lake Tahoe, has produced a few "long-term rentals" but to know if those are just 30-day rentals, seasonal rentals, or actual long-term housing for locals is unknown. Many of the seasonal, 30-day rentals have rents well beyond the reach of the average local looking for housing.

A few solutions came to the table other than taxing lodging properties and second-home owners.

Fixing shuttered apartments would help fill the void as would fixing shuttered motels that could become housing. Try to buy Motel 6 and create housing instead of the current plan for demolition to restore the meadow and stream zone.

Housing advocate Rebecca Bryson suggested the City incentivize what they want to see and penalize what they don’t want.

The City Council wrapped up the conversation with an action plan for City Staff and a list of priorities, with the first priority of looking into becoming a Charter City where they could add a transfer tax to real estate transactions to raise income for affordable housing projects. Down the line is a possible increase of the TOT tax, and a vacancy tax is currently taking up the bottom spot on the priority list. The Council said they will continue to seek creative solutions for housing.