Last week we kicked off part one about the Tahoe housing crisis, and concluded that the most critical cause of today’s housing shortage is the underutilization of existing housing.
Very well put together Brian, I may not agree with everything you laid out but took some time to articulate some thoughts. I'll try and keep this in the order of what you covered:
GOV POLICY DRIVEN SOLUTIONS
- Limiting STR's seems to be a key area of concern, and the model Palm Springs implemented came to mind.
- On 'Leasing Public Land to Employers for Tent/Trailer housing', the CA State Parks system is also an example.
FREE MARKET SOLUTIONS
- Truckee is now providing pre-permitted ADU building plans & forgivable loans up to $50k, will be interesting to see how this pans out. I am concerned that on-street parking becomes an issue particularly in winter - anecdotally most apartment complexes in town were built with inadequate parking for their residents.
H.U.B
- The compulsory surveys can be problematic and result in large error bounds for the H.U.B. calc. Obviously this is just an idea right now, but you would need to estimate this error bound before presenting this as a viable solution.
- How will the proposed financial incentive for converting STR -> LTR be funded?
H.U.B. SUPPLEMENTAL PROP TAX
- This will only put further squeeze on the ‘forgotten middle’ class who may be struggling to maintain a toehold on home ownership, and certainly will not incentivize any Martis Camp residents to start renting out spare bedroom #7.
- If H.U.B. exceeds target, where will funding for tax credit come from?
Closing thoughts:
"I do agree single family homeownership is well beyond the reach of anyone in their 20s and 30s working in the service sector in Tahoe" - idk man, feel like that could be said of anywhere, not just Tahoe... The Bay is an exemplary spaghetti bowl of commutes for folks who can't afford to live where they work, and it may be a problem that will never be solved in whole or in part. As easy as it is to place the blame for our housing crisis on second homeowners and tourists we also need those folks buying our $9 beers to wash down $24 burgers, and putting up barriers that affect RE could have ripple effects... One item of note is local school district funding via Basic Aid (property tax base) instead of the state's LCFF program, which allows Truckee to pay teachers higher wages and thus attract better talent.
Keep these coming, looking forward to your next post.
Interesting read, thanks for posting. I was just reading about the SLT tax stuff. While I applaud the equal taxation approach, I'm seeing the haves vs have nots fight on a smaller scale in our Zephyr Cove HOA -- spreading things evenly is still perceived as unfair as the "haves" should pay more of their share than the have nots. It may be that in our community that is particularly "fair" as it's about 8:1 (non-residents, residents). The non-residents have much bigger monetary incentives and war chests to hire lawyers and to campaign against "socialism". As someone who grew up in ZC and has seen Whittell go from graduating class of 60 students to 6 -- the town has changed, and IMHO certainly not for the better. There are no easy (or at least, quick) solutions -- I suspect re-balancing of housing in Tahoe is going to take tens of years, which is about how long it took us to get into this mess. Even if housing is "fixed" the service business that cater to a residential population are gone and will take 10+ years to return in the right conditions. Tahoe is no longer a great place to live, even if you have money. Lots of people dreamt of living in Tahoe full time for COVID and have retreated to cities with services like health care and quality schools. For now, I think it's more likely that the pendulum continues to swing further towards fewer full time housing units as the remaining holders of property that would have catered to local residents also sell and see their properties converted into less dense and more expensive vacation housing. The story to watch, imho, is Reno/Carson which is also getting to be quite expensive as many Californians have moved there with the hope of a better balance between services and lower cost of living -- and we continue to see people who work in Tahoe travel further, which demands increased wages to commute to Tahoe which in turn causes the people who can afford to go to Tahoe to be wealthier and fewer. I haven't studied how the economies of Aspen and Vail work -- they must have a similar problem that is perhaps a decade ahead of Tahoe? Or perhaps the environment is too different to compare. The only thing I can think of that would reverse or halt the trend Tahoe is on is a Tech Bust where people lose 50-70% of their paper money for a sustained period and we saw massive sales of distressed properties to people who can afford them on current Tahoe Local Salaries.
Thx for the comment Mike - I do agree single family homeownership is well beyond the reach of anyone in their 20s and 30s working in the service sector in Tahoe. And I believe affordable housing doesn't mean everyone can become a homeowner. My HOA has ~700 properties and is probably 3:1 or 4:1 non-residents to residents. But as you and others have noted, if service workers can't afford to be here, then services don't exist. And vacation without services isn't great either. I would recommend having a google or two about Aspen. While it's by no means "affordable" at first glance, they've done about as good a job as any ski town at investing in and enabling service workers to survive. This AspenTimes piece from Dec 2023 is a good quick read: https://www.aspentimes.com/news/more-than-two-thirds-of-aspens-occupied-homes-are-deed-restricted/
I also think that a very real challenge for Tahoe (kinda similar to SF Bay Area in a weird way) is how fragmented the local governance structures are, which makes collective action intrinsically harder. Because Truckee and SLT are incorporated cities with mayors and city councils, I do think they're more likely to be the leaders in housing reform, and the rest of Placer / Washoe / Eldorado will eventually follow their lead.
Thanks Scott. Can you tell me more any more about prop 13? I know the basics I think, and heard someone else refer to prop 13 as the "third rail of CA politics" and unlikely to ever be overturned. But don't know why. I would presume that eventually laws change when enough people think they should change. Also curious if prop 13 even matters so long as the tax on property owners was just called something other than a "supplemental property tax assessment." Could call it the "Keep Tahoe Ticking Tax" or maybe "Keep Tahoe 22" and get both KT-22 zealouts and swifties to support it... 🙄
Very well put together Brian, I may not agree with everything you laid out but took some time to articulate some thoughts. I'll try and keep this in the order of what you covered:
GOV POLICY DRIVEN SOLUTIONS
- Limiting STR's seems to be a key area of concern, and the model Palm Springs implemented came to mind.
