Palm Springs council approves Pacaso and other ‘co-owned’ homes despite criticism

An ordinance allowing a limited number of "co-owned" homes in Palm Springs like those managed by the company Pacaso survived a last-ditch effort Thursday to prevent it becoming law.

Members of the Vista Las Palmas neighborhood have adamantly opposed the regulation to allow 30 co-owned homes in the city. In a letter on behalf of roughly 400 homeowners sent to the city council on Wednesday, the neighborhood group accused the council of being swayed by campaign contributions from a lobbyist for Pacaso.

"We’ve asked the question countless times, 'what’s the reason to vote to approve it?' And we’ve never gotten the answer," Kevin Comer, co-chair of the Vista Las Palms Neighborhood Association said in an interview prior to the meeting. "And the reason is there probably isn’t one."

The lawyer for the neighborhood group, Mark W. Edelstein, said the councilmembers appeared to be in violation of a state law meant to stop public officials from using their position to financially benefit campaign contributors.

However, City Attorney Jeffrey Ballinger told the council prior to the first vote that the state law did not apply because the ordinance establishes policy citywide rather than involving a contract or license entitlement for anyone specific. And councilmembers vigorously denied being influenced by the campaign contributions of Brian Rix, the co-founder of a local public relations firm hired by Pacaso.

During a lengthy discussion before a 3-2 vote approving the ordinance, some councilmembers said the co-owned home regulations were developed over a long period of time in an effort to accommodate a new style of home ownership.

"This isn’t something that has just happened in the last two weeks. This has been a very long process in trying to do the right thing, and it’s to create regulations and to put regulations in place versus not having any regulations," said Councilmember Ron deHarte.

Rix did not immediately respond to requests for comment.

The councilmembers who voted in favor pushed back against the idea that they were influenced by the campaign donations.

"It is important that in a city like Palm Springs, where we can get very impassioned on issues at times, that we consistently demonstrate that no matter how passionate we are, we respect the integrity of the others that we are disagreeing with until it is ultimately demonstrated that that integrity cannot be respected," said Councilmember Lisa Middleton.

Ordinances must receive two separate votes before being adopted into the city's municipal code. Typically the second reading generates little notice or debate as the public discussion is held before the vote on the first reading. However, on some divisive issues, the second reading represents the final moment when a change can be made.

Mayor Jeffrey Bernstein brought up a number of issues he said warranted the second reading being delayed. The One-PS neighborhood organization also requested the city delay final approval of the ordinance.

"There are financial issues, there are legal issues, that do not seem to be fully thought out," Bernstein said during the meeting. "I think we are going to get into a lot of problems if we don’t sort out these legal questions first.”

Yet the council voted along the same lines as the first reading, passing the ordinance 3-2, with Bernstein and Councilmember Grace Garner dissenting.

A Bay Area-based company, Pacaso, already operates five co-owned homes in Palm Springs and worked with the city in the development of the new ordinance. The company says it hopes to foster good communities while allowing people who don't normally get the opportunity to own luxury homes a pathway to do so.

Pacaso buys high-end homes, with a separate limited-liability company created for each transaction, then sells shares in those LLCs to a number of different owners, who then each have the right to stay in the home a certain number of days per year.

The city's new regulations create a number of limitations on the maximum number of co-owned homes in each neighborhood. Only homes that are twice the city's median housing price will be eligible to be co-owned. Also, no new co-owned homes will be allowed in neighborhoods that have 20% or more homes used as vacation rentals. In general, only two co-owned homes will be allowed per neighborhood and they cannot be within 500 feet of each other.

"We have heard concerns based around quality of life. We have heard concerns about oversaturation in any particular neighborhood. We have heard concerns about impact to housing," Pacaso Senior Director John Choi said during the meeting. "So we support this ordinance because we think it is a very robust clear way to address all of those issues."

Sam Morgen covers the city of Palm Springs for The Desert Sun. Reach him at smorgen@gannett.com.

This article originally appeared on Palm Springs Desert Sun: Palm Springs council approves Pacaso and other ‘co-owned’ homes despite criticism