A hilltop home overlooking Santa Barbara is at the center of a contentious debate over affordable housing.
San Francisco-based company Pacaso, founded by former executives with Zillow, manages a “fractional ownership” home at 1131 Las Alturas Road in Santa Barbara, and three others in Montecito and Santa Barbara.
The company sells fractional interests to out-of-towners looking for a second home. Those fractional owners have the right to stay overnight at the home for up to 44 days a year, but not more than 14 in a row.
“It’s harmful to communities like Santa Barbara that have such an extreme shortage of housing,” said Rob Fredericks, executive director of the Housing Authority of the City of Santa Barbara. “It takes another home out of the available inventory in Santa Barbara for home ownership and even rental that could possibly be available.”
Along Santa Barbara’s twisty roads of the Riviera, “No Pacaso” signs adorn driveways. Leading the charge against the boxy, white, sprawling home is Don Vogt, a homeowner across the street.
“Communities have long banned timeshares in residential neighborhoods because of their short-term occupancy, hotel-like behavior and commercial activity, in a location where such activity is inappropriate,” Vogt said. “No matter what they say, Pacaso is a timeshare.”
Santa Barbara is gripped by a housing crisis and a homelessness problem that are worsening with each day. Families are competing for scarce housing resources with multimillion-dollar companies and investors who are able to pay hundreds of thousands of dollars above a listed price just to lock down a home.
Pacaso did not respond to Noozhawk’s request for an interview. (Update: Pacaso gave Noozhawk the following statement on Thursday morning).
“Pacaso is not a timeshare,” said Brian McGuigan, Pacaso spokesman. “We help families co-own second homes, which is common practice in Santa Barbara, and can be part of the solution to the housing crisis in the community. Research shows that co-ownership contributes more to the local economy than the typical second home, while redirecting second home buyers away from median priced single family homes in demand by locals and into high-end, luxury homes.”
The company website includes animated graphics, with contempary vertical sliding screens.
“Explore our collection of stunning single-family homes in top second home destinations,” the company’s website states. “We’ll help you find the perfect fit, and you decide how many shares you’d like to own.”
The company states that it creates a property LLC for each home, finds and vets co-owners, and handles all of the sales details. At closing, the co-owners enjoy 100% ownership of the home, and Pacaso does not retain any shares.
“Step over the velvet rope, and be the first to know about new listings and previously sold-out homes with newly available shares,” the website states.
Vogt said that last November, noisy catering at the Las Alturas house turned into a “booming techno-rock party lasting into the night.” He and his wife, Carolyn, heard the music through their windows. The number of people coming and going into the home impacts neighborhoods, he said.
“It was a real wake-up call for our neighborhood,” Vogt said. “No one from Pacaso monitors the owners’ behavior. It is up to the neighbors to get pissed off enough to call the police.”
Vogt said such housing does not belong in Santa Barbara.
“The owners will move in and out of the property at least 30 times and as many as 48 times per year,” Vogt said. “It’s just an end-run around existing timeshare and other short-term occupancy ordinances.”
The company lists three other properties in the area: 502 Picacho Lane, listed for $1.18 million for an eighth ownership; 1547 Shoreline Drive, listed for $2.1 million for an eighth ownership; and 2084 East Valley Road for $1.3 million for an eighth ownership.
Santa Barbara Mayor Randy Rowse said the fractional ownership homes are bad for Santa Barbara.
“I am certainly not in favor of it,” Rowse said.
He has spoken with City Attorney Ariel Calone and asked him to research if there’s a way to legally block the arrangement. The company’s popularity has exploded in the past year. Cities such as Pacific Grove and Truckee are among the 15 cities trying to keep the company out, and other cities also are fighting the company.
Rowse said people who use the luxury units as second homes are not part of the community.
“We want people to live here who are invested in the community,” Rowse said.
Housing Authority executive Fredericks said there should be some deeper looks by city officials and county officials to put some kind of control measures in place. He said he’s hoping for a moratorium.
“If they don’t, it is going to continue to take units offline for locals,” Fredericks said. “Even though it is super luxury, it takes a unit out of the inventory for locals. It just further constricts supply. It’s like a trickle-down effect that affects everything.”
For Vogt, he said he hopes city officials take action.
“Once Pacaso commercializes a home, it will never again be occupied by a single family,” Vogt said. “They have removed it from the stock of houses available for single owners.”
— Noozhawk staff writer Joshua Molina can be reached at firstname.lastname@example.org. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.