Palm Springs could see more co-owned homes in its future after a vote by the city council earlier this week.
The 3-2 vote on Tuesday allows for up to 30 shared homes to operate within the city over the next three years, and presents a shift in the council’s attitude toward a business model it had once spurned.
The Bay Area firm, Pacaso, is largely behind the new regulations. The company purchases single-family homes in popular vacation markets and sells shares of those homes to a limited liability company with up to eight owners. Each owner then gets use of the home at specific times of the year.
Pacaso bought five homes in Palm Springs before critics pointed out the similarities between its business model and timeshares, which are prohibited in single-family zones. Previously, the city council had signaled its intent to ban homes operated by Pacaso inside city limits.
The new law regulates co-owned homes much in the way the city does short-term vacation rentals, by limiting the total number and density within neighborhoods as well as instituting fines for noise and other violations.
Proponents presented the new ordinance as a compromise between Pacaso’s original vision for operations within the city and the council’s concerns over neighborhood cohesion and affordable housing.
“If one were to compare what we have before us today with what was originally proposed two years ago, the differences are absolutely night and day,” Councilmember Lisa Middleton said during Tuesday’s meeting. “It seems that what we have here is an opportunity to move to something that is a responsible compromise of interests, and is not something that is going to result in the kinds of problems that were discussed two years ago.”
Pacaso welcomed the city’s decision. Senior Director John Choi said in a statement to The Desert Sun that the company was committed to ensuring the ordinance met the community’s needs.
“We are glad the city understands the profound benefits of co-ownership and look forward to co-ownership being recognized as an established practice in Palm Springs,” he added.
Some neighborhood groups opposed allowing Pacaso and similar companies from operating in the city. The board of the Vista Las Palmas Neighborhood sent the city a strongly worded letter urging the council to vote the proposal down.
“It is baffling to all of us how any resident in our city has their quality of life improved by losing a neighbor and having it replaced with 8 different families who all come and go at different times, all using the home as a vacation getaway rather than a ‘home,'” the organization wrote in the letter.
Several safeguards are in place in the new ordinance to limit the spread of co-owned homes throughout the city. Such homes will only be allowed if they’re purchased at twice the median housing price. New co-owned housing units will be prohibited in neighborhoods in which the vacation rental percentage capacity of 20% has already been reached. Only two co-owned units will be allowed per neighborhood. And co-owned units cannot be within 500 feet of each other.
Mayor Pro Tem Ron deHarte and Councilmembers Christy Holstege and Middleton voted in favor of the ordinance. Mayor Jeffrey Bernstein and Councilmember Grace Garner were opposed.
“Palm Springs has always been a tertiary housing market,” Holstege said prior to the vote. “We’ve always relied on this being a place where people have time shares and home shares and vacation rentals. We rely on that as our life blood for the city. It’s incredibly important.”
Bernstein and Garner brought up concerns over the impact of affordable housing.
“The fact is that this takes away from housing stock, which reduces our overall housing,” Bernstein said during the meeting. “I’m not a lawyer, but I do have an economics degree, and I can tell you this does reduce the housing stock, and it does increase prices when you start selling higher (houses) even if those aren’t the affordable ones.”
Sam Morgen covers the city of Palm Springs for The Desert Sun. Reach him at [email protected].
This article originally appeared on Palm Springs Desert Sun: Palm Springs allows co-owned homes like Pacaso’s, with limits
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