South Lake Tahoe’s Measure T Overturned: What’s Next for Vacation Rentals?

On a landmark legal and political shift, South Lake Tahoe’s Measure T—originally passed by voters in 2018 to phase out short-term vacation rentals (VHRs) in most residential areas—has been overturned by the El Dorado County Superior Court. The March 2025 ruling declared the measure unconstitutional, setting the stage for a full reevaluation of VHR regulation in the region.

The South Lake Tahoe Property Owners Group challenged the law, arguing that the resident-only exception unfairly discriminated against out-of-state homeowners, violating the Dormant Commerce Clause. The court agreed and struck down the measure entirely, ruling that the unconstitutional clause could not be severed from the rest of the ordinance.

In April 2025, the City Council voted not to appeal, meaning Measure T is no longer enforceable. In response, the council enacted a 45-day moratorium on issuing new VHR permits to provide time for drafting new regulations. April 22, 2025, the City Council met and amended the 2018 VHR ordinance and instructed staff to come back with changed on May 6, 2025, as well as the first reading.

On May 6, 2025, the City Council met again to do the first reading of the changes but unfortunately continued deliberation and amendments, prolonging the first reading of the ordinance to June 3, 2025. During the May 6th meeting, City Council asked staff to come back with another revised ordinance including the following changes from April 22, 2025: With Measure T overturned, the city reverts to its prior VHR ordinance—along with several significant amendments made in 2018, many of which were designed to balance tourism interests with residential protections:

1. No location-based bans – VHRs are not geographically restricted within residential areas, except where otherwise noted.

2. No cap on total VHR permits – There's no overall limit on how many permits may exist at any time.

3. 150-foot buffer rule – New VHR permits are not allowed within 150 feet of an existing permitted VHR. Condos do not have to abide by the 150-foot buffer rule.

4. Ban in multi-family dwellings – No VHRs are permitted in apartment buildings or duplexes.

5. 24/7 response requirement – Every VHR must have a local owner or property manager available within the basin at all times.

6. Full cost recovery for permits – Permit fees must fully fund the cost of enforcement and administration.

7. Grandfathering preference – Previous permit holders may receive preference in future applications.

8. Police enforcement authority – Enforcement of VHR regulations has been shifted to the South Lake Tahoe Police Department.

9. Permit issuance limit of 150 per month – A throttle mechanism allows only 150 new permits per month, meaning it will take at least 4 months before new applicants can begin operations.

10. Final appeal authority to Planning Commission – Once the Planning Commission rules on a permit, the decision is final.

11. Updated occupancy rule – The maximum occupancy is now 2 people per bedroom, plus 0, with up to 5 children under 13 excluded from the count.

12. Surveillance for compliance – Cameras are required on-site for monitoring parking and trash areas.

13. Indoor noise monitoring – All VHRs must install indoor decibel readers to monitor noise levels in real-time.

14. Mandatory in-person check-in – Guests must check in face-to-face, with a 24-hour grace window after arrival.

15. Fire safety via defensible space – All properties must comply with defensible space requirements to reduce wildfire risk.

16. No waiting period for new homebuyers – New property owners can apply for a VHR permit immediately upon purchase, removing previous waiting periods.

The first reading of the ordinance, and any additional changes the ordinance is set for June 3, 2025. The moratorium was also extended to June 19, 2025.