For Immediate Release: July 28, 2020
TAHOE CITY, Calif. — The Placer County Board of Supervisors approved a new transient occupancy tax rebate program Monday intended to spur investment in lodging projects in North Lake Tahoe.
The program is part of a larger county effort intended to incentivize new lodging development or redevelopment of existing properties in the unincorporated areas of the Lake Tahoe Basin portion of the county – reducing the environmental impacts of aging properties while increasing economic development in the region.
“Investing in our town and community centers is critical to a stable North Lake Tahoe region,” said District 5 Supervisor Cindy Gustafson. “This tax incentive program reaffirms the county’s commitment to attracting further re-investment in our community. It’s an important new tool in the toolbox to ensure we are doing everything we can to support the economic and environmental health of North Lake Tahoe.”
Development costs in the Tahoe region are especially high, and revenue during the early years of a lodging property often isn’t enough to cover its costs – a problem often referred to as “the feasibility gap.” Rebating the transient occupancy taxes collected from lodging stays can help projects overcome those high costs, making them more attractive for investment. This program complements other recently approved incentives, including assistance to meet the tourist accommodation unit requirement and supporting new financing mechanisms to meet specific project requirements such as parking, sewer and sidewalks.
Specifically, the program would offer a rebate on transient occupancy taxes for up to 20 years. Properties would pay the full value of TOT owed, and the county would rebate the property operators up to 90% for the first four years. After that, the rebate would be 80% through year eight and 70% for the remaining term. Similar program terms apply to renovation of existing lodging properties.
The county also assessed potential revenue returns under the incentive program. With new incentivized investment in the community, the county expects to see a return on increasing property values and tax revenues, as well as sales tax revenues.
With limited new development since 1962, the county contracted with BAE Urban Economics in November 2019 to study regional barriers to economic investment. Findings identified a declining population in North Lake Tahoe, a lack of quality lodging, aging infrastructure and high costs of development as barriers to investment. The full BAE report can be found here.
In March, the Placer County Board of Supervisors provided direction to pursue programs and policies to attract economically and environmentally beneficial investment in the North Lake Tahoe region.
Staff conducted a stakeholder survey, in which participants showed strong support for the tax incentive program concept and provided initial feedback for program priorities. Feedback prioritized financial offsets to address current building costs, including prevailing wage impacts, among others.
The program outline is available upon request.
Contact: Stephanie Herrera