Judge stops county from implementing full VHR ordinance

A federal judge issued a temporary restraining order Thursday preventing Douglas County from implementing portions of its new vacation home rental ordinance.

The ordinance was scheduled to go into effect on Thursday.

According to the county, the order was issued pending trial in a challenge to the county’s new ordinance initiated by VHR operators, who claim the ordinance would affect their vacation rental business.

Robert Kalthoff, a Texas resident, owns a vacation rental he purchased in 2017.

He has a permit but doesn’t have designated parking spots for the property. According to court documents, the Kalthoffs receive $36,000 a year in rental income that they rely on.

Also challenging the ordinance are Evie Viera and David Isenberg, who own a nine-bedroom home in upper Kingsbury. Viera’s current permit allows up to 22 people to occupy her home. Under the new ordinance, she might not be able to renew her permit because Kingsbury is over the 15-percent rental cap.

World Class Property Management owners Heidi and Jeren Gunter manage 53 short-term rentals in Douglas County and they are their sole source of income.

“If the new ordinance goes into effect, the Gunters stand to lose portions of their business,” the order said. “These limitations and inevitable loss of some clientele under the new ordinance will impact the Gunters’ business.”

Rental operator Jim Thulin owns five properties in Tahoe Township and spent more than $2 million remodeling, according to the order.

His properties would require a special use permit for more than 10 occupants, and the new law would prohibit him from owning properties under his company.

“This will create a loss to Mr. Thulin of millions of dollars in rental revenue,” the complaint said. “Even if Mr. Thulin sold his property, he claims he would lose money as these properties were remodeled for the purpose of utilizing them as VHRs.”

Sean Ward and Zorka Aguilar own a condo for which they’ve applied for a permit to rent on a short-term basis. Ward is also a part owner of a business that helps rent vacation home rentals. Of the 20 owners the company represents, a dozen have filed for either new permits or renewals which haven’t been acted on by Douglas County. The county’s moratorium on issuing permits remains in effect through July 30.

The plaintiffs argue that the ordinance violates the Fourth Amendment.

The $20,000 fine for operating without a permit is disproportional to the offense and violates the limit on civil penalties in state law, the judge said in his order.

“The court finds it troubling that many of these fines are for several thousands of dollars without any authority to lower the fines for particular violators’ circumstances,” Judge Robert Jones wrote. “For this reason the court temporarily restrains defendant from imposing a fine of greater than $5,000 for a single violation.”

The judge also agreed with the plaintiffs that the advisory board will “be impermissibly biased or at least appear to be so based on the requirement that the board be compiled of a majority of people who are not ‘current VHR permit holders.’”

Jones’ order affects parts of the new ordinance, including stopping the county from limiting VHR occupancy based on parking, prohibiting tandem parking on private property, implementing new fines for violations, requiring a notice be posted for unscheduled VHR property inspections and creating the VHR Advisory Board, as currently constituted, until such time as a final determination can be made regarding the constitutionality of the ordinance.

The judge set an Aug. 26 hearing date.