Fractional ownership real estate company Pacaso adopts new approach in Napa Valley — and residents are suspicious

Editor’s Note: This story was updated at 5:20 p.m. with comment from a Boisset Collection representative.

The recent appearance of an iconic Napa Valley inn on the website of the fractional-ownership real estate company Pacaso was interesting enough to draw attention — both positive and negative.

But the real surprise lay in the details.

Jean-Charles Boisset, whose burgeoning Boisset Collection includes heavyweight Wine Country brands like Oakville Grocery, Raymond Vineyards, Buena Vista Winery and DeLoach Vineyards, isn’t selling ownership shares of the Ink House through Pacaso. The entrepreneur known locally as “JCB” is offering a fractional one-year lease.

For $84,000, you can buy use of the former bed-and-breakfast for 1/8 of a year, or about 45 days. That calculates to roughly $1,867 per night.

The Ink House lease holders would schedule their visits through the Pacaso app and SmartStay technology, a company spokesperson said.

It’s new territory for Pacaso, the San Francisco-based company that was founded a little over three years ago and, by its own reckoning, reached a $1 billion valuation faster than any other privately listed startup.

“An opportunity arose to offer more people a unique chance to enjoy Napa Valley via Jean-Charles Boisset’s idyllic bed-and-breakfast ‘Ink House’ and Pacaso is happy to support as the sales and management partner,” the representative told The Press Democrat in an email.

“This is Pacaso’s first-ever lease listing, in partnership with Jean-Charles Boisset. The company’s focus is, and will continue to be, co-ownership.”

It isn’t clear if successful bidders will have to use their 45 days consecutively, or if the eight of them will divide up dates on the calendar.

Neither Jean-Charles Boisset nor Boisset Collection marketing representatives replied to The Press Democrat’s requests for information.

The Ink House’s Pacaso listing notes that the 4,660-square-foot Italianate farmhouse, with its distinctive wedding cake shape and crow’s nest lounge, offers four king bedrooms with en-suite bathrooms, a chef’s kitchen, formal tasting room and bocce court. It sits on 1.2 acres just south of St. Helena, at Whitehall Lane and St. Helena Highway.

Part of the pitch is an opportunity to partake in “the Napa Valley lifestyle,” with access to a JCB concierge team to help with bookings for the brand’s wineries and tasting rooms.

Boisset purchased the Ink House for $6.45 million in 2021. He could pay that off in 10 years of fractional one-year leases.

Facing opposition

Pacaso sells properties all over the U.S., often referring to its mission as “democratizing second homeownership.” But its model — which involves forming a limited liability corporation to hold shares of a house, and selling those shares to, usually, eight buyers — has frequently ignited outrage here in the North Bay.

After Pacaso bought its first home in the city of Napa in May 2020 and later put eight shares on the market for $184,000 each, residents in the Bel Aire neighborhood of north Napa went on the offensive. They organized protests and put up signs reading “Stop Pacaso” and “Stop Commercializing Our Neighborhoods.”

Neighbors “threatened to use the restroom on our property” and “indicated to us that they would stand at the front of the street and harass and intimidate every owner that comes through the property,” Pacaso co-founder and Napa resident Austin Allison told the Napa Valley Register in 2021.

Pacaso eventually relented and sold the house on Rainier Avenue to a single buyer.

Things didn’t go much better for the company in the city of Sonoma around the same time. There, a group of neighbors organized a campaign against Pacaso’s purchase of a property on Old Winery Court. They started a petition on Change.org, and soon every house on the street was displaying protest signs.

Pacaso currently offers eight homes for sale in Napa and Sonoma counties, according to its listings.

Critics generally decry the company’s role in converting residential properties into vacation spots, potentially cutting into the housing stock in communities already faced with a shortage.

They also take exception with Pacaso defining what it does as a real estate transaction rather than a timeshare arrangement, bringing visitors into residential neighborhoods without paying local occupancy fees.

Those issues don’t entirely apply to the Ink House deal. It has long been an inn for travelers, not a residential home. And its rural locale couldn’t properly be described as a neighborhood.

But while it’s in an unincorporated area of Napa County, the Ink House’s proximity to St. Helena adds another contentious dimension. Pacaso had an active lawsuit against the city until Thursday, when St. Helena announced a settlement agreement.

The settlement limits Pacaso’s operations in the city to its existing four homes, while leaving open the possibility of further negotiation over the next 18 months. Any attempted expansion of operations by Pacaso in St. Helena would require an amendment of the city’s timeshare ordinance.

Pacaso had filed a civil complaint in U.S. District Court in July 2021, arguing that St. Helena was legally wrong in defining the company’s model as “operating, facilitating, and selling timeshares.”

Local impact

News of Pacaso’s involvement in the Ink House has rankled some St. Helena residents, such as Leslie Stanton.

A local icon who retired in July 2020 after 34 years as librarian at St. Helena Public Library, then returned to work the desk as a volunteer, Stanton has been a vocal critic of Pacaso. The company converted a house across the street from hers to fractional ownership.

“No family of any kind would live there again,” she said. “No kids in the schools. No participating in local politics. No neighbors. Yes, true second homes have this result, too. But Pacaso circumvented some taxes, and just added craziness to our neighborhoods by circumventing local ordinances. Having a hotel next door just doesn't work.”

Boisset will continue to pay transient occupancy tax, or TOT, to Napa County during the Ink House’s one-year lease.

The California tax code gives counties and cities the authority to impose a TOT on overnight stays, ostensibly to compensate local government for services provided. Pretty much every county has one.

In Napa County, the transient occupancy tax is 13% of the property’s revenue for overnight stays, a figure that includes a 1% assessment toward affordable housing programs.

In addition, Napa County inns pay a self-imposed 2% “tourism assessment” to the county.

Robert Minahen, Napa County’s treasurer-tax collector, said that when someone rents a house or room in the county for longer than 30 days, it effectively becomes a rental property rather than a hotel. Minahen did not expect the Ink House to be obligated to pay those taxes while under lease.

But after initial online publication of this story, a Boisset representative emailed to confirm the confirm will maintain TOT payments.

“We also very much believe that the relationship will benefit the community by shifting from a model in which many different groups of people can rent rooms in the house throughout the year, to one in which eight groups rent the house and have an opportunity to become a more integrated part of the community through their commitment to their lease – the difference between staying one night in a room, and knowing that you have a long-term commitment to the property and the area,” wrote Patrick Egan, Boisset’s senior vice president of marketing and communication.

When Stanton posted the Ink House news on the website Nextdoor on Jan. 18, the response was vocal.

“I don’t have a dog in this fight,” commented Connie Brennan, “but I am curious — what does this do for the JCB brand — I thought he was kinda big on local? It seems like kind of a stupid move on his part… he must know how many in the valley feel about Pacaso.”

Stanton agrees. She acknowledges that the Ink House is out of city limits, and already geared toward tourists. But she doesn’t understand why a prominent local businessman would get involved with a company that has become such a lightning rod in the valley.

“Some people feel betrayed by him,” Stanton said of Boisset. “He’s trying to make it seem like he’s behind the city. Well then, what is he doing with Pacaso?”

You can reach Phil Barber at 707-521-5263 or phil.barber@pressdemocrat.com. On X (Twitter) @Skinny_Post.