(CN) – A group of vacation home managers and homeowners in a California resort town filed a state lawsuit this week challenging a measure they say unlawfully caps occupancy levels and restricts them from renting out vacation homes.
South Lake Tahoe, located on the south shore of popular getaway destination Lake Tahoe, is about a four hour drive from San Francisco and minutes away from local ski resorts and casinos.
In 2003, as vacation home rentals became more prevalent in the city, vacation home owners and managers were required to apply for permits with the city. As of July, the city listed 1,764 permitted vacation rentals.
But in the November general election, residents passed a measure called the Citizens Initiative Measure To Eliminate Most Vacation Home Rentals In Residential Zones in South Lake Tahoe, albeit by only 58 votes.
The initiative, also known as Measure T, prohibits non-permanent city residents from renting out vacation homes – with restrictions lifted for permanent residents – outside of a “tourist core area” beginning on Jan. 1 2021.
New occupancy regulations, capping the number of people in any vacation rental at 12, took effect on Thursday, just days before the holiday rush.
South Lake Tahoe Property Owners Group, an unincorporated group of vacation home managers and homeowners, said in their complaint that the occupancy limits are “disastrous” for vacation home managers and tourists who have already booked their rentals and arranged travel.
“Literally thousands of people’s holiday plans will be disrupted as will the lives of owners and managers trying to scramble to comply with the new law,” the complaint said.
The lawsuit, filed Tuesday in El Dorado County Superior Court, called the measure discriminatory and said it violates both state and county land use laws.
“The initiative interferes with vested rights,” the complaint said, adding that it violates the privileges and immunities clause of the U.S. Constitution.
Plaintiffs seek a temporary restraining order, a preliminary injunction and a permanent injunction barring enforcement of Measure T.
A spokesperson for South Lake Tahoe said the city has not taken sides in the fight.
“Even though the city is listed as a defendant, Measure T was a citizen initiated ballot measure. We respect the will of the voter,” the spokesperson said. “The City has not taken a position on the lawsuit, but we look forward to learning the outcome of Monday’s hearing. We do anticipate City Council will be discussing this issue in a special meeting after the holidays.”
The primary industry for the picturesque city, located near the California and Nevada border, “is and always has been tourism,” the complaint said, which added that the city receives more than $2 million per year from taxes on vacation properties.
Before the measure passed, the city often required vacation home owners to make costly improvements to properties within 45 days in order to comply with requirements under the permit, which expire after one year.
More than 1 in 10 homes in the city are permitted for vacation rental, the complaint stated.