South Lake Tahoe City Council reacts to lawsuit, court order on new short-term rental rules

The South Lake Tahoe City Council said it wants to move forward with phasing out short-term rentals in residential areas, while delaying enforcement of stricter occupancy rules in the face of a lawsuit and court order.

Earlier this year, a referendum that placed new restrictions on short-term rentals in South Lake Tahoe passed by a narrow margin. Measure T phases out existing short-term rentals outside the tourist core over a period of three years, with no new short-term rental permits issued outside of that area. Existing hosts must renew their short-term licenses each year and stop offering short-term rentals after December 31, 2021.

The measure also reduced the number of occupants short-term rentals can host at one time to two people per bedroom, with a maximum of 12 people per property. Current rules allow two people per bedroom plus four per home. The new occupancy rules were scheduled to go into effect on December 20.

However, after a lawsuit by the South Lake Tahoe Property Owners Group challenging the new measure was filed December 18, an El Dorado County judge issued a temporary restraining order December 24 to delay implementation of the new occupancy limits.

A hearing is set for January 24, which could result in a preliminary injunction blocking the full implementation of Measure T until the court decides the merits of the case. No trial date is scheduled yet.

The South Lake Tahoe City Council met this week and issued a statement saying that it respects “the will of the voters of South Lake Tahoe” and supports the continued phase-out of short-term rental permits in residential areas while the case proceeds, as well as delaying enforcement of new occupancy limits due to the impact on previous visitor reservations.

The City Council also expressed its “desire for the City to work toward a future compromise on the VHR [vacation home rental] issue, involving stakeholders on both sides of Measure T, in an effort to bring our community together.” 

South Lake Tahoe started the crackdown on short-term rentals late in 2017 when it started implementing strict new rules that regulated short-term rental parking, noise, hot-tub use, and trash disposal; set a citywide cap on short-term rentals; and included a $1,000 fine for both renters and owners for violations.

The law requires short-term vacation rental hosts to be licensed and renew their registration every year, as well as collect city transient occupancy tax from their guests and pass those tax revenues on to the city.

Although Airbnb collects lodging taxes on behalf of its hosts in some California cities, it does not collect them in South Lake Tahoe, and neither do other listing platforms such as VRBO or HomeAway.

That means that short-term rental operators are responsible for registering with the city, collecting taxes from their guests, filing tax returns, and remitting taxes. MyLodgeTax offers an automated solution for short-term rental hosts looking for simplified lodging tax compliance. For more on California lodging tax, see our state vacation rental tax guide.    

South Lake Tahoe is not the only city dealing with legal challenges to short-term rental laws. In November, Boston agreed to delay enforcement of parts of its new short-term rental rules. At issue is a provision requiring short-term rental booking agents such as Airbnb to share data with the city and remove any hosts who break the rules.

Airbnb claims those provisions violate federal laws that protect online platforms from punishment for content. Airbnb and Boston agreed that the data-sharing requirements wouldn’t be enforced until a judge rules on Airbnb’s request for an injunction while the case proceeds.