HomeMy WebLinkAbout2.0_Code Update Related to Fractional Homeownership_PA2022-0202
CITY OF NEWPORT BEACH
PLANNING COMMISSION STAFF REPORT
October 6, 2022
Agenda Item No. 2
SUBJECT: Code Update Related to Fractional Homeownership (PA2022-0202)
▪ Zoning Code Amendment
▪ Local Coastal Program Amendment
SITE LOCATION: Citywide
APPLICANT: City of Newport Beach
PLANNER: Jaime Murillo, AICP, Principal Planner
(949) 644-3209, jmurillo@newportbeachca.gov
PROJECT SUMMARY
Staff will provide the Planning Commission with an update regarding the growing trend of
fractional homeownership, how other jurisdictions are addressing the use, deficiencies in
our current codes, and outcome of recent City Council discussions on this topic.
RECOMMENDATION
Receive presentation on fractional homeownership and provide direction to staff.
BACKGROUND
Fractional homeownership is when multiple owners purchase a property and split the
allowed time at the property through a formal arrangement. In the fractional model, the
allocated time for each owner is based on their percentage of ownership.
November 16, 2021, City Council Study Session
On November 16, 2021, the City Council conducted a study session to discuss fractional
homeownership. Information was presented that there was one known fractional
ownership operator within the jurisdictional boundaries of the City and that four homes
had either been fully sold or marketed for sale as fractional homeownership. The City
Council directed staff to monitor fractional homeownership activity in the City and
investigate how other jurisdictions were dealing with such issues and report back.
September 13, 2022, City Council Study Session and Sagecrest Study
Staff retained the services of Sagecrest Planning+Environmental (Sagecrest) to study
jurisdictions with known fractional ownership properties and prepare a report. The report
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Fractional Homeownership Update (PA2022-0202)
Planning Commission, October 6, 2022
Page 2
is included as Attachment PC1; however, due to bulk, the appendices are available online
at www.newportbeachca.gov/fractionalownership.
On September 13, 2022, the City Council held a study session to discuss the results of
the Sagecrest study. The study found that of the 22 jurisdictions surveyed, 15 classify
these properties as a form of timeshare. Public testimony provided during the study
session included concerns about increases in traffic and noise, as well as fractional
homeownership properties having an adverse impact on the character of the existing
residential neighborhoods. In some instances, fractional homeownership properties
operate in a similar manner as short-term lodgings by limiting occupancy by owners of a
fractional interest in a property to less than 30 consecutive days. Over the past 10 months,
the number of fractional homeownership operators has increased to five and fractional
homeownership residential properties within the City has nearly tripled with at least 11
fractional homeownership residential properties currently fully sold or marketed in the
City.
At the conclusion of the study session, the City Council directed staff to return with: 1) a
moratorium to pause the transactions of new fractional homeownerships; and 2) an
initiation of a code amendment to revise the NBMC to regulate the practice.
September 27, 2022, City Council Meeting
On September 27, 2022, the City Council held a special meeting and adopted Resolution
No. 2022-61 initiating Zoning Code and Local Coastal Program Amendments related to
fractional homeownership. Public testimony provided included the need for the City
Council to adopt a moratorium to prevent the continued growth of fractional
homeownership properties while the code amendments are prepared and reviewed
through the various legislative bodies (i.e., Planning Commission, City Council, and
California Coastal Commission). Ultimately the City Council chose not to pursue a
moratorium but directed staff to work expeditiously with the Planning Commission to
develop code amendments to better regulate fractional homeownership to protect the
character of residential neighborhoods. The City Council identified definitions and other
standards from the City of St. Helena, as well as other cities, that may be good examples
of how to proceed.
DISCUSSION
Staff will provide the Planning Commission with an overview of how other jurisdictions,
such as St. Helena, that have pursued code amendments to better regulate fractional
ownership properties and identify potential revisions that can be applied in the City of
Newport Beach. Consistent with City Council direction, staff intends to take the Planning
Commission’s direction and develop code amendments for the Planning Commission’s
formal review and recommendation at the next soonest meeting.
