Our current economic and housing situation is a crisis of a low-wage service economy combined with sky-high home prices, built over decades, not just last year. Right now, we live in an economy built by Tahoe’s existing special interests, the Chamber of Commerce, the Hotel and Lodging Association, and the Realtors Association, all three organizations that together support the status quo of low wages, over-tourism, and overpriced housing. This isn’t working, and Tahoe’s establishment isn’t happy that this is being discussed, and even less happy that someone is advocating for change. But change is possible. Affordable housing and diversification of the economy are possible here.
The results of our current situation are not only visible in the things we see, like the annual Fourth of July vandalism of our beaches, but also in who’s gone: our families. Since 2000, the South Tahoe area (all of the 96150 zip code) has lost a staggering 25% of its working-age adults and 35% of its school-age children. Approximately 4,000 adults and 2,500 children have left our community. Not only are these numbers staggering, they are completely disproportionate to the relatively flat population change statewide (+6% and -2%, respectively). Block by block, neighborhood by neighborhood, streets that were once home to a mix of working locals and families are hollowing out, mostly to empty vacation homes. This exodus of families is a Tahoe problem.
This exodus is not just a loss of local labor, but also a loss of local customers. Gone are about 4,000 local workers who paid service fees throughout the year, ate at restaurants, fixed cars, bought school supplies for their children, and basically ran the trades of daily life. What remains is a decline in the local labor force and a shrinking customer base of very young adults who, while in their 20s, might have been willing to live four or five people in a house, no longer have access to the kind of safe housing they need to settle, raise a family, and advance their careers. This is the “missing middle class” and the lack of decent, but modest, housing available to workers who are no longer newcomers but are in the early stages of their careers.
A community that pushes families out is not healthy. The root cause is not hard to identify: local jobs are not supporting local housing costs. Tahoe desperately needs major housing reform, significant economic diversification, and a total shift in governance priorities from exploitation to stewardship.
In a free housing market, prices would settle at an equilibrium point between local demand and the additional cost of supply. But Tahoe’s housing market is not a free market; demand is decoupled from local wages, and supply is geographically and artificially constrained. While local wages limit prices in most communities, as a vacation destination, locals have been relentlessly outcompeted by virtually unlimited well-funded second/second home buyers bidding on a limited housing supply. Geography prevents low-cost, low-density suburban development (and is environmentally undesirable), while at the same time, the restrictions imposed by the TRPA limit cost-effective, high-density development. For example, the TRPA completely bans modest duplexes as a type of “multifamily housing” in most residential areas of the basin, even though luxury McMansions are permitted everywhere.
As a result, virtually all housing built in the last 20 years has been luxury McMansions. Furthermore, in a ostensible effort to curb overdevelopment, TRPA requires all new housing units to have a “housing allocation” permit, of which there are only about 3,500 left in the entire basin (including various “bonus” units). Every McMansion or luxury AirBnB condo unit built today is a modest workforce housing unit that will never be built in the future. For decades, this system has rigidly favored luxury vacation homes at the expense of modest local worker housing.
Compounding Tahoe’s high housing costs is a relatively low-wage tourism services job market that is notorious for extremely limited opportunities for career advancement. Many of the opportunities that existed until relatively recently have steadily shrunk. A good example is Vail Resorts’ outsourcing of nearly all skilled administrative positions in its HR department to an app that staffs employees remotely from its headquarters. Similar outsourcing has also occurred at casinos across state lines. The tourism jobs that remain are concentrated in both front- and back-of-house jobs that are difficult to automate but also pay less. This can be seen in data from the “Tourism Destination Management Plan” prepared by TRPA and approved by the Chamber of Commerce, which shows that taking inflation into account, the region’s tourism industry profits have increased 10% over the past five years, while average tourism industry wages have decreased 15%.
Tourism is a fickle industry, and holidays are typically one of the first expenses people cut back on when times get tough. As a result, local economies that boom and bust are becoming less and less cyclical, and as a result, workforces are becoming more unstable and mobile.
