Washoe’s Board of County Commissioners on Tuesday voted to approve a fee increase for some short-term rentals but declined to cap the number of STRs allowed in unincorporated Washoe County.

Short-term rentals are what are offered by sites like Airbnb and VRBO.

There are nearly 700 permitted STRs in unincorporated Washoe County, with about 94% in the Tahoe basin.

Kelly Mullin, the county’s director of planning and building, presented to commissioners information gathered from the first two years of the STR program, including proposed permit fee increases. 

The issue of short term rentals has drawn heated debate in the community as homeowners said they have had to deal with additional traffic, noise, trash and parking congestion caused by STR guests. Many community members also say that an increase in STRs has led to a shortage of housing in the community and rising housing costs.

The existing permit fees for the STR program don’t cover the costs of the program, Mullin said. The fee structure set in 2021 brings in about $257,000 in revenue, not even half of the cost to run the program. The county has covered the annual shortfall – about $259,000 – from its general fund. 

Commissioner Mike Clark said he believes the program is essentially subsidizing wealthy STR property owners in Incline Village.

“This doesn’t make any financial sense whatsoever. We’ve got everybody in town covering the shortfall and under 700 people making the profits from these,” he said. “We’ve got the worst of all worlds. We’re losing money and we’ve got a bunch of angry neighbors. Could it get worse than that?”

The county’s STR program was launched with fees based on “guesstimates” for the number of permits and county resources required, Mullin said. Commissioners approved the program with an expectation that fees would be reassessed once the program had been running. 

In addition to being underfunded, Mullin said the STR program is understaffed and needs two full time employees to run the program’s administration, compliance and enforcement. Hiring dedicated staff at a lower professional level, she added, would free up higher-level planning staff to focus on more complex duties. 

The approved fee increases affect Tier 1 STR permits and renewals, which covers rentals for up to 10 occupants, and increase the fees by $270-$350 per year with annual adjustments for inflation. New fees would cost operators $706 to $1,194 per year. 

In addition to an overall fee increase, the new fee structure includes a $45 fee for STRs in the Lake Tahoe basin to cover litter removal services and a 4% regional technology fee. 

No changes were proposed or approved for Tier 2 and Tier 3 STRs. A Tier 2 permit authorizes a maximum occupancy of 11-20 persons and requires an administrative review. The Tier 3 permit increases maximum occupancy to 21 or more persons and requires a special use permit approved by the Washoe County Planning Commission.

Mullin said the STR program is working to improve enforcement by regularly exchanging data with the Washoe County Sheriff’s Office and increasing patrol presence near problem properties and street-side spot checks during the summer.

Despite agreeing that the county was losing money on STRs through the permit program, Clark said the county should not have waded into the short term rental business and getting in the middle of what he said were neighborhood disputes. 

Commissioners voted 3-2 to increase Tier 1 STR fees with Commissioners Jeanne Herman and Clark voting against the measure.

No cap imposed on number of STRs

Washoe County residents at Lake Tahoe have pointed to an increase in STRs in the community as one factor in the lack of affordable and workforce housing. 

In response, Commissioners Clark and Alexis Hill requested the board consider a cap on the number of STRs permitted to operate in Washoe County. 

The recently approved Washoe Tahoe Housing Partnership’s Housing Roadmap included strategies to address that shortage, including a potential cap on the number of STRs in the basin. 

All other areas of the Lake Tahoe basin, in Douglas, El Dorado and Placer counties, have already set caps on the number of STRs in their locales. South Lake Tahoe doesn’t have a cap but limits STRs to commercial areas and the tourist core, preserving residential areas for local housing.

“This is one of the worst ideas I’ve heard today,” Commissioner Jeanne Herman said. “People that own homes don’t rent them out because they enjoy people that rent them destroying them. They rent them out because they could use the money.” 

She added that placing a cap on the number of permitted STRs takes away homeowners’ rights to use their property freely. Commissioner Mariluz Garcia agreed.

Several real estate professionals spoke out against the STR caps. 

Grant Meyer, speaking for Incline Village Realtors, said capping the number of STRs would would reduce tourism revenues and “ruin an already sluggish housing market.” He added that the vast majority of STR owners in the Tahoe basin use their properties a portion of the time, meaning that those housing units wouldn’t be available for workforce housing anyway.

Residents in Incline Village’s Tyrolian Village, who have battled STRs repeatedly in recent months, said a cap on STRs would improve the quality of life for residents in Incline Village. 

Linda Smith, who lives in Tyrolian Village, said more than 8% of Incline Village housing stock is permitted STRs, at least 4 times more than other jurisdictions around the lake.

“STR’s are a commercial use which should be restricted to commercial zones and not allowed in residential neighborhoods – especially in neighborhoods like Tyrolian Village that has very limited parking, very narrow streets and very limited access and egress,” said Daniel and Donna Zahm, also residents of Tyrolian Village.

Commissioner Andriola said she wasn’t in favor of placing a cap on STRs countywide and suggested that homeowners associations and community advisory boards address the issue on a more focused level. 

A motion to not set STR caps was approved 4-1 with Commissioner Hill voting no. 

Following the vote, commissioners urged county staff to gather more feedback from homeowners associations and community advisory boards on STRs for future discussions on the issue.