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Fractional Homeownership Update (PA2022-0202)
Planning Commission, October 6, 2022
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NOTICING
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
Prepared by: Submitted by:
ATTACHMENTS
PC 1 Fractional Homeownership Report
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FRACTIONAL HOUSING
‐ i ‐ 27128 Paseo Espada, Suite 1524
San Juan Capistrano, CA 92675
Prepared For:
City of Newport Beach
Community Development Department
August 29, 2022
FRACTIONAL HOMEOWNERSHIP
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FRACTIONAL HOUSING
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Table of Contents
EXECUTIVE SUMMARY .................................................................................................................................. 1
BACKGROUND ............................................................................................................................................... 1
Known/Suspected Properties in Newport Beach ..................................................................................... 1
BENEFITS AND IMPACTS OF FRACTIONAL HOUSING .................................................................................... 2
Fractional Housing Benefits ...................................................................................................................... 2
Fractional Housing Impacts ....................................................................................................................... 3
COMMUNITY SURVEY ................................................................................................................................... 4
City of Beverly Hills, CA ............................................................................................................................. 5
City of Carlsbad, CA ................................................................................................................................... 5
City of Carmel by the Sea, CA .................................................................................................................... 5
City of Encinitas, CA .................................................................................................................................. 5
City of Fort Lauderdale, FL ........................................................................................................................ 6
City of Hermosa Beach, CA ....................................................................................................................... 6
City of Indian Wells, CA ............................................................................................................................. 6
County of Monterey, CA ........................................................................................................................... 6
City of Napa, CA ........................................................................................................................................ 6
Village of North Haven, NY ....................................................................................................................... 7
City of Oceanside, CA ................................................................................................................................ 7
City of Pacific Grove, CA ............................................................................................................................ 7
City of Palm Desert, CA ............................................................................................................................. 7
City of Palm Springs, CA ............................................................................................................................ 7
City of Park City, UT .................................................................................................................................. 8
City of Santa Barbara, CA .......................................................................................................................... 8
City of Santa Cruz, CA ................................................................................................................................ 8
City of South Lake Tahoe, CA .................................................................................................................... 8
City of Sonoma, CA .................................................................................................................................... 9
City of St. Helena, CA ................................................................................................................................ 9
Town of Truckee, CA ................................................................................................................................. 9
City of Vail, CO ........................................................................................................................................ 10
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APPENDICES ................................................................................................................................................ 10
Appendix A – Pacaso Economic Impact Analysis, prepared by EBP ........................................................ A1
Appendix B – City of Beverly Hills Urgency Ordinance ........................................................................... B1
Appendix C – City of Carlsbad Timeshare ordinance .............................................................................. C1
Appendix D – City of Carmel by the Sea Cease and Desist Order ...........................................................D1
Appendix E – City of Hermosa Beach Planning Commission Resolution ................................................ E1
Appendix F – County of Monterey Cease and Desist Order ................................................................... F1
Appendix G – Village of North Haven Code Amendment ...................................................................... G1
Appendix H – City of Palm Desert Ordinance ........................................................................................ H1
Appendix I – City of Palm Springs Cease and Desist Order ...................................................................... I1
Appendix J – Park City Notice of Amendment ......................................................................................... J1
Appendix K – City of Santa Cruz Ballot Initiative ..................................................................................... K1
Appendix L – City of South Lake Tahoe Cease and Desist Order ............................................................ L1
Appendix M – City of Sonoma Ordinance .............................................................................................. M1
Appendix N – City of St. Helena Ordinance ........................................................................................... N1
Appendix O – Pacaso Inc. v. City of St. Helena ....................................................................................... O1
Appendix P – Town of Truckee Ordinance .............................................................................................. P1
Cover Photo by Dex Ezekiel on Unsplash
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EXECUTIVE SUMMARY
The City of Newport Beach (City) is beginning to see the rise of fractional homeownership of single‐family
houses. Fractional homeownership is when multiple owners purchase a property and split the allowed
time at the property through a formal arrangement, as compared to multiple owners who occupy the
residence full‐time or have no formal arrangement for occupancy. In the fractional model, the allotted
time for each owner is based on their percentage of ownership. In reviewing available data on fractional
homeownership, there appears to be at least ten such properties within the City but there could be more.
The City is receiving complaints from residents that these properties function similarly to short‐term rental
vacation homes and result in significant noise, traffic, and other impacts to residential neighborhoods. As
a result of these concerns, the City asked Sagecrest Planning+Environmental (Sagecrest) to investigate
how other jurisdictions are dealing with fractional housing and the companies that promote them. Based
on this investigation, it appears that other communities are adopting moratoriums and pursuing operators
of fractional housing companies through code enforcement actions.
BACKGROUND
Fractional homeownership (sometimes called co‐ownership) is an emerging trend in real estate where
ownership of properties is equally shared among multiple owners (typically between four and 12 owners).
