New cap on Lake Tahoe vacation rentals aims to protect local housing. Does it go far enough?

The Placer County Board of Supervisors this week voted to clamp down on the number of vacation rentals operating around Lake Tahoe, citing a crippling housing crisis that locals say makes it nearly impossible to live in one of California’s tourism hot spots.

The new rule caps the number of licensed vacation rentals at 3,900 in the Tahoe region. The cap was lowered from a proposed 4,300, which would represent 25% of Placer County’s housing stock in the Basin.

It follows a temporary rule the county adopted last year restricting vacation rental permits to 4,300 homes.

The cap sets a limit that’s greater than the current number of licensed vacation rentals in Placer County’s share of the Tahoe Basin, but in line with the number of homes that county officials believe are actually being used by tourists.

Placer County has about 2,500 active short-term rental permits, but 3,900 open Transient Occupancy Tax certificates, which allow the county to collect tax on guests who rent properties and hotel rooms. To obtain a permit, a property owner must first secure a tax certificate, county staff said, which is why 3,900 was set as the cap.

Board Chairwoman Cindy Gustafson said the cap was not an attempt to increase the number of short-term rentals.

“It was not, and I’m going to own this and it won’t make me popular, but it was not to increase the number of (short-term rentals)“ she said. “We really felt at the time there’s probably that many operating currently that aren’t permitted and aren’t being tracked, and we were trying to bring everybody into compliance. It was never my intent to say ‘let’s have more.’”

Some residents wanted the board to go even further in tightening the restrictions. Many people attended the meeting in-person and virtually, sharing concerns of how the rise in short-term rentals affected traffic, available housing, and the character of their communities.

“We’re all feeling tremendous impacts from over-tourism,” Gustafson said.

El Dorado County, which also stretches into the Tahoe Basin, limits vacation rentals to 10% of its available housing in the region, or 900 homes.

And Nevada’s Douglas County on the east shore of Lake Tahoe allows about 13% of its available housing to be used for short-term rentals, which is about 600 homes.

More tourists visiting Lake Tahoe

According to studies done by the Tahoe Regional Planning Agency and others, at least 42% of the traffic in the Tahoe Basin is day-use visitors, she added, not vacation renters, making the issue more complex.

“There’s a growing sentiment and there has been for some time that the lake, the region, is going to continue to be impacted as we watch Northern California grow, as we look at the effects of climate, people wanting to get out of the cities, climate, there’s many, many factors there,” Gustafson said. “And what ability do we have because we’re not a national park to limit capacity.”

The new cap on permits takes effect March 22.

Homeowners who permanently reside in the community and want to rent out a room or second unit must still obtain a permit, but are not subject to the cap, the county said.

Expensive home or long commute

The decision to address short-term rental permits came on the heels of a historic 2021 summer season for Tahoe Basin residents, in which an unprecedented bleed of local workers forced many businesses to reduce hours significantly.

Dwindling housing stock and rising costs forced many long-term residents out of the area as cash-heavy buyers from the Bay Area and Sacramento swept into the real estate market, pricing out local buyers.

These factors contributed to a sharp drop in available housing for full-time residents, forcing some to leave the area permanently or endure long commutes.

“So the inventory right now is extremely low on top of having very, very high prices so you can understand why people are having such a hard time finding housing right now in our region,” said Emily Setzer, senior management analyst for the county in a presentation.