Economic diversification in mountain tourist towns (including ours) is possible and necessary. Examples include medical care, with world-class orthopedic centers like the Steadman Clinic in Vail, which draws patients and quality jobs year-round. Tahoe also has a small media economy, from production services to outdoor media publishing. Another is outdoor education, not just tourism, with NOLS, AIARE-Pro, AMGA training, and more. All of these are in Bishop and Mammoth, but not here. LTCC is a notable silver lining. Their outdoor education program expanded rapidly under the late Dr. Clinton Culp, showing that this is a viable industry. Expansion into nursing degree education also provides both jobs and career opportunities for locals. While by no means an exhaustive list, these examples demonstrate the potential for growing parts of our local economy that support stable year-round employment and stable year-round customers, and are less affected by the boom and bust cycles of tourism.
But the central challenge to economic diversification ultimately hinges on the housing crisis. As of this writing, there are 92 vacant positions between Barton Hospital and LTCC, not because Tahoe is a bad place to live, but because rent is too high. It’s hard for any organization to expand in a place where its employees can’t live. And, crucially, vacant positions also mean lost customers year-round for all the other local businesses.
Communities need both housing that local people can afford and jobs that local people can thrive. Today, both are in increasing shortage. Reducing housing costs is key to achieving the change our communities need. All roads lead through a housing crisis.
Small changes at the margins can and do happen with little controversy. Ongoing changes like helping homeowners build ADUs with pre-approved plans and the initial proposal to allow modest duplexes within city limits, two initiatives I’ve been working to get started on over the past year, can and will help, but ultimately they won’t be enough. The 2019 South Shore Housing Needs Study estimated that 3,000 housing units will be needed by 2026 just to support the existing economy, many of which will need to be at or below current prices. We need thousands of homes for local workers and families, not dozens.
Current incentives have not only failed to create affordable housing, they have actively curtailed it. Since 2000, vacant housing has exploded, increasing 56% and outpacing the construction of new homes. As a result, the city has actually lost over 300 homes for local residents. To recover these losses to more than a small margin, we need to put meaningful public funding into projects like building new housing for workforces, helping renters and first-time homebuyers, and providing fire insurance assistance to keep people in their homes. All of this will cost money the city doesn’t currently have. We also need to change incentives for what housing we build in the future, making MacKenzie mansions less profitable and modest homes and duplexes more profitable, and changing incentives for how we use our existing housing stock. In other words, big change.
And with every call for big change, there’s always big pushback from those who think the current system is working well.
The coalition of the Chamber of Commerce, the Realtors Association, the Hotel and Lodging Association, and the Tahoe Keys Homeowners Association, an interest group representing the most established big-money interests in Tahoe and ironically calling itself “Community First,” have banded together with the sole purpose of rejecting all proposals to fund affordable housing. Not only my proposal, but every proposal put forward by other members of the City Council and City Staff that could fund affordable housing was rejected. The list of options they rejected included a modest 2% tourist hotel tax, a sales/transfer tax on mansions over $1 million, and of course, a tax on vacant homes. In place of these proposals to fund affordable housing, they proposed nothing. Do nothing. Fund nothing. Change nothing. Continue to build only luxury villas. Deflect, deny, and whitewash that there is no housing crisis. This is a morally indefensible position.
The rhetoric accompanying the demand for “no change” reflects a lack of an alternative vision for a healthy future for our community. Lacking a meaningful alternative solution of their own — one that identifies where the funding would come from — opponents of change have resorted to personal attacks, hate speech and anti-Semitism. This is despair, not rational debate.
If you put pressure on the system, the system will rebel.
But no matter the cries of opponents in support of the inaction status quo, the reality remains: We are losing our workforce. We are losing our families. If we lose both, Tahoe’s future will be another Aspen, another Jackson Hole; not a community, but a Disneyland in the mountains, a theme park visited by the wealthy but inhabitable by workers. This future will be extremely beneficial for a few, but at the expense of our souls. But that future is not immutable, and it does not have to be our destiny.
We choose to advocate for change.
