One more try at VHR lawsuit settlement

A second attempt at a settlement of a federal lawsuit filed by vacation home rental owners against the county is up for debate at Thursday’s Douglas County commissioners meeting.

A key sticking point that allowed holders of multiple VHR permits to renew annually through 2031 was reduced to 2024.

The lawsuit was filed a week before the new VHR ordinance took effect on July 15, 2021, with a judge issuing a restraining order against the enforcement of some provisions.

Under the ordinance, vacation home rental permits may only be held by a single entity, but when it was implemented, there were permit holders with more than one rental.

The county has been meeting with the nine plaintiffs since November to hammer a settlement agreement, which county commissioners rejected on Jan. 6. After that meeting, the county continued negotiations with the plaintiffs and produced a new settlement.

Among the proposed changes to the ordinance under the agreement are a limitation of two persons per bedroom if the property has four or fewer bedrooms. Otherwise, occupancy would be further limited to no more than four people per onsite parking space.

The up to $20,000 fine for operating a vacation rental without a permit remains in place for anyone caught advertising or operating a VHR without ever having a valid permit for the property.

Fines for those who had a valid permit, but through some mishap failed to renew by deadline, but kept operating are up to $5,000 if they file a complete application within 60 days of expiring. 

Closely held corporations and limited liability companies may have a permit if it is owned by an individual, family, trust or members of a household.

Property managers will be subject to the same rules as owners and are prohibited from marketing or managing a property that doesn’t have a valid permit.

Under the settlement, each side will waive any claim for damage and will be responsible for their own legal fees.

If commissioners approve the settlement, they would be required to approve changes to the ordinance in April.

Douglas County divides vacation rentals into three tiers, with Tier 1 rentals occupied by the owner and having four or fewer renters. Tier 1 rentals are exempt from the limit on the number of permits.

Tier 2 rentals are those which can house up to 10 renters. Tier 3 rentals may have 11 or more renters, but are required to obtain a special use permit approved by the VHR Advisory Board.

On Feb. 23, the board conditionally approved one tier 3 rental at 550 Sunset Lane in Zephyr Cove.

Requests at 260 Pleasant Court in Kingsbury and 153 Granite Springs were continued, and a permit at 342 Maryanne Drive in Zephyr Cove was denied.

The panel has been wading through a stack of Tier 3 permits. In order to qualify for a Tier 3 permit, owners must have received a valid Tier 2 permit. The owners of the Maryanne Drive address will continue to be able to rent to up to 10 renters and may appeal the denial to county commissioners.

Vacation rentals are prohibited outside of the Lake Tahoe Basin under the ordinance. In East Fork, a special use permit for a bed and breakfast is required to conduct short-term rentals. While breakfast isn’t necessary for approval, a public hearing before the Douglas County Planning Commission is. Residents seeking a permit in East Fork, which includes all of Douglas County outside of the basin, are required to be on the property while it’s being rented.