The West is having second thoughts on second homes

Amelia Richmond knocked on the apartment door, squeezing a clipboard under her arm. No one answered. She waited another minute before crossing the patch of dirt to the next door. This time, a woman with glasses and long brown hair opened the door and two small dogs ran outside, barking and circling Richmond’s feet.

“Hi, good evening,” Richmond said. “We’re gathering signatures to get an initiative on the November ballot.”

It was a Tuesday evening in April during one of the first warm weeks of spring, but the air still had enough of a bite that Richmond wore a blue puffy jacket to stay warm while she walked door to door. She was one of 85 volunteers canvassing South Lake Tahoe to get a new tax measure on the ballot.

At first, the woman who lived in the apartment didn’t seem all that interested in signing. “Probably not,” she said, almost shutting the door, but Richmond kept talking.

She explained that, in this lakeside California community, 44% of the housing units are vacant more than six months out of the year. That adds up to more than 7,000 homes. The petition proposes a tax on those properties — $3,000 the first year and $6,000 every subsequent year they remain unoccupied. Called a vacancy tax, it would raise up to $34 million a year for housing, road repair and public transit.

“No one that lives here would have to pay it,” Richmond continued. “Just the ones that are empty for more than half the year, so we can raise more money to build more affordable housing.”

The door stayed open.

South Lake Tahoe is like many resort towns in the West, where tourism is the main driver of the economy, and has been for the last century.

Today, the Tahoe area sees an estimated 15 million visitors a year. A vast majority of jobs are in the service industry. Half of the city’s residents earn less than $49,000 a year.

With a $655,950 median sales price for single-family homes, locals can’t compete with out-of-town buyers looking for second homes. So, like many mountain resort communities where housing and wages are grossly mismatched, South Lake Tahoe is losing its full-time residents.

“Tourism promises much but delivers only a little,” writes Hal K. Rothman, in his book, “Devil’s Bargains: Tourism in the Twentieth-Century American West,” an authoritative read on the social and economic consequences of tourism that’s just as relevant today as when the book was first published almost 30 years ago, in 1998.

In Tahoe, the repercussion has been the hollowing out of the community. “The inherent problem of communities that succeed in attracting so many people is that their very presence destroys the cultural and environmental amenities that made the place special,” he writes.

Today, half of South Lake Tahoe’s workforce lives outside of the Tahoe Basin, in cities across the border in Nevada, trading cheaper housing for longer commutes — especially long in Sierra Nevada blizzards. South Lake Tahoe schools have seen a 35% drop in enrollment since the school district’s peak in the 1990s.

Meanwhile, across the entire Tahoe Basin, vacation homes take up half to nearly two-thirds of the housing stock, and given Tahoe’s strict environmental regulations, building new housing is not only difficult but expensive.

South Lake Tahoe can’t build its way out of the problem fast enough, Richmond says. The rate of new construction is outpaced by the growth in second-home ownership. This predicament — where local workers can’t find places they can afford to live, yet neighborhoods are dark and empty for most of the year because they are mostly vacation homes — is a common one in the region.

In Park City, Utah, 66% of the homes are empty six months out of the year or more, according to the Census Bureau’s American Community Survey data in 2022. Compare that to Salt Lake City, one mountain pass and a county line away, which has a vacancy rate of only 5%, and it becomes evident how this particular element of the housing crisis isolates itself to small mountain communities that rely on a local workforce.

In Aspen, Colorado, 38% of homes are empty half of the year or more. It’s about the same ratio in Gunnison County, home to Crested Butte, while to the north, in Sun Valley, Idaho, almost 75% of residences are vacant, likely second homes used once or twice a year. That’s comparable to the north shore of Lake Tahoe, about an hour’s drive away from South Lake Tahoe, where about 68% of the housing stock are second homes.

“You can’t find a ski town in which this hasn’t been the case, because the incentives are there,” Richmond says. “If you have the capital to come in, buy a property, use it when you want, and ride the property value up, it’s a good deal.”

Richmond believes the vacancy tax would shift the market incentives, unlock much-needed housing for locals and raise money for affordable housing. It’s an idea that’s percolating across the West — Vancouver has one, so does Oakland, Berkeley and San Francisco — though San Francisco’s Empty Homes Tax is being litigated in court.

In Colorado, the state’s association of ski towns, representing 28 municipalities from Telluride to Steamboat, is currently contemplating a tax on empty homes.

Unlike its neighbors in the Tahoe Basin, South Lake Tahoe is incorporated with an elected city council. Here, locals can influence policy with their vote.

And in this proposed measure, the tax is structured to offer property owners a clear choice. Stay and live here full time or rent to local residents so the people living in the home are a part of the community, paying sales taxes and enrolling children in local schools. Or, live here part time, use the home occasionally, and pay a vacancy tax that funds housing and transportation solutions that will help Tahoe solve its mounting issues. The last option is to sell.

Richmond held up the clipboard and a pen. “This just gets it on the November ballot so we can vote as a community.”

