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Pacaso backlash draws on amid latest funding round

by Lillian Dickerson September 17, 2021

10-12 minutes

When Alfred Miller pulled up to his new vacation home in Sonoma, California, he was greeted by a bevy of signs scattered on lawns, fences and cars protesting the very company he used to purchase the property: “Stop Pacaso,” “Not here, Pacaso!” and even, “The Pacaso house is the big one on the right with no soul.”

“So, imagine me as a new owner driving up, and I get to the corner of Old Winery Court … and the more I drive into the neighborhood, the more signs I see,” Miller told NPR. “I mean, it was not what I would call very welcoming.”

Pacaso, a luxury home co-ownership company, is a Silicon Valley darling at the moment, having just raised $125 million in a Series C funding round after achieving unicorn valuation in March. But the influx of cash comes amid persistent NIMBY backlash from vocal protesters in Northern California wine country — the first market it began operating in when it launched in October 2020.

The median home sale price in Sonoma County, according to Zillow, is $760,000, and the biggest gripe homeowners in the wealthy area have is that Pacaso’s co-ownership model is introducing “transients” into the community — albeit transients that can afford to buy shares of homes valued at $2 million or more.

One group in particular called STOP Pacaso Now (STOP serving as an acronym for Sonomans Together Opposing Pacaso), has continued to be active in its fight against Pacaso, speaking to the media, publishing weekly newsletters, hosting rallies, posting signs and more. It’s also spurred a number of spin off groups in neighboring regions, including CATS (Communities Against Timeshares, in Napa), NOPE (Neighborhoods Oppose Pacaso Encroachment, in St. Helena), and Newport Beach Against Pacaso Timeshares, among others.

STOP Pacaso Now’s primary beef with the co-ownership company seems to lie in what it sees as the company’s selling of timeshares to people who end up becoming “transients in the community,” rather than substantially contributing to it or being invested in it.

“If [Pacaso CEO] Austin Allison moved here three years ago because he loved it so much, he should have done his homework and not taken advantage of the COVID [second home-buying wave],” Pattie Dullea and Paula French, representatives for Napa CATS, told Inman in an email. “He should have taken the time to get to know the community neighborhoods and  support them. Instead he concocted a selfish get rich quick scheme that will eradicate any community that is left here after ‘fractional owners’ take their piece…”

“You’re not a co-owner,” David Applebaum, a tech exec and member of STOP, told GeekWire, of Pacaso customers. “You’re a transient vacation occupant. You’re not joining local groups, you’re not sending your kids to school. You’re not a member of the community. You are coming here for a two-week vacation and then leaving.”

The homepage of STOP Pacaso Now characterizes Pacaso as “the newest way for Silicon Valley bros and venture capital vultures to make a quick buck at your expense: By turning your neighbor’s house into what’s basically a glorified timeshare.”

Austin Allison

However, Allison has vehemently argued against the perceived definition of Pacaso as a company that sells timeshares, even suing the city of St. Helena after it prohibited the company for violating laws that ban timeshares, which, Pacaso says, it doesn’t sell. Pacaso likens its model to going in on a property with a few friends; each party that contributes to the purchase actually owns a fraction of the asset, not just the right to use it for a fixed time period.

The lawsuit is ongoing, but in June, U.S. District Judge William H. Orrick dismissed one of Pacaso’s five “causes of action” against St. Helena through California’s anti-SLAPP (strategic lawsuit against public participation) statute, which helps protect the public’s right to free speech.

Colin Tooze, Pacaso’s vice president of global public affairs and communications, told Inman that “in the overwhelming number of places where we operate” Pacaso homeowners have been warmly welcomed into their new communities.

Colin Tooze

“[Neighbors] rightly see that [Pacaso homeowners] are supporting the community through spending money locally in local businesses, at local restaurants, supporting the local tax base by owning property in the community in question, and they’re forming good relationships with their neighbors.”

After the backlash began earlier this year, Pacaso launched a number of initiatives in June to try and appease its neighbors. Those initiatives included only purchasing homes valued above $2 million (so as not to compete with buyers in the area’s median price tier), pledging a $20,000 donation to an unspecified local nonprofit that aids in housing affordability for each Pacaso home sold ($2,500 for each one-eighth ownership interest), adding new noise level regulations to its owner code of conduct and creating a Pacaso-appointed point of contact available to receive feedback from community members 24/7.

