SOUTH LAKE TAHOE
The housing solution we already have
We have houses, but residents are losing their homes.
The housing crisis is worse than ever, but solutions are possible. The City of South Lake Tahoe is considering a vacancy tax on houses that sit empty most of the year.
FREQUENTLY ASKED QUESTIONS
WHY DO WE NEED A VACANCY TAX?
We need solutions for our housing crisis. Median home prices in South Lake Tahoe have more than doubled since 2014, reaching $705,000 in 2023. Approximately half of Tahoe’s workers now live outside the region and of those who do live here, nearly two-thirds don’t earn enough to afford the living expenses of a typical family. Lack of affordable housing has led to a shrinking population and drop in school enrollment since 2020. We need innovative solutions that address the scale of the crisis.
How would a vacancy tax benefit South Lake Tahoe?
45% of all single-family homes in South Lake Tahoe - roughly 7,300 houses - currently sit empty most of the year. A vacancy tax would incentivize owners to rent their properties to local residents for at least half of the year, while simultaneously generating up to $22M per year funds for new housing.
In addition to benefiting locals, a vacancy tax benefits the second homeowners and full-time residents by ensuring South Lake Tahoe remains a vibrant community. The housing crisis is eroding the experience for visitors and residents alike - and no one wants to own a home in a hollow town devoid of employees or local culture.
Why don’t we build more housing instead of ADDING A TAX?
The City is building as much new affordable housing as it can, but it is not enough. Because the TRPA limits new development in the Tahoe basin, the City of South Lake Tahoe only receives 33 new allocations per year for housing construction. This means that even with unlimited funding, it would take decades for the city to construct enough housing to alleviate the current housing shortage.
The City is currently working on incentivizing homeowners to rent to locals with Landing Locals and building new affordable housing such as the Sugar Pine Village project - but to solve the housing crisis, we need to further incentivize the conversion of empty second homes into long-term rentals or sales to local residents.
How would a vacancy tax work?
While different options are under consideration, one option is that any residence not occupied for at least 50 percent of the year (182 days) would be considered a second home subject to a vacancy tax. Vacancy taxes recently passed in other California cities have started at $3,000 per year for each nonexempt residence in the first year, increasing to $6,000 in each subsequent year.
Renting the property for at least 6 months out of the year to a local resident would exempt an owner from the tax. Additional exemptions would exist for properties under active renovation, buildings in probate, and homes of elderly residents currently in a care home or long term medical treatment.
Is a vacancy tax legal?
Yes, here in California, the cities of Oakland, San Francisco, Berkeley have recently implemented vacancy taxes - and Sacramento and Truckee have announced they are considering doing the same.
As far as any risk of litigation, the City of South Lake Tahoe's in-house counsel has said that any litigation could be handled in-house, just like the Measure T litigation. In-house counsel added that legal expenses are not a significant concern.
Is it fair to tax second homeowners who do not get to vote locally? Some second homes are family homes that go back generations.
Second homeowners are absolutely a valued part of our community - many are deeply involved in local nonprofits and local efforts. And as part of our community, they need to be part of the solution to end the housing crisis. The housing crisis is eroding the experience for full time residents, second homeowners and visitors alike. No one wants to own a home in a town with no local culture or employees to staff local businesses.
Further, Prop 13 mandates that assed values of properties can rise by no more than 2 percent per year until the next sale - meaning owners of second homes that have been in their family for generations are paying a small fraction of the property taxes that a local resident would pay if they purchased the same home today.
As a result of Prop 13, residents who have recently bought homes are being taxed many times more than second homeowners who have owned family property for decades. A vacancy tax would allow our community to share that burden more fairly.
Second homeowners pay property taxes with no “drain” on local resources. Isn’t that a good thing?
Despite this common narrative - the truth is quite the opposite. Housing *is* a local resource, and a very limited one, given Tahoe’s environmental and physical constraints on development.
As school funding is largely dependent on the number of children enrolled in each school district, it is also incorrect to assume that our schools benefit from the property taxes of second homes while maintaining lower teacher/student ratios. As the housing costs have skyrocketed over the past 20 years, we have lost 36% of our school enrollment – and the funds that come with it.
Local businesses also suffer when homes sit vacant. Traffic becomes over-concentrated on weekends and holidays, while shops, restaurants and grocery stores see visitation and revenue drop midweek and in the off-season. Despite the long-held narrative to the contrary, empty second homes are not a drain-free source of tax revenue. They come at high cost to our local economy and our community.