Fractional home ownership is not new. It involves a group of buyers coming together to split the cost of purchasing property through limited liability companies, called LLCs, and is a legal practice. According to Summit County records, 15% of homes in Park City have an LLC listed as the owner.
But the practice has come under scrutiny over the last two years after a company called Pacaso started offering what it calls “co-ownership in a box.” Picasso helps groups of home buyers form an LLC and then provides property management and scheduling services for them.
Picasso’s website lists four properties in Park City that are available now, offering shares priced between $500,000 and $2 million each.
Residents have spoken up at public meetings and argued that Pacaso is essentially running timeshares, which are regulated in Park City. In response, the city has been exploring code changes to address the issue.
The changes include clearly defining differences between timeshares, private residences, and fractional ownerships; requiring conditional use permits and business licenses for fractional ownership properties; and prohibiting fractional ownerships in some areas.
Charles Neal lives in the Fairway Meadows neighborhood and serves as president of the homeowner’s association. He said he believes fractional ownerships make communities less safe.
“I would not be able to recognize all of the vehicles that drive in, all of the people that show up," he said. "I feel our community would not be as safe. Right now, if I see something odd or one of my neighbors sees something odd, they know it’s odd because they know who lives there, they know the vehicles, they know the people, they know the dogs, they know the service personnel that come there.”
Todd Bice is a fractional owner of a home in Old Town that is managed by Pacaso. He said he believes the city has the right to regulate land use, but doesn’t see how the proposed changes would do that since owning property through an LLC is perfectly legal.
“I think the problem that I see here is you’re not really regulating property and this proposed ordinance isn’t even to regulate land use," said Bice. "I think the staff acknowledged that what it really is is to regulate a management model.”
Pacaso Public Affairs Manager Sarah Filosa told commissioners that Pacaso is different from timeshares and nightly rentals because owners agree to strict guidelines when forming their LLCs. Those include not renting out properties or hosting large events. And if Pacaso were to ever go out of business, the LLC would still own the homes. All the owners would have to do is find new property managers.
Commissioners voted unanimously Wednesday night to recommend the code changes to the city council. Commission Chair John Phillips said he sees both sides of the issue, but said fractional ownerships should only be allowed in certain parts of Park City.
“The way I see it is what we are doing is striking a balance," Phillips said. "We’re not banning it, but what we’re proposing to do is zone it appropriately to zones that have similar uses. I am fully supportive of the staff’s recommendations.”
The city council will consider approving the code changes at its meeting on June 23.