Key Details:
In a significant development for short-term rentals in South Lake Tahoe, California’s Third District Court of Appeal has overturned Measure T, which had previously banned most vacation rentals within residential areas.
Measure T, originally passed in 2018 by local voters, limited short-term rentals to designated tourist zones and commercial areas, effectively excluding a large portion of residential neighborhoods. It also permitted permanent residents to rent their properties short-term for up to 30 days annually.
However, in a ruling issued on March 13, 2025, the court found the permanent resident exception unconstitutional. The judge ruled that the measure’s permanent resident exemption violated the U.S. Constitution’s Dormant Commerce Clause, which prohibits states or localities from enacting laws that discriminate against interstate commerce, leading to the invalidation of Measure T entirely.
The court’s ruling restores the pre-Measure T regulatory framework, allowing property owners to apply for vacation rental permits in residential areas.
Legal experts believe that the court’s decision may trigger lawsuits against the City of South Lake Tahoe, as affected owners could seek compensation for lost rental income and financial damages.
South Lake Tahoe has 60 days to appeal the ruling.
Our Take:
The court’s decision to overturn Measure T could have far reaching effects, and set a major precedent for other cities attempting to limit non-local STR owners.
Now, with Measure T struck down, the City of South Lake Tahoe faces a choice: rewrite the rules to comply with the court’s decision or find another way to clamp down on non-local STR owners. Either way, this fight isn’t over. Legal battles are on the horizon, with property owners likely to seek damages for lost income.
More broadly, this ruling signals trouble for cities attempting to curb vacation rentals through aggressive bans.
For South Lake Tahoe, where the economy depends on tourism, this ruling is a major win for STR owners and local businesses as long as the decision stands.
Source: My News 4
