One Sonoma neighborhood’s fight to keep Pacaso out
Posted on June 7, 2021 by Sonoma Valley Sun
“Pacaso is litigious, and they’re bullies,” said Brad Day, of Sonomans Together Opposing Pacaso.
Commentary by Jackie Lee
Sonoma residents are mostly respectful of their neighbors, aside from the occasional loud birthday music. They maintain cordial relationships at a friendly distance, but when one has concerns, the others knock on the door asking how they can help. It’s that kind of camaraderie. When an important issue circulates under the radar, the entire group comes together to address it.
Such was the origin of STOP, “Sonomans Together Opposing Pacaso,” designed to resist a subversive takeover of the Old Winery Court neighborhood, west of Sonoma. The facts and figures are a moving target, but to summarize to date:
Pacaso is an LLC set up as a new real estate company backed by hundreds of millions of dollars in funding. They are buying up properties in Sonoma, Napa, and other wine country destinations, then sell fractional ownerships from one-eighth to one-half of each home in a legal strategy that sidesteps established timeshare regulations. The City of St. Helena refuted Pacaso’s claims that it was not a timeshare, and Pacaso has sued them. They later backed out of a sale in Napa when faces with community backlash.
Ownership of a fractional share allows the buyer (LLC partner) to have 44 days in residence in periods up to a maximum of two weeks at a time, which can then be shared with family and friends. Instead of four people contributing to the neighborhood, the house could theoretically have large groups of revelers each time, rotating every two weeks to the next group in line.
Facts and figures aside, current residents of the area will be affected if Pacaso is allowed to go ahead with their incursion. The neighbors’ way of life will change if their community spirit fails because of new people and new baggage going through a revolving door every two weeks.
Brad Day is the neighbor spearheading the STOP movement through the NextDoor neighborhood online app. With his wife Holly Kulak, he publishes the online magazine Weekend Sherpa. He said he was “voluntold” to be the speaker at their first strategy meeting with neighbors, but he’s glad to do it.
“Pacaso is litigious, and they’re bullies,” he said. “For those wondering how this differs from Airbnb, people who stay at an Airbnb pay transient occupancy taxes into our local community. Pacaso users will not pay this tax. Airbnbs and other vacation rentals are subject to operating regulations. Pacaso’s model can buy into any neighborhood and flip it into a fractional ownership/timeshare. What’s the big deal? Well, if you think Sonoma has changed in the last few years, wait until this business model sinks in. Within a few years, our local neighborhoods will be a revolving door of tourists staying in residential homes, using our facilities, and not paying taxes. Plus, this puts a bigger burden on an already crunched housing market.”
Pacaso is affecting every community they try to enter, he said. “We need to investigate how they came into town. Is this what we want for our community? I don’t think it is. That’s why I and the residents on my street are fighting this fight. It’s about the big picture, the long term. Sonoma is a special place, and we have to work hard to keep it that way. Community means different things to different people, but once you lose it, it’s hard to get back. Do the local communities have the money to challenge Pacaso?”
Kathy Benziger and her family have been neighbors around the corner on Lovall Road for 25 years. She stated, “We have a definite interest in who moves in and out of the area. We particularly need thriving and supportive communities because our adult son Chris is disabled.” They bought the house next door to the Pacaso house for their son, whose bedroom window on the side is next to the Pacaso house. She continued, “If it becomes a party house, the noise could present a major problem. But not only that. We depend upon the kindness of neighbors whenever our son needs urgent help, and we feel part-time residents would not have the same level of concern.” She added regulations need to be updated to avoid this new model which could become a factor everywhere.
Day said, “They can gift their share to other family and friends as well. Passing on their ownership could be exponential. They’re on vacation so social gatherings are part of it and could be a problem. Pacaso is innovative in exploiting this legal loophole. They don’t pay Transient Occupancy Tax, so the community loses out.”
He said there’s no evidence of any pro-activeness by the County. “We’d like to see that changed. People visiting via their timeshare allowance are not accustomed to operating here, so they would depend on their neighbors too, which means several groups have to be trained all the time. Corporate clients could get involved, gifting their ownership as part of corporate deals.”
Kulak noted that over 2,000 people locally and in Marin have signed the petition on Change.org, and sign-ups increase each day.
Day noted, “I’m impressed by everyone’s passion. It is a negative for communities to turn neighborhoods into timeshares. Pacaso changed their buy-in level recently, but they can still buy a $750k house and flip it into a timeshare. They may pivot now that they’ve relinquished their property in Napa. Eager competitors may jump on the train. It’s still a timeshare according to the length of time you can stay there. How can they spin it as not a timeshare? It’s just dressed up in different legal language. Who knows where it could go?”
Kulak added, “It’s important to us to not only protect this neighborhood from such maneuvers but to prevent it from going further. The tentacles extend far and wide. We need to mobilize other communities so that we become a grassroots venture.”
“We need to put pressure on people who can make a difference,” Day added. “All supervisors, the Governor, people who can actually change the regulations. If it catches on, it’s not only Pacaso here but also in other neighborhoods. It could happen in the City of Sonoma too, so they need to be aware and ready. This is an opportunity for Sonoma City Council to start the conversation now. Who wins? Not the community, not the neighbors, only Pacaso. It’s worse than a timeshare. When you drive into our Court and see the signs outside, who would actually buy here? You’d have to have a level of arrogance to buy in to a neighborhood that doesn’t want you.”
Day and Kulak both said most of the people on their eight-house block moved into a neighborhood, not a place for timeshares. “Timeshares as a fact belong together in different areas, not in neighborhoods,” Day continued. “It’s a pitch to venture capitalists without looking at the reality on the ground. We’re not anti-timeshare or anti-vacation rentals—there are places where they work, just not in neighborhoods. I’m proud how committed we have all been here in the fight against Pacaso. Our neighbors have lived here since childhood. All of us want to work hard to preserve what makes Sonoma special, and we don’t want to lose that. We don’t want it to become allowable everywhere.”
Reached by telephone for comment, Sonoma City Council Vice Mayor Madolyn Agrimonti stated, “We on the City Council are fully aware of the Pacaso situation, and are looking into it. I feel it’s just a new avenue to make money, but it doesn’t have concerns about the neighborhood.”