Another threat to the quiet enjoyment of our neighborhoods is upon us, and once again it originates in Silicon Valley. Its name is Pacaso.
Its founders were the “geniuses” behind Zillow, which last year managed to lose a whopping $528 million dollars in an unprecedented year of gains in housing. Brilliant. Salt Lake City Magazine calls Pacaso a “bloated tech-based parasite profiting off the community.”
This timeshare start-up (calling themselves fractional ownership) purports to not be a timeshare because it sells “ownership deeds” instead of time. However, if it looks like a duck, and acts like a duck, guess what? Quack.
I‘m going to call it what it is. A timeshare. In their own literature, Pacaso explains how they “share out the time” which is the definition of a TIMESHARE. And the cities of Palm Springs, Malibu, Helena in Napa Valley, and Sonoma all agree with my logic, and have labeled Pacaso a timeshare company.
Please take the time to read up: https://stoppacasonow.com.
This is the newest business model that corporate interests and private equity groups are using to take over our neighborhoods, turn them into profit-making resorts, and destroy our single family zoning. They have hired lobbyists in the cities they are trying to overrun, and reportedly have a meeting next week with the Town of Paradise Valley.
I am calling on our residents to email the mayor, council and staff to express our concerns and urge them to enforce our no timeshare goal as stated in the General Plan and just say no to Pacaso.
Other communities have fought back with success, picketing at their town halls and the properties in question. The cities mentioned above had leaders that made it loud and clear in no uncertain terms that the model was illegal in their town, and even ordered cease and desists on the properties already purchased. Pacaso left. I am hoping for the same declaration from our town leaders.
It’s been pointed out to me that we have different laws than California. That is true, but not the point. I would be wary of the “our hands are tied” argument, which I hope we will not be encountering. These are not short term rentals, but timeshares.
My understanding is that timeshares and fractional ownership are not allowed in the Town of Paradise Valley. The 2012 General Plan currently in effect, clearly states in Table 3.31 under Housing that no timeshare or fractional ownership residences shall be allowed anywhere in the town. Even in other cities where they may be allowed, they are only limited to certain areas.
I believe single family residential homes in our unique community are not the place for timeshares or fractional ownership vacation homes.
This model of buying up properties to churn does no favor to our community. Pacaso makes their money by:
Purchasing a property under an LLC which eventually becomes the “property manager”
Hike up the price tremendously, then split that property eight ways, and re-sell each “portion” (44 days a piece, at 14-day intervals) to make a huge profit.
Make a 12% commission on each sale. Typical Realtor fees are 6% at best.
If the timeshare owner wishes to sell their timeshare, the LLC charges 6% to do so. Then, charge a new 12% to the new buyer.
This business model screams “Churn and Turn.” The bulk of their profit comes from the buying and reselling of the properties, which means the model relies on continuing transactions, eventually buying up multiple properties with no end in sight in small communities like ours. At least with an STR, the property is stable and the owner is not looking to buy and resell to keep their revenue stream going. And sometimes there is a respite where the property is empty, or rented to a longer term renter.
With the Pacaso model, the owner of the time can “gift” (hmmm) the weeks to anyone they choose. The vacationers can only stay 14 days at a time unless they have purchased more than one-eighth share. The residents will be a constant flux, and unvetted (Pacaso likely will claim the new STR Town Code rules won’t apply — including vetting for sex offenders because they claim to not be an STR).
We must preserve and protect the town we love. We cannot afford to wait for our elected officials to make this decision for us, or hope it “goes away.” My hope is that the Town Council prioritizes this issue, and that they tighten up any code ASAP that would leave us open to interpretation with an emergency meeting if necessary.
Please join me in emailing and calling the town to strongly voice our opposition to Pacaso!
Editor’s Note: Christine Labelle is a 45-year resident and is running for Town Council. She currently serves on the Town of Paradise Valley Historical Advisory Committee.