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About three months later, those peace offerings do not seem to have made much of an improvement in community relations, however.

“[The changes] recently made by Pacaso are not a sincere and honest attempt to address the overall concerns we have raised about the community-decimating impacts of their ‘we’re not a timeshare’ scheme,” Dullea and French told Inman.

Regarding Pacaso’s 24/7 community point of contact, residents in St. Helena, Sonoma and Napa expressed exasperation and dismay.

“What [community] liaison? There’s a liaison?” Holly Kulak, a member of STOP Pacaso Now, wrote to Inman in an email.

Connie Wilson, a member of NOPE, told Inman in an email that the community’s Pacaso point person tasked with helping address noise disturbances lives about 30 minutes outside of town, and hasn’t been effective in mitigating noise complaints that “continue to this day” at one Pacaso home in the area.

“[Pacaso’s] insertion of a home manager position for locals to contact only confirms that they understand their model is not necessarily a great fit for any neighborhood,” French and Dullea told Inman.

When asked if the company’s recent initiatives to build bridges in the communities it serves had accomplished what Pacaso had originally hoped, Tooze said those initiatives were a sign of the company’s “commitments we want to make to the communities where we operate.”

“It’s less about short-term tracking of outcomes than it is a sign of our commitment to dialogue and to have conversations with people in the community,” he added.

Tooze also noted that, in general, the company has received positive feedback about their home managers in different areas.

“The property manager model is one we think makes a lot of sense and we hear good feedback about that model,” Tooze said. “It’s part of the home manager’s job to regularly be in touch not only with owners and their guests, but also with neighbors, and the feedback that we hear is that that works.”

If Pacaso homeowners are found in violation of the company’s policies, like not observing quiet hours or renting the home out to outside parties, Pacaso can “suspend owners’ state rights for up to three months,”  Tooze said.

Members of STOP Pacaso Now and its affiliate groups have also criticized the company’s pledge to donate to housing affordability causes for each Pacaso home sold, claiming its donations are minuscule for a company of its wealth.

“Pacaso’s pledge of $2,500 per share sold is a pittance, especially since their purchases of mid-level houses in St. Helena has effectively removed stock from first time home buyers,” Wilson told Inman.

Despite continued criticism that Pacaso takes away housing stock from the communities it serves (even after its pledge to only purchase homes valued over $2 million), the company argues that it’s helping solve the housing crisis through its shared ownership model.

“Our view is, we can’t wait for America to build its way out of the affordability crisis and we have to expand access to housing now, in part by just making better use of the housing stock that we have,” Tooze said. “I would think of Pacaso as an example of approaches to utilization that over time could actually relieve the pressure on the housing market.”

French and Dullea added that Pacaso’s choice to put a $2 million minimum on their home purchases also made little difference in helping the housing crunch.

“Their decision to not seek properties under $2m is also irrelevant,” they wrote to Inman. “The prices of homes everywhere are skyrocketing.”

STOP Pacaso Now has been working to spread the word through an active Twitter account it’s been posting to daily for the last several weeks, which has garnered about 115 followers. Aside from that, anti-Pacasoism has popped up on Facebook too — in the form of a group called ByeByePaca$o, which has about 150 members.

Some pretty heated conversations about Pacaso have shown up on unrelated social media pages too though, like on the discussion board of the Tahoe VHR (Vacation Home Rental) Club’s Facebook page where some commenters seemed to think Pacaso wasn’t deeply impacting Tahoe’s workforce community since it purchases luxury homes, but others saw its presence as a clear risk to the community fabric.

STOP Pacaso Now’s next protest rally is scheduled for Saturday, September 18th, where protesters will gather at 1509 Riesling Way in St. Helena to protest Pacaso’s latest home purchase in the city, the home located at the very address at which protesters will meet.

“Pacaso doesn’t really care about the community, as they claim,” French and Dullea told Inman. “They care about carving out their piece of the pie and to hell with the overall health of a community that is struggling to be able to house [workers].”

As of Thursday, Pacaso had also announced its expansion into Southern Florida — a region likely to be much more welcoming to Pacaso, as the state is rife with timeshares.

Email Lillian Dickerson