LAKE TAHOE, Calif./Nev. – Building housing in any area requires a wide spectrum of housing, from transitional to affordable to market-rate and above. But because of pre-existing codes specific to the Tahoe area, building for the “missing middle” or multi-family housing is deeply disincentivized. And with continually rising market rates in the region, it makes it necessary to solidify housing within a certain area median income (AMI), though it often goes to affordable housing. For this article in the Tribune’s housing series, we’ll explain how these codes and contracts have impacted housing in Tahoe, and what changes are on the horizon for them.

What are development rights?

Even for those not in the know about development in the region, it’s still widely understood that Tahoe has garnered a reputation for being difficult to build in. The Tahoe Regional Planning Agency (TRPA) is responsible for creating Tahoe’s development rights system back in 1987 to disincentivize building and development. In the past, it’s undergone many changes in response to changing conditions in the region, but here’s how it works as it currently stands.

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In order to develop a parcel of land in Tahoe, a developer must attain all the standard rights and permits as well as a development right. These are classified into three different types: tourist accommodation units (TAUs), commercial floor area (CFA) and residential units of use (RUUs).

To obtain development rights, developers can purchase them from the TRPA or through the TRPA’s marketplace from other developers who hold development rights. They can also purchase them from building departments or from the California Tahoe Conservancy (CTC) or the Nevada Tahoe Resource Team’s (NTRT) land banks. Lastly, developers can get development rights from buying and then restoring sensitive land parcels, which is also how the CTC and NTRT have banked their development rights. Development rights can be transferred from one property to another and can even be converted as the graphic shows.

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However, one major oversight that the TRPA and the Tahoe Living Working Group (TLWG) identified is how development rights also disincentivize building affordable and multi-family units. No matter what size it is, an RUU is an RUU, meaning that to make the most of purchasing a development right, building bigger and more expensive housing pays better. Not only that, but an RUU also only counts for one. If a developer wants to build a triplex, then they need three RUUs, making it less appealing and more expensive to have multiple units on a parcel.

Robb Olson, a developer, architect and member of TLWG has primarily worked on custom homes and second homes. His clients typically have enough money to pay for the many restrictions and fees imposed on building in the basin, but he recognizes that’s not true for every development. “Uncertainty kills projects,” said Olson, “And much of what we do can be a weird, awkward process. It takes persistence to get to the finish line.”

According to Olson, the development rights marketplace can be a feast or famine situation, often with rights locked to the specific region of the basin that you’re in. These fees can be debilitating and come from multiple agencies, often requiring homeowners or new developers to invest time in learning the ins and outs or pay someone to help them through the confusing process.

In the case of some projects, these fees can build up to the point that what could have been workforce housing is removed or reduced in order to make the project pencil. Olson recounted a hunting lodge they were interested in turning into housing—but the eventual cost meant that the only profitable way to use the property was short-term rentals.

Bonus units and deed restriction

To make building housing more appealing and less expensive, the TRPA offers bonus units in exchange for deed restriction of a property.

Essentially, the TRPA keeps a certain amount of RUUs that they can grant for free, called bonus units. This reduces the cost for the developers and allows them to add more units. The TRPA has a certain number of bonus units they hold onto, and the pool is allocated so that 50% goes to affordable housing, 25% goes to moderate housing, and 25% goes to achievable housing. However, because affordable housing has been a major focus, the lower AMI focused tiers can pull from the higher tiers, meaning that in actuality, a higher percentage than half usually goes to affordable housing.

In exchange for these bonus units, the developer must adhere to the legal stipulations in the deeds indefinitely. Here in the basin, typically deed restrictions refer to keeping the prices for the property at a certain AMI, which maintains a housing supply of affordable housing.

The TRPA provides jurisdictions around the basin with bonus units that can be granted and with residential allocations, which are a development right used to create RUUs. The pools for each of those can be seen in the following graphic.

Deed restriction challenges

Even outside of the TRPA’s jurisdiction, deed restriction is a key component for keeping prices more manageable for housing—the town of Truckee utilizes deed restriction in many of its properties across the AMI spectrum. But it presents its own challenge.

Deed restrictions here are often best incentivized through affordable housing. That’s not to say affordable housing isn’t necessary, but it does mean that new properties being built through deed restrictions are often for affordable housing, meaning the missing middle continues to miss out on new units that are being built.

