The voters of South Lake Tahoe, California, adopted an ordinance that forbade the city from issuing short-term rental permits for properties in residential zones unless the owner was a permanent resident of the city, and declared that all short-term rental permits would expire three years later. The trial court granted the city summary judgment on all claims raised by an association of property owners who rented short-term.
In South Lake Tahoe Property Owners Group v. City of South Lake Tahoe, No. C093603 (June 20, 2023), the California Court of Appeal mostly agreed, holding that the owners' vested rights and state law preemption claims did not survive. But the court disagreed with the trial court's dismissal of a (dormant) Commerce Clause challenge to the residency component. As noted in this recent Fifth Circuit decision, local ordinances that discriminate between residents and non-residents are (or at least could be) too burdensome of the right to interstate travel as a durational residency requirement. Here's the resident exception:
Despite its ban on vacation home rentals in residential zones, Measure T allows permanent residents to let their dwellings up to a total of 30 days per year, subject to obtaining a permit. For purposes of the exception, a permanent resident is a person who lives in his or her home a majority of the year and claims a homeowner’s property tax exemption under article XIII, section 3, subdivision (k) of the California Constitution.
Slip op. at 17.
The court concluded that the "resident owner exception discriminates on its face against interstate commerce" because it "unlawfully requires 'an out-of-state firm 'to become a resident in order to compete on equal terms.'" Slip op. at 26 (citations omitted). By foreclosing non-resident owners from participating in the city's short-term rental market, the ordinance benefits residents "based solely" on an owner's residency status:
Because Measure T’s permanent resident exception facially discriminates against interstate commerce, it is per se invalid unless the City can justify the discrimination by showing that the resident exception ‘ “advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.” ’
Slip op. at 33 (citations omitted).
South Lake Tahoe Property Owners Group v. City of South Lake Tahoe, No. C093603 (Cal. Ct. App. June 20, 202...