The woman signed the petition.

In some towns in the West, up to 75 percent of houses are vacant, likely second homes used once or twice a year.

By the time ballot initiative deadlines approached, local volunteers collected enough signatures, and the vacancy tax was added to the November ballot as Measure N.

Soon after Measure N was announced, people who own second homes in South Lake Tahoe began to receive a curious letter in the mail that was postmarked from a suburb of San Francisco. The letter outlined steps to mislead election officials and register to vote at the address of their vacation home, which is illegal.

One person who received the letter, however, was a California state assembly member and they tipped off the El Dorado County elections department, alerting them to keep an eye out for any suspicious voter fraud. But the county was already aware — they’d noticed an uptick in false voter registrations for South Lake Tahoe since February. By the first week of June, they’d counted almost 200 questionable forms.

The debate began to appear in the editorial pages of the two local news outlets, like a game of pingpong, going back and forth about the tax’s merits or drawbacks, depending on the perspective of the writer.

At a June city council meeting, when staff presented a report analyzing the vacancy tax, public comment stretched for hours into the night. People were angry, emotional. One side shared stories about how impossible it is to find a home they can afford, or even rent. The other side described second homes their families have held onto for generations.

An opposition movement began to coalesce, calling itself “No on Measure N.” A group organized a town hall in August, livestreaming and uploading it to YouTube so people who did not live locally could still watch. In the video, Duane Wallace, the South Tahoe Chamber director, stands in front of a crowded room and speaks into a microphone on a podium.

“Whenever you have this large of a group of people who are in opposition to something, there will be some disagreement,” he said.

The opposition was being organized by South Lake Tahoe’s two chambers of commerce, the association of realtors, the lodging association, an influential property owners association for a wealthy lakefront neighborhood, and the restaurant association. In August, the National Association of Realtors contributed $625,000 to the opposition campaign.

“But really what the coalition is, is you,” Wallace said, looking out to the audience. “It’s property owners who inherited a property, who had grandparents who built a little cabin up here and whose memories are tied up into this.”

Steve Teshara, director of government relations for the Tahoe Chamber of Commerce, stepped up to the podium to outline the ongoing work to solve the housing crisis. “The hard work of solving housing takes going to meetings, day in, day out, month in, month out, year in, year out. That’s the hard work that they (the proponents) don’t want to do. And that’s the hard work that we do,” Teshara said.

Jerry Bindel of the lodging association outlined the major flaws of the tax, starting with the cost to administer, enforce and legally defend the tax, based on a likely assumption that it would be challenged in court if passed by voters. He also emphasized how a tax like this would invade people’s privacy, requiring everyone — full-time residents, renters and vacation homeowners — to show they were in their home for more than 180 days a year with records to prove it.

Already, word of the vacancy tax is affecting the real estate market, scaring away potential buyers, added Sharon Kerrigan, executive vice president of the South Tahoe Association of Realtors.

“We believe that the second homeowners are absolutely integral to the fabric of our community,” Kerrigan told me when I called her after the town hall meeting. “The other side is trying to paint them as not contributing. We disagree.”

Second homeowners pay property taxes, Kerrigan says, though in California, Proposition 13 means that neighbors next door to one another could pay vastly different rates, depending on the value of their property when they bought it. Second homeowners pay utility bills. They go to restaurants, bars and rent kayaks or stand-up paddleboards from concessionaires. They pay into the home building, repair and maintenance cottage industry that’s been propped up for decades in South Tahoe, with everyone from snow removal plow drivers to house cleaners working for people who do not live here all the time.

“Not all these folks are uber-, uber-wealthy,” Kerrigan says. “Sure, we have some of those, but we’re hearing from a lot of people who are moderate second homeowners, like teachers, firefighters, folks that have had second homes from intergenerational transfer. They might be the third generation that holds it. They might be retired on a fixed income. They might have an 800-square-foot cabin. They don’t have the 5,000-square–foot mansion. They’re all going to be taxed the same.”

Little research exists to show exactly how a vacancy tax would impact a place with so many second homes. Shane Phillips, a housing policy researcher at the Lewis Center for Regional Policy Studies at UCLA, says that other vacancy taxes in Washington, D.C., Vancouver or Oakland are all in metropolitan areas with very low vacancy rates, a sharp contrast to a ski town where almost half its homes would be impacted.

“All of these places have exceptionally low vacancy rates, like 2 or 3%,” Phillips says. “That’s basically just the amount of vacancy you have from people who rent and move pretty frequently, just leaving their unit vacant a month while the landlord seeks the new tenant.”

Even so, only the most punitive policies — like in Vancouver, where the tax is a percentage of the assessed property value, not a flat fee — tend to unlock housing, but these are usually high-cost homes, so even though they’re back on the market, they’re still not within reach for people who need housing the most.

What’s more significant, Phillips says, is Vancouver’s ability to raise millions of dollars every year for affordable housing. Since the Empty Homes Tax launched in Vancouver in 2017, $142 million of net tax revenue has been allocated to affordable housing.