The amount of time the owner may spend at the property correlates to the fraction of ownership (e.g., a
1/8 share owner would be allotted 45 days per year). This time allotment is not typically used
consecutively, but rather one or two weeks at a time. In addition to the cost to purchase their share of
the home, the owners are responsible for their share of the maintenance, property management fees,
HOA fees, cleaning costs, utilities, taxes, insurance, and payment into a reserve fund to cover long‐term
repairs, such as replacement of the roof. Fractional owners maintain an ownership interest, benefit from
a change in property value due to appreciation and have the potential to generate income through short‐
term rentals, although the City would maintain authority on short‐term rentals. It should also be noted
that some fractional homeownership companies prohibit short‐term rentals in their management
agreement.
Companies such as Pacaso, Sharetini, Ember, Equity Estates, and others facilitate the purchase of
properties and provide the necessary maintenance, furnishments, property management, and cleaning
services in exchange for a monthly fee. Many of these companies utilize ownership models that purchase
and hold the properties under entities, such as limited liability companies, to avoid the need for a real
estate transaction each time an owner sells their share. Alternatively, an ownership group could forego
using a management company and self‐govern the access to fractional housing.
Known/Suspected Properties in Newport Beach
Sagecrest reviewed the listings on various sites to identify properties in Newport Beach. Additionally,
Sagecrest reviewed the City’s database to find properties with mailing addresses that match the fractional
home ownership companies. The following table lists the properties that are either known or suspected
to be fractional ownership properties.
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Property Address Source
117 25th Street Listed on Pacaso
121 Emerald Avenue Listed on Pacaso
305 Grand Canal Listed on Pacaso
315 East Bay Avenue Listed on Ember
506 West Oceanfront Listed on Pacaso
1703 Plaza del Sur Listed on www.compass.com
2137 Miramar Drive Listed on Ember
2628 Ocean Boulevard City database mailing address match to Pacaso
3803 Marcus Avenue City database mailing address match to Pacaso
4106 River Avenue Listed on Pacaso
BENEFITS AND IMPACTS OF FRACTIONAL HOUSING
Fractional Housing Benefits
The primary benefit of fractional homeownership is to own a second home at a more affordable price.
According to county records, the home at 506 W Oceanfront sold on March 14, 2022, for $6,800,000. A
1/8 share of this house is currently being offered on Pacaso for $1,098,000.
According to Equity Estates, a vacation home investment firm, the benefits of fractional housing are: 1
It’s more affordable ‐ Perhaps a $4M home is out of reach, but $1M is right in your wheelhouse.
Fractional ownership lets you get the home you want in the most desirable location at the price
you can afford. This goes for home upkeep and maintenance, too. By sharing the costs of upkeep,
fractional ownership makes long‐term ownership a much more realistic possibility.
The home will get some love ‐ No home should sit vacant 48 weeks out of the year. By sharing the
ownership, the home will be opened up at regular intervals. Opening and closing windows and
doors, running the water, turning on the AC and heater, and using amenities like the hot tub and
pool—all of these are essential to maintaining the home. It provides an opportunity to identify
issues early on and preserve the home’s long‐term value.
Peace of Mind ‐ Fractional ownership also means sharing the burden of homeownership. Rather
than a single point of failure (i.e., you), you essentially have a group that shares accountability,
schedules maintenance, checks on the home, and divides the work and chores that would
otherwise be left to a single owner.
Another fractional housing company, Pacaso, claims that its model reduces demand in the housing
market. Specifically, they state, “This demand on top of short supply has driven up home prices to
unprecedented levels. Instead of eight second home buyers buying eight separate median‐priced homes,
which drives up prices even further, Pacaso consolidates those eight buyers into just one luxury home,
which alleviates pressure at the median‐priced tier.”2 To address concerns that they do not provide a
benefit, Pacaso commissioned an economic impact analysis (Appendix A), which found that the average
fractional ownership house generates an average of $48,390 in annual spending compared with the
1 https://equityestatesfund.com/the‐pros‐and‐cons‐of‐fractional‐ownership, retrieved August 16, 2022
2 https://www.pacaso.com/blog/economic‐impact‐study, retrieved August 16, 2022
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average second home. The study further found that fractional housing generates an average of $3,780
additional revenue in local and state tax dollars over the average second home.
Fractional Housing Impacts
Notwithstanding the aforementioned benefits, many communities have received complaints from their
residents that fractional housing creates adverse impacts on the neighborhoods in which they are located
and the City as a whole. Jurisdictions that have taken a proactive approach to preventing fractional
housing in their communities all have expressed concerns about the following:
Fractional housing adversely impacts the affordability of full‐time homes in the community. As
more homes are taken out of the primary housing market and converted to vacation homes, the
available housing stock is reduced. Even though the fractional housing companies focus on the
high‐end market, any loss in available housing supply results in increase costs across the entire
market.
