On June 2, controversial condominium startup Pacaso announced changes to its business operations in Napa and Sonoma counties in response to what the company described as “community feedback.”
Currently valued at $ 1 billion, Pacaso was founded by former Zillow Austin executives Allison and Spencer Rascoff in late 2020, and it’s been making waves in wine country since its first real estate purchases here in early 2021.
The company is in the midst of a lawsuit against the city of St. Helena, which has banned its fractional ownership model, citing an ordinance banning timeshares. Pacaso disputes that its properties are timeshares.
According to his website, Pacaso is currently reselling fractional ownership shares in two Sonoma County homes: a $ 4.5 million home in Healdsburg at 6165 W. Dry Creek Road, which is available to eight potential owners at 677,000. $ each; and a house outside the city limits in Sonoma at 1405 Old Winery Court, which the company valued at $ 4.05 million with eight stakes available at $ 606,000 each.
This week, the company announced its commitment to only buy homes in Napa and Sonoma counties worth more than $ 2 million. For every Pacaso home sold, the company said it would donate $ 20,000 (or $ 2,500 for every eighth of ownership) to “a local non-profit organization supporting housing affordability.”
As part of his announcement, Pacaso canceled plans to resell a home he owns at 1627 Rainier Ave. in Napa to fractional owners and instead sell the house to one owner.
The property was sold to Pacaso for $ 1.13 million in April, but the company has faced criticism from community members for recovering a house that could be considered part of the workforce housing stock. work of the city.
Pacaso also said he would expand his code of conduct for owners, which prohibits parties and vacation rentals, to include the implementation of decibel limits on all home audio systems. A contact point assigned by Pacaso will also be available for neighbors’ on-the-ground comments seven days a week.
Ellen Haberle, Pacaso’s director of government and community relations, said in documents provided to the Index-Tribune that Pacaso “looks forward to working together to help the community thrive for the long haul.”
Brad Day, spokesperson for Sonomans Together Opposing Pacaso (STOP), said the group was happy to see Pacaso withdraw from the Bel Aire neighborhood in Napa, but it was not enough.
“Obviously the community doesn’t want them there, just like here,” he said. “A company with a moral compass would announce that it is withdrawing from all residential neighborhoods. Fractional timeshares destroy the fabric of communities by turning local neighborhoods into a revolving door of people on vacation. Pacaso is the kryptonite for communities.
Pacaso has paid an average of $ 4.1 million for his 14 homes to date in Napa and Sonoma counties, according to a company spokesperson, and each home spans an average of 2.1 acres. .
With its stated focus on high-end luxury homes and the average selling price of homes in the Sonoma Valley already above $ 1 million, according to MLS data from May, Pacaso’s new buying low of 2 million dollars is not expected to affect its current or potential acquisitions locally, says Tracy Reynes, Compass real estate agent.
First District Supervisor Susan Gorin bought a small fractional property in a house in Northstar near Lake Tahoe after losing her home in the Nuns fire in 2017. She told the Index-Tribune that she thought fractional ownership in a resort area with many houses and units rented on short notice “is very different” from converting a single-family home in an established neighborhood to the model.
“It is no surprise that neighbors are angry with this model of property intruding into their neighborhoods, especially when there is a vacation rental exclusion zone already superimposed on that neighborhood,” said Gorin.
“There is an impact on the condominium neighborhoods. A single family home may have some level of services entering the neighborhood to maintain the home, but probably not at the frequency required for that model of ownership.
A local sales representative stepped forward to champion Pacaso’s business model, according to the company’s marketing materials.
“Empty second homes with absent owners is not a good solution for the economic recovery of our small business community,” said Travis Stanley, CEO of the Napa Chamber of Commerce, in Pacaso press materials. “Pacaso’s business model actually provides more sustainable economic support and uses local suppliers to buy, sell, maintain and maintain properties throughout the year.
A request from Index-Tribune for further comment from Stanley – or a comment from Sonoma Valley Chamber CEO Mark Bodenhamer – was not returned.
The announced operational changes do not affect Pacaso’s lawsuit against Saint Helena, filed on April 6, according to company spokesman Larry Kamer of the Napa-based Kamer Group. The question is whether Pacaso’s home ownership structure is technically a timeshare.
The federal lawsuit, filed in the US District Court for the Northern District of California, seeks to “secure the legally protected rights of (de Pacaso) homeowners to enjoy the benefits of owning property in the beautiful surroundings of St. Helena.”
Pacaso owns or manages five houses in Saint Helena. His lawsuit claims the town’s letters “scared real estate agents and dampened their efforts to buy and sell property interests in Pacaso properties,” according to the Napa Valley registry.
In the Sonoma Valley, neighbors of Old Winery Court still hope they can stop Pacaso from selling his home to eight owners.
Cul-de-sac resident Holly Kulak believes Pacaso has a “deeply flawed” business model.
“(Pacaso) is not the answer to solving all kinds of housing problems in communities,” she said. “They want their IPO windfall on Wall Street at our expense.”
Contact Lorna at [email protected]