Changes are afoot for the commodities system that controls development in the Tahoe Basin.
The Tahoe Regional Planning Agency's Development Rights Strategic Initiative kicked off in February 2016, and after two years, the working group — comprised of TRPA board members, city and county leaders and other stakeholders — has recommended alternatives to the commodities system.
Currently, in addition to city or county zoning and permitting requirements, the TRPA requires different combinations of commodities — like tourist accommodation units, residential development rights and commercial floor area — in order for any new development or redevelopment to take place.
The system was put into place in the late '80s to control rampant development in the Tahoe Basin that was negatively impacting the lake and its surrounding environment.
But minimal redevelopment of aging properties and a lack of workforce housing projects over the last few decades drove the agency to take a hard look at the process, which many describe as confusing and costly.
This September the group selected a recommended alternative to the development rights program, which, they say, will make it easier for people to acquire and transfer commodities and convert them between commercial, tourist and residential housing uses.
They hope to accomplish this by establishing an exchange rate between commercial, tourist and residential development rights and eliminating the need for local jurisdictional approval for development rights transfers.
This would "streamline the existing transfer process and reduce this complexity and associated fees, while maintaining the overall development potential (or cap) for the Lake Tahoe Basin…" according to TRPA documents.
"I think it's an incremental gain. I don't think it's a game changer," said Zephyr Cove land use and real estate attorney Lew Feldman, one of the members of the working group. "The system itself has created an economic barrier to redevelopment which remains notwithstanding improvements to its flexibility."
Feldman noted that the commodities still add "several million dollars" for some projects and can make the difference in a project being economically viable.
However, he believes the elimination of jurisdictional approval for commodities transfers will "potentially be more significant."
"It's my view that we have a significant oversupply of blighted tourist products in South Lake, which due to the growth management system is very difficult to redevelop, and maintaining the status quo has been what most of us have seen for the last 30 or 40 years," said Feldman.
"Because the oversupply exists in the city there is no market for these resources in the city. The elimination of the jurisdictional barrier will broaden the market, and I think will have a positive impact on accelerating the removal of blight by creating an opportunity for other jurisdictions to compete for these resources."
While the city of South Lake Tahoe has 919 banked tourist accommodation units, Placer County has 87, Washoe County has five, and El Dorado and Douglas counties have none. This does not include development rights that could be collected from tearing down existing hotels and motels.
The working group also proposed opening up TRPA's pool of free "bonus" residential development rights for low-income housing projects to a broader range of incomes.
"That could help provide housing for the 'missing middle,' people who earn too much to qualify for low-incoming housing, but too little to afford market-rate housing," said Joanne Marchetta, TRPA executive director.
At present, it is difficult to attract developers to build workforce housing projects in the area due to the high cost of commodities and other development fees. The types of projects that pencil out for developers are often high-end housing for visitors and second-home owners.
The cost of these development rights fluctuates due to supply and demand, but one South Shore Realtor is selling residential development units (including the development right and allocation needed to build a home) for $25,000 to $35,000 each. "Bonus" units provided to a developer for workforce housing would reduce the cost of a project, especially for a multi-family housing project.
"Opening up the bonus pool to workforce housing is an important step in the right direction," said El Dorado County District 5 Supervisor and TRPA Governing Board member Sue Novasel. "The current development rights system has been identified as a barrier to sensible project development. It is hoped that, by changing the current commodities system, we will spur needed housing for the basin while maintaining important environmental controls."
These changes also aim to support land banks in their efforts to increase their development rights inventories, according to the working group.
Simplifying the process allows agencies like California Tahoe Conservancy (CTC) to more easily acquire aging properties on environmentally sensitive lands, knock-down the structures, restore the lands, and bank the commodities associated with the former development to be purchased and used by a developer at a later time.
"We see it as a three-pronged benefit," said Patrick Wright, CTC executive director and working group member. "You get rid of aging dilapidated properties, you restore wetlands and you facilitate redevelopment."
The working group will meet again in May to continue fine-tuning these recommendations. Workforce housing bonus units will be the main topic of discussion.
The public hearing process for the approval and adoption of the changes to the commodities system and the environmental review is scheduled for TRPA Advisory Planning Commission on Sept. 12, the Regional Plan Implementation Committee on Sept. 26, and the Governing Board on Oct. 24.