I have found out it isn't the police, it is the National Environmental and Planning Agency. It appears they are trying to get the villa owners who own property on the beach to pay for a beach license. So it is not like the police are on the beach hassling anyone (tourists or locals)

I agree with MilwaukeeMike - you can find something in every price range and you can definitely mingle with the locals in TB. Check out Treasure Beach.net - places to stay and you will get a lot of information of what is available.