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The Lake Tahoe Basin: appraising in a heavily regulated market.

Article Excerpt
ABSTRACT

The existence of the Tahoe Regional Planning Agency (TRPA), and its associated rules and regulations, make the appraisal experience in the Lake Tahoe Basin extremely challenging. The TRPA has created value considerations that are unique and difficult to comprehend and apply. This article is a primer on some of the things the appraiser must become familiar with in order to perform an appraisal in a competent and professional manner.

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Appraisers should be prepared to do far more research for assignments in regulated areas. When public agencies are heavily involved, the appraiser needs to become familiar with the impact of their regulations on the market.

This article is intended as an overview of the appraisal environment in the Lake Tahoe Basin. Because of the basin's location on the California-Nevada border and unique environment, there are multiple regulatory restrictions affecting its market and impacting real estate appraisal. It is not possible to present all of the valuation considerations that exist or to go into great depth on each issue. This article is a starting point from which readers can begin additional research having some understanding of the path ahead.

The Lake Tahoe Basin

Lake Tahoe and the surrounding land areas that comprise the lake's watershed are generally referred to as the Lake Tahoe Basin (Figure 1). Approximately two-thirds of the basin is located in California and one-third in Nevada. The Lake Tahoe Basin encompasses approximately 500 square miles with the lake itself covering about 40% of the basin. The mountain peaks surrounding Lake Tahoe range from approximately 8,000 to 11,000 feet. Moderate to steeply sloping, forested terrain comprises most of the land area in and around the basin.

The Lake Tahoe Basin is one of the most visually spectacular areas in the country. The lake itself is a naturally occurring body of water. The surface has an elevation of approximately 6,200 feet. The lake's surface area totals 191 square miles, and is 22 miles long and 12 miles wide with a maximum depth of 1,645 feet. There are 42 miles of shoreline in California and 20 miles in Nevada.

Sixty-three streams flow into Lake Tahoe with the Lower Truckee River being its only outlet. A dam at the head of the Truckee River in Tahoe City regulates the level of the lake. The Bureau of Reclamation constructed this dam, which allows the top 6.1 feet of the lake to be operated as a reservoir. The Truckee River flows east from Lake Tahoe, through Reno, and eventually into Pyramid Lake in Nevada.

[FIGURE 1 OMITTED]

Lake Tahoe is famous for its depth and water clarity. The lake's clarity has diminished over the past decades with this loss attributed to human activities: grazing, mining, logging, and general development. The basin's terrain and climate are also contributors to the lake's degradation. This area experiences only 30 to 70 frost-free days per year, which results in a relatively short growing season. This short growing season, combined with the region's steep terrain makes the area susceptible to erosion, surface runoff, and water quality degradation.

Tahoe Regional Planning Agency

The Tahoe Regional Planning Agency (TRPA) is the primary regulatory agency in the Lake Tahoe Basin. County and city authorities definitely play secondary roles when it comes to deciding what can and cannot be done with a property.

In the late 1960s, after two decades of rapid growth, the governments of California and Nevada approved a bistate compact for the creation of a regional planning agency. In 1969, the United States Congress ratified this compact and the Tahoe Regional Planning Agency was created to oversee development within the Lake Tahoe Basin.

The TRPA's stated mission is to "lead the cooperative effort to preserve, restore, and enhance the unique natural and human environment of the Lake Tahoe Region" (1) The Code of Ordinances adopted by the TRPA regulates land use, density, rate of growth, land coverage, excavation, and scenic impacts. These regulations are designed to bring...

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