“In the case of South Lake Tahoe and cities like it, I think the fact that such a large share of units are these kinds of second home, vacation home type places, means it’s hard for me to know or predict what the effect would be.”

Some believe that a vacancy tax can shift market incentives, unlock much-needed housing for locals and raise money for community improvement.

When Steve Tancredy inherited his grandfather’s log cabin, located less than a mile from the state line in one of South Tahoe’s older neighborhoods, he had to remove layers and layers of peeling, bubbling paint to restore the wood to its original glory.

It’s a 20-by-30-foot cabin, two stories tall, 900 square feet in all. Somehow, it fits three bedrooms and two bathrooms.

Tancredy lives in his childhood home in Walnut Creek, but he comes up to his family cabin in Tahoe as much as he can. When he worked the graveyard shift — he splices cables for a communications company — he’d leave from work as soon as he clocked out on Friday morning, with an ATV in the truck bed and jet skis towed behind, getting a head start on the weekend traffic.

Over the years, three generations of his family have poured countless weekends and dollars into that little cabin. But it’s getting harder to hold onto it.

He was recently dropped from his private homeowner’s insurance company due to wildfire risk and had to sign up for California’s FAIR plan, doubling the amount of insurance he pays every year. Adding another $6,000 tax to the bill on the cabin would crush him, he says. “Nobody’s pay has gone up that much.”

Some ski towns are paying second homeowners to rent long term to locals, as a way to unlock those unused houses. The “Lease to Locals” program started in Truckee during the pandemic and quickly spread to South Lake Tahoe, Mammoth Lakes, as well as municipalities in Colorado, Idaho, Vermont, and even the Massachusetts seaside town of Nantucket.

But many second homeowners, including Tancredy, don’t want to rent their houses to strangers. He had two bad experiences with former tenants in the 1980s when his dad owned the cabin.

“The neighbor next door at the time, he ended up calling the police because of all the yelling and screaming,” he says. “When we did get it back, the refrigerator door was broken. The oven door was broken. Doors were kicked in. The windows were broken.”

That was the last time the Tancredys rented their cabin to long-term tenants.

Lately, the thing that’s making Tancredy upset is that people think his house is vacant. “It’s fully furnished. All the utilities are on. I could relocate up there right now. All I’d have to do is go to the store and load up the cupboards with food. It’s livable right now. To me, vacant sounds like somebody who has an empty cabin and never goes up there.”

Yet, it’s easy to sort the vacation homes from the full-time residences on any given street. When I met Richmond at her home in April, she pointed out the sliding glass door to a large house on the other side of her backyard. Their lights are off most nights, she said. It’s tough to see so many homes go unused when people who are moving to South Lake Tahoe to work at the hospital, fight wildfires, fix cars and groom ski runs are having such a hard time finding just a place to live.

At a meeting the previous winter, Sierra Riker told the city council about moving to Tahoe in 2021 after joining Americorps to fight wildfires. “Housing was impossible to find on my meager stipend, even with the option of roommates,” Riker said. “I had to rent a small room from someone willing to go far below market value.”

Now, she makes $30 an hour, and still, all the house she can afford is a 450-square-foot apartment built in the 1950s. “And I am much more fortunate than others,” Riker says. “If I can’t afford more than a tiny rundown one-bedroom apartment, then how is someone making $20 an hour able to live here? Many houses are left empty most of the year and the issue is only getting worse.”

Roderick Martin, a 23-year-old mechanic, says the same thing. “No one can afford to live here,” he told the city council. “I can confidently say that if something doesn’t change, there will be no more population of young people in South Lake Tahoe.”

Teshara, of the Tahoe Chamber, doesn’t deny Tahoe’s housing challenges. He experienced the volatile real estate market during the pandemic firsthand — selling his house and receiving cash offers, which he turned down to sell to a local family instead, and then getting outbid when he was looking for a new house. “We scraped every coin we had, we put down an offer, and it wasn’t enough. Somebody comes in and says, ‘Hey, here’s my offer,’ and we were just out of luck. That was hard. It was very frustrating.”

Charging a flat tax on second homes isn’t the answer to Tahoe’s housing crisis, Teshara adds. “What we do about it is we go to city council meetings. … We go to county meetings. We try to advocate for different types of affordable housing.”

Yet, even Teshara admits that policy work moves slowly — too slow for people frustrated with decision-makers and leaders for talking too much and not taking action to stop the bleeding. In 2018, South Lake Tahoe voters banned short-term rentals. Teshara thinks it was an extreme response that stifled local businesses. The controversial measure passed by just 58 votes. “By the time the city woke up and tried to do something, it was too late,” Teshara says. He’s motivated to not let a repeat scenario play out with Measure N. “It’s not a patient world, and solutions take time.”

Though, when rent is due at the end of the month, time is not a luxury that people have.

This story appears in the November 2024 issue of Deseret Magazine . Learn more about how to subscribe .