As with recent projects like Dollar Creek Crossing, pitching deed restriction for mid-range AMIs is often a money sink. Private investment in the housing sphere is typically targeted towards affordable housing, where the federal government incentivizes it through low-income housing tax credits (LITC). For achievable, moderate and market-rate housing, no such incentives exist.

Local land trusts like St. Joseph’s Community Land Trust often make it easier for developers to leverage LITC. But awards for these projects often go to out-of-town developers—a large portion of the affordable housing here is built and managed by The John Stewart Company, whose closest office is in Sacramento. Some local developers have expressed that they feel like they’ve been passed over by county or city officials and that they don’t get a fair shake at creating affordable housing.

Patrick Taylor, owner of Alpine Corporation, has been trying to build deed restricted, achievable workforce housing in the region as a local in the area. He’s been working on the issue for years, but says that code changes and land shortages have made it far more challenging.

“There’s plenty of fees and loans that have to be dealt with,” said Taylor, referencing the development rights costs, fees for construction from multiple agencies and lawyers to help ensure deed restriction and other documents are legally binding. “There are these big hurdles and a multitude of agencies and requirements. Slimming that down would make the process much more streamlined, but right now, there are too many hands in the cookie jar, and miscommunication among a lot of them.”

Developers like Taylor have long expressed a desire to cut down the bureaucracy, and a high interest in increasing workforce housing incentives in residential and commercial areas. These would help protect environmental initiatives by reducing the need to commute, bringing people closer to public transit and their places of work.

The future of development rights

To its credit, the TRPA recognized the negative impacts that current development rights code has had on housing, and Phase 3 of the Cultivating the Community, Conserving the Basin plan (also called Tahoe Living) includes major code changes.

Currently, the summer and fall of this year is dedicated to exploring, defining and testing policy recommendations, including changes to the development rights system and associated codes. The end stage is expected to take place in winter and spring of 2026, where policy and code updates will be finalized.

Development rights are fairly restrictive in the Tahoe Basin, but not necessarily unique. Other areas of California, Maryland, Washington, New Jersey, New York and Colorado have development rights systems that the TRPA studied in 2021 to improve their system—some of which are being supported by TLWG and other housing advocates.

Olson laid out some of what TLWG members have been speaking about in recent meetings.

• Re-evaluating coverage

Land coverage is an associated concept with development rights, as it monitors the use of human-made structures that replace the soil and change how sediment enters the lake. However, Olson hoped that potentially looking at increasing coverage for homes that are otherwise infiltrating their water or are located in town centers would make it easier to streamline building them. “Housing is mitigation enough,” said Olson, “Especially in town centers, it reduces VMT (vehicle miles traveled) and gets people using transit.”

• Re-evaluating fees

There are fees aplenty in the Tahoe Basin, many of which unintentionally do the same thing as development rights and make it harder to build multiple units of housing. For example, VMT fees are evaluated per unit and are roughly $3,000—making it hard to justify building apartment complexes and other multi-family homes. “There are also a lot of fees that are missing because there’s a lack of equity in how those fees are applied,” said Olson. “Having agencies collect those missing fees could offset the cost of workforce housing.”

• Codes and subsidies

While the TRPA reduces four possible fees for deed restricted housing, Olson asserted there is a need for true subsidies beyond these and bonus units. For example, agencies and jurisdictions could utilize a checking system that prioritized funding workforce housing projects with proximity to town centers and/or transit. Or they might focus on square footage of units rather than flat rates per unit, which would incentivize building more multi-family residences.

• Fractional units

In Truckee, rather than counting bonus units as the same regardless of size, their bonus units are fractional. For example, a studio is equivalent to 0.5 of a bonus unit, while a two- or three-bedroom apartment is counted as 1 bonus unit. Olson called this a “compelling idea”, as more closely considering fractional units would make it easier to award more housing to deed restricted projects, as well as making it easier to get development rights for larger housing complexes.

The complex legal systems that are meant to protect Lake Tahoe’s environment have shifted in the past, and this major effort could make it easier for the basin to build workforce housing and match the growth happening in the region.

If you want to contribute to the TRPA’s conversations on development rights and other policies, they have two upcoming meetings in July. The South Shore workshop takes place on July 22 from 5 p.m. to 8 p.m. in the Bijou Community School, while the North Shore workshop takes place on July 23 from 5 p.m. to 8 p.m. in the Tahoe Community Foundation Trepp Room.

Eli Ramos is a reporter for Tahoe Daily Tribune. They are part of the 2024–26 cohort of California Local News Fellows through UC Berkeley.