Due to the high turn‐over of occupants, fractional housing could adversely impact long‐term
residents in the surrounding neighborhood. Given that vacations typically last for short periods of
time, these properties would have similar impacts as short‐term rentals, such as noise, loss of
privacy, loss of community buy‐in, and decline in property values.
The operation of the fractional homeownership companies within residential areas would result
in the commercialization of residential neighborhoods. Several communities that Sagecrest spoke
with noted that the operations of these companies would require a business license as they are
establishing a commercial use.
Sagecrest discussed concerns with fractional housing with a major opponent to fractional housing, Stop
Pacaso Now3. This organization consists of volunteers who provide resources to residents to oppose
fractional housing from being established in their community. This includes providing sample yard signs,
sample letters, and volunteer coordination guidance. In discussing the effectiveness of their outreach,
Stop Pacaso Now stated that they have had great success in communities in which residents have
organized. Stop Pacaso Now has sponsored four petitions on change.org (Sonoma4, Dry Creek Valley5, St.
Helena6, and a nationwide petition7) against fractional housing with a total of 7,411 signatures.
The Mitchell Hamline Law Journal of Public Policy and Practice published a journal article8 that found that
“The increasing commodification of single‐family homes has had cascading effects on housing and on
communities in general.” Fractional housing is shared among various owners, as a result, an increase in
3 https://stoppacasonow.com/
4 https://www.change.org/p/sonoma‐county‐planning‐commission‐pacaso‐time‐shares‐don‐t‐belong‐in‐sonoma‐
neighborhoods, retrieved August 16, 2022
5 https://www.change.org/p/pacaso‐time‐shares‐don‐t‐belong‐in‐dry‐creek‐valley‐s‐agricultural‐zoning‐and‐
farmlands, retrieved August 16, 2022
6 https://www.change.org/p/mderosa‐cityofsthelena‐org‐gellsworth‐cityofsthelena‐org‐stop‐pacaso‐from‐
commercializing‐our‐residential‐neighborhoods, retrieved August 16, 2022
7 https://www.change.org/p/pacaso‐stop‐pacaso‐s‐takeover‐of‐housing, retrieved August 16, 2022
8 Markuson, Christopher (2022) "A Timeshare By Any Other Name: Fractional Homeownership and the Challenges
and Effects of Commodified Single‐Family Homes," Mitchell Hamline Law Journal of Public Policy and Practice: Vol.
43: Iss. 2, Article 1. Available at: https://open.mitchellhamline.edu/policypractice/vol43/iss2/1
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the number of units could decrease the demand for hotel rooms. This would likely result in a reduction in
the amount of transient occupancy tax accrued by the City.
COMMUNITY SURVEY
Sagecrest researched other communities that have fractional ownership properties to determine if there
is a concern with these properties and how the community is addressing these concerns. A summary of
the actions is contained in the table below, followed by a description of each community.
Considered Timeshare Considered Short‐Term Rental Not Regulated Enforcing Existing Regulations Adopted/Pursuing Code Revisions to Strengthen Regulations Adopted Moratorium Beverly Hills, CA
Carlsbad, CA
Carmel by the Sea, CA
Encinitas, CA
Fort Lauderdale, FL
Hermosa Beach, CA (a)
Indian Wells, CA (b)
Monterey, CA
Napa, CA
Village of North Haven, NY
Oceanside, CA
Pacific Grove, CA (a)
Palm Desert, CA
Palm Springs, CA
Park City, UT
Santa Barbara, CA
Santa Cruz, CA
South Lake Tahoe, CA
Sonoma, CA
St. Helena, CA
Truckee, CA
Vail, CO
Notes
(a) Code Amendment in Process
(b) City Council is split on whether or not fractional housing is a timeshare
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City of Beverly Hills, CA
On July 15, 2021, the City of Beverly Hills adopted an urgency ordinance establishing a 45‐day moratorium
on fractional ownerships of residential and commercial properties. In the staff report, the City expressed
concerns that the properties would impact the residents in the surrounding neighborhood since they
would operate as vacation rental homes. The City noted these properties would likely “experience high
turnover rates of occupants, and result in impacts related to their operation such as noise, loss of privacy,
loss of community buy‐in, and decline in property values.” In addition to these impacts, the City expressed
concerns that converting homes to fractional housing would remove permanent housing from the housing
market. Notwithstanding this prohibition, the moratorium does allow the City Council to approve a
fractional ownership dwelling if they adopt a finding that “the fractional ownership of a property will not
disturb the stability of a residential neighborhood or residential building and will not adversely impact
future development, redevelopment, safety, and proper maintenance of the property” during a duly
noticed public hearing.