Recent VHR and TOT Administration in Douglas County is Disorganized and Troublesome (opinion)
Submitted by Carson Now Reader on Wed, 07/14/2021 - 2:30pm
On July 15, 2021, Douglas County implemented a revised VHR permit ordinance. Sweeping changes affected approximately 500 to 600 second homeowners in the county and an indeterminate number of bad apple real estate investors running wildcat hotels. “Heads in beds” and occupancy tax revenues support the Tahoe-Reno region. However, this county action is not a balance of Tourism Rules vs. Distressed Residents, but indication of poor local government administration and possible conflict of interest of those enlisted to support enforcement.
As a fulltime Sacramento resident, and longtime small second home owner in Douglas County, I've taken note of this significant issue. In 2004, the Tahoe Regional Planning Agency (TRPA) developed clear guidance for sensible management of vacation stays. Countless task forces later, municipalities like Douglas County, seek to blaze a less prudent path. They’ve been reactive and at times failed miserably to identify genuine tax dodging hosts in measured, capable, or objective fashion. In the process, they’ve also deflected attention from a much greater problem.
Long before Airbnb style booking platforms facilitated increased market competition for visitor activity, my spouse and I made certain to enlist local professional property management firms to handle vacationer needs, issues, and if necessary, behavior. It made sense from the outset, and especially in the past year, as Douglas County permit compliance protocols and enforcement incompetence were outsourced, and thus compounded, by county decisions.
A predatory third-party collection agent with a standard 35% commission rate was hired by Douglas County. As such, they have clear motive to drive one size fits all punishments, while skirting Nevada administrative law. The massively influential, politically connected, HDL Companies of Brea, California, aggressively pursues violations or lapses with little regard for due process remedies. Now the county’s ordinance revision doubles maximum penalties. Sounds good to some county residents, except outsourced tasking to HDL also includes control of online architecture designed to facilitate efficient local transactions between the county, citizens, and local business. That interface has been often dysfunctional. Big government detractors and enforcement advocates alike should be concerned.
HDL, like a small handful of other large private firms specializing in municipally contracted enforcement, are not subject to the same set of rules applied to typical collection agencies. Consumer protections from their tactics are quite weak. When similar entities are empowered by cities and counties to seek and apply broad stroke pressure on perceived infractions, potential abuse of power is significant. In the HDL business model, it “eats what it kills”. In extreme scenarios, folks with unpaid parking tickets could be threatened with arrest or tax liens, as in 2015 in Georgia when Linebarger Goggan Blair & Sampson, one of the nation’s largest government contract collectors, cracked down with a similar incentivized enforcement dragnet, ostensibly to support local public agencies.
My own eye-opening experience was getting hit with a maximum enforceable fine based on mishandled permit renewal scheduling and verification. The penalty might not seem draconian at first glance, especially if we had been grossly non-compliant with critical obligations. However, following a year and a half of coordinated tax, nightly surcharge, and fire safety compliance for vacation rental activity in our one-bedroom condo, it simply became too exhausting to battle with the county over inconsistent permit issuance dates. Long hours spent in communication with our equally frustrated local management company had proven futile. They, along with the rest of legitimate small businesses facilitating and serving an estimated 60% local tourism related employment base, have been forced to deal with retroactively imposed nightly surcharges and countless county errors in posting Transient Occupancy Taxes (TOT) across multiple client properties. Given this intractable headache, we chose to pay a maximum enforceable fine of $5050 under vigorous, vetted, and largely unrecognized protest.
Nevada Senate Bill 322, introduced in March of this year, seeks remedies ensuring counties won’t overreach and protects homeowners with scant resources to fight off hired guns like HDL Consistency would be maintained through the state Department of Taxation.
Douglas County’s arrangement with HDL is about a year old. Should it evolve, public scrutiny for potential conflicts of interest, property owner class action suits, disproportionate penalties, and denial of citizen recourse must be demanded. Responsible local government should not be jobbed out. The county’s so-called “education” program and a newly reconstituted 5-person citizen advisory group may have marginal impact, but there is every reason for skepticism based on the county’s track record and their misguided contracting practices.
— Jeff Fekete is a teacher and former broadcast media professional who maintains a home in Sacramento, Calif., and Stateline, Nev.
