California voters consider controversial vacation home tax issue in iconic Lake Tahoe area

SOUTH LAKE TAHOE, CA. Vacation home owners in Northern California’s South Lake Tahoe could face a significant tax hike if voters in the mountain resort town approve a measure on the ballot Tuesday that pits affordable housing against private property rights.

South Lake Tahoe, located on the shores of a famous alpine lake, has about 7,000 vacant homes — 44% of the city’s estimated living area, according to the 2022 American Community Survey. Measure N would impose a flat tax of $3,000 on homes that are vacant 182 days in a calendar year.

The tax will increase to $6,000 for each subsequent year that the home is vacant for six months.

The city is the latest in the United States to see growing debate about the impact of resort real estate. Critics say empty second homes have worsened the nation’s housing crisis by contributing to a shortage of affordable rental properties, especially in pricey resort destinations like South Lake Tahoe.

Supporters of the measure say they want to encourage homeowners to rent to workers or contribute to housing, road and transportation projects. They say the city is losing families as businesses have to hire in a region where land for housing is scarce.

Kelly Bessem works at least 50 hours a week in multiple jobs as a hydrology and land management scientist and snowboard instructor. Now she’s sleeping in her car so she can buy a house in Markleeville, which is about 40 minutes from South Lake Tahoe.

“I did everything I had to do, but I still got to the point where I just squeezed through,” Bessem said.

Nancy Dunn, a homeowner who has lived part-time in South Lake Tahoe since 2018, opposes the measure as unfair and un-American.

“This is my home, and I want to be able to come back to it whenever I want, come and go whenever I want,” Dunn said as she stocked her home with firewood earlier this month. “The American way is to have the right to own property and do with it as you please.”

The California Association of Realtors and the National Association of Realtors contributed a combined $1 million to defeat the measure in a city with just 12,000 registered voters.

While still uncommon in the U.S., more places are considering a vacancy or vacant home tax to address the workforce housing shortage by using underutilized homes to expand the long-term rental market.

In Hawaii, the Honolulu City Council is trying to pass a tax on empty homes, its third attempt since 2018, while the Colorado Ski Towns Association is pushing for legislation allowing cities and counties to ask voters to approve taxes on empty homes.

Margaret Bowes, executive director of the Colorado group, said resort towns have few options when choosing where to build. The housing shortage has “reached crisis levels,” affecting essential services and commerce “from ski resort companies to local small businesses,” she said.

Perhaps the most famous example is Vancouver, Canada, which in 2017 introduced a tax of 1% of the assessed taxable value of a vacant home. The tax is now 3%, and the city says it has raised $142 million for affordable housing projects.

In California, San Francisco and Berkeley have approved taxes on vacant properties in 2022.

A vacancy tax may work to a limited extent in large cities, but a vacancy tax could make a huge difference in smaller cities like South Lake Tahoe, says Shane Phillips, who runs the Randall Lewis Housing Initiative at UCLA. Angeles.

He didn’t know enough about the proposed tax to offer an opinion, but generally supports taxes on empty vacation homes in areas where housing is in short supply. Taxes can be used to discourage harmful behavior, such as taxes on cigarettes, he said.

“And I think a similar argument can be made here: people occupying multiple homes and not living in them in communities like South Lake Tahoe… it’s actually hurting other people,” Phillips said.

Measure N has roiled the tiny community, which, with about 21,000 year-round residents, is the most populous city surrounding Lake Tahoe and a popular weekend getaway. It is 188 miles (300 kilometers) northeast of San Francisco.

The city’s median household income is $68,000, which is below California’s median income of $95,000. The median home sale price was $750,000 in September, up from $427,000 five years ago, according to Redfin.

Modeled after a tax on empty homes in Berkeley, city officials project the proposed tax would raise up to $8 million in the first year and up to $20 million the following year.

Amelia Richmond, co-founder of Locals for Affordable Housing, the group that collected signatures to put the issue on the ballot, said this is an opportunity to ensure South Lake Tahoe doesn’t go the way of other mountain towns with even more high level of vacancies. .

Property owners will self-report annually, although documentation may be required. There are exceptions to the occupancy requirement, such as homes undergoing renovation.

To avoid the tax, vacation home owners can sell their property, rent it out to a year-round tenant, or rent it out to seasonal travelers or employees. They can’t offer their homes as short-term rentals after the city voted to reduce rentals to less than 30 days, citing noise and housing shortages.

Opponents say many of them were saving and saving for modest second homes and should not be penalized for the lack of affordable housing in the region. They are also upset that, as part-time residents, they cannot vote on the measure.

Tom Fields, 85, divides his time between a three-bedroom house he describes as nothing special other than its Lake Tahoe location and a location in central Oregon.

“This is crazy, and I don’t even know if it’s constitutional,” he said. “When you buy land and they start taking away the rights, that’s when people get upset.”

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Har reported from San Francisco.