St. Helena, Pacaso settle suit over fractional home ownership company’s operations in city

St. Helena and Pacaso Inc. have reached a settlement in a civil lawsuit the fractional home ownership company brought against the city nearly three years ago.

Under the settlement agreement announced Thursday, San Francisco-based Pacaso will maintain the four homes it currently manages in St. Helena, but will not add other properties.

The settlement, however, opens a window for Pacaso to initiate conversations with the city over the next 18 months to discuss growing the number of homes the company is allowed to market or sell in St. Helena. It could also lead to “possible future revenue streams for the City relating to Pacaso’s marketing, use, or sale of additional homes,” according to the agreement.

Currently, any attempted expansion by Pacaso would first require an amendment of the city’s timeshare ordinance, requiring noticed public hearings before both the city planning commission and the City Council.

No money exchanged hands with the settlement as it is strictly a usage agreement.

“It was a compromise, absolutely. But it was the right thing to do,” St. Helena Mayor Paul Dohring told The Press Democrat on Friday. “Even though I’m the mayor of St. Helena, I also have a background in law. I understand the uncertainties of litigation. With respect to the existing four properties, we were not entirely certain we could prevail.

“You risk going to trial, having an adverse result and having to spend taxpayers’ money on that.”

Pacaso had filed a civil complaint in U.S. District Court in April 2021 alleging that St. Helena had legally erred in defining the company’s model as “operating, facilitating, and selling timeshares.” It sought the unfettered ability to continue operating and adding properties within the city.

Pacaso owned or managed five single-family homes in St. Helena at the time.

The city said the fractional ownership model — in which a number of buyers (typically eight) acquire shares in a property and take turns occupying the space — violated its timeshare ordinance.

The city wasn’t alone in evaluating Pacaso’s model as a timeshare arrangement. Community members have protested the company’s presence in the cities of Napa and Sonoma for similar reasons. Pacaso has vigorously denied that characterization, arguing that it “democratizes” second home ownership by making that sort of vacation getaway a reality for people who couldn’t otherwise afford it.

Pacaso also hailed this week’s settlement agreement as a win for everyone, and as a measure of its commitment to the community.

The company quoted a St. Helena Pacaso co-owner in its own press release.

“This is great news for those of us who co-own homes in St. Helena,” Taylor Lopez said. “The reality is, co-ownership is a decades-long tradition here in wine country, where people enjoy visiting for weeks or months out of the year, contributing to the local economy, and can afford to own a home by sharing the cost with other families. I’m glad that the City of St. Helena has done the right thing by settling this matter.”

The city of St. Helena’s timeshare ordinance, active in 2021, stated: “The creation of a time-share project as a means of ownership of any single-family, two-family or multiple-family dwelling or any apartment house shall be prohibited within the city.”

St. Helena adopted a new timeshare ordinance in April 2022.

Dohring, the St. Helena mayor, said he has already heard from community members regarding the settlement agreement. To his surprise — considering the strong feelings people have about Pacaso — the reaction has generally been positive.

“The win is we have prevented Pacaso from expanding its timeshares in the city of St. Helena,” Dohring said. “We have four existing Pacaso-model establishments in the city. They will continue on. Folks understand that.

“We would hope those four existing timeshares will continue to comply with our law and respect our neighborhoods. So far, they’ve been doing that.”

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