Vacancy Tax Projected to Boost Annual Retail Spending by $27 Million in South Lake Tahoe, CA, According to City Report

[South Lake Tahoe, Calif.] June 18, 2024 – The City of South Lake Tahoe’s impartial fiscal analysis estimates that the proposed vacancy tax initiative will increase local retail spending by up to $26.8 million per year, providing a massive boost to local small businesses, including restaurants and retail shops.

• Related: Tahoe Vacancy Tax Petition Officially Qualifies for November 2024 Ballot

The report estimates that the incentives and funding from the vacancy tax would provide an additional 1,543 occupied homes, supporting some 2,300 new full-time residents, who would, in turn, shop, dine and purchase goods year-round in the local economy. The report projects a 10% increase in permanent population for the City of South Lake Tahoe, effectively replacing the 10% population loss the City has experienced since 2000.

Based on current per-residence retail data, the report indicates that this would increase total local retail transactions (sales subject to sales taxes) by $26.8 million per year, with the addition of 1,543 new full-time households.

“The vacancy tax is a major win for local businesses, providing both more workers and more year-round customers, and we’re glad to see that reflected in the City’s impartial analysis,” said Amelia Richmond, co-founder of Locals for Affordable Housing. “When 44% of all housing units sit vacant most of the year, our businesses take the hit. By incentivizing more use of the housing we already have, there are more year-round customers to eat, drink and shop at local shops and restaurants on a daily basis. Not to mention, more housing for local employees.”

As noted on page 5 of the report under “Sales Tax,” the current Sales Tax Revenue Impact ranges from $235,000 to $670,000 annually, an estimate the authors of the report constructed with three assumptions:

1. Permanent residency would increase by approximately 540 to 1,543 residencies, with one to two residents per property.

2. Estimated household income will be approximately $67,686 per property based on 2022 US Census data.

3. Retail sales per property will be approximately $17,386 based on 2022 US Census data.

Using the report’s estimates: retail sales per occupied residence of $17,386 x 1,543 new full-time local households = $26,826,598 in new retail spending for local shops and restaurants annually.

Of this new retail spending, the City’s 2.5% component of existing sales taxes is estimated to yield up to $670,000 of additional tax revenue – generated from increased retail business revenue alone. El Dorado County would see a corresponding boost as well.

“Just like the vacancy tax, this sales tax ‘bonus’ helps meet community needs without raising taxes on locals. It simply comes from business growth alone,” said Nick Speal, the other co-founder of Locals for Affordable Housing.

The report, officially named Elections Code Section 9212 Report for Vacancy Tax Citizens Initiative Petition, will be presented at the South Lake Tahoe City Council Meeting on the evening of June 18, with the requested action of passing a Motion to accept the report and direct the City Clerk to post the final version online.