- On 'Leasing Public Land to Employers for Tent/Trailer housing', the CA State Parks system is also an example.
FREE MARKET SOLUTIONS
- Truckee is now providing pre-permitted ADU building plans & forgivable loans up to $50k, will be interesting to see how this pans out. I am concerned that on-street parking becomes an issue particularly in winter - anecdotally most apartment complexes in town were built with inadequate parking for their residents.
H.U.B
- The compulsory surveys can be problematic and result in large error bounds for the H.U.B. calc. Obviously this is just an idea right now, but you would need to estimate this error bound before presenting this as a viable solution.
- How will the proposed financial incentive for converting STR -> LTR be funded?
H.U.B. SUPPLEMENTAL PROP TAX
- This will only put further squeeze on the ‘forgotten middle’ class who may be struggling to maintain a toehold on home ownership, and certainly will not incentivize any Martis Camp residents to start renting out spare bedroom #7.
- If H.U.B. exceeds target, where will funding for tax credit come from?
Closing thoughts:
"I do agree single family homeownership is well beyond the reach of anyone in their 20s and 30s working in the service sector in Tahoe" - idk man, feel like that could be said of anywhere, not just Tahoe... The Bay is an exemplary spaghetti bowl of commutes for folks who can't afford to live where they work, and it may be a problem that will never be solved in whole or in part. As easy as it is to place the blame for our housing crisis on second homeowners and tourists we also need those folks buying our $9 beers to wash down $24 burgers, and putting up barriers that affect RE could have ripple effects... One item of note is local school district funding via Basic Aid (property tax base) instead of the state's LCFF program, which allows Truckee to pay teachers higher wages and thus attract better talent.
Keep these coming, looking forward to your next post.
Interesting read, thanks for posting. I was just reading about the SLT tax stuff. While I applaud the equal taxation approach, I'm seeing the haves vs have nots fight on a smaller scale in our Zephyr Cove HOA -- spreading things evenly is still perceived as unfair as the "haves" should pay more of their share than the have nots. It may be that in our community that is particularly "fair" as it's about 8:1 (non-residents, residents). The non-residents have much bigger monetary incentives and war chests to hire lawyers and to campaign against "socialism". As someone who grew up in ZC and has seen Whittell go from graduating class of 60 students to 6 -- the town has changed, and IMHO certainly not for the better. There are no easy (or at least, quick) solutions -- I suspect re-balancing of housing in Tahoe is going to take tens of years, which is about how long it took us to get into this mess. Even if housing is "fixed" the service business that cater to a residential population are gone and will take 10+ years to return in the right conditions. Tahoe is no longer a great place to live, even if you have money. Lots of people dreamt of living in Tahoe full time for COVID and have retreated to cities with services like health care and quality schools. For now, I think it's more likely that the pendulum continues to swing further towards fewer full time housing units as the remaining holders of property that would have catered to local residents also sell and see their properties converted into less dense and more expensive vacation housing. The story to watch, imho, is Reno/Carson which is also getting to be quite expensive as many Californians have moved there with the hope of a better balance between services and lower cost of living -- and we continue to see people who work in Tahoe travel further, which demands increased wages to commute to Tahoe which in turn causes the people who can afford to go to Tahoe to be wealthier and fewer. I haven't studied how the economies of Aspen and Vail work -- they must have a similar problem that is perhaps a decade ahead of Tahoe? Or perhaps the environment is too different to compare. The only thing I can think of that would reverse or halt the trend Tahoe is on is a Tech Bust where people lose 50-70% of their paper money for a sustained period and we saw massive sales of distressed properties to people who can afford them on current Tahoe Local Salaries.
Thx for the comment Mike - I do agree single family homeownership is well beyond the reach of anyone in their 20s and 30s working in the service sector in Tahoe. And I believe affordable housing doesn't mean everyone can become a homeowner. My HOA has ~700 properties and is probably 3:1 or 4:1 non-residents to residents. But as you and others have noted, if service workers can't afford to be here, then services don't exist. And vacation without services isn't great either. I would recommend having a google or two about Aspen. While it's by no means "affordable" at first glance, they've done about as good a job as any ski town at investing in and enabling service workers to survive. This AspenTimes piece from Dec 2023 is a good quick read: https://www.aspentimes.com/news/more-than-two-thirds-of-aspens-occupied-homes-are-deed-restricted/
I also think that a very real challenge for Tahoe (kinda similar to SF Bay Area in a weird way) is how fragmented the local governance structures are, which makes collective action intrinsically harder. Because Truckee and SLT are incorporated cities with mayors and city councils, I do think they're more likely to be the leaders in housing reform, and the rest of Placer / Washoe / Eldorado will eventually follow their lead.
California Proposition 13 makes this plan for a “supplemental property tax assessment” illegal.
Thanks Scott. Can you tell me more any more about prop 13? I know the basics I think, and heard someone else refer to prop 13 as the "third rail of CA politics" and unlikely to ever be overturned. But don't know why. I would presume that eventually laws change when enough people think they should change. Also curious if prop 13 even matters so long as the tax on property owners was just called something other than a "supplemental property tax assessment." Could call it the "Keep Tahoe Ticking Tax" or maybe "Keep Tahoe 22" and get both KT-22 zealouts and swifties to support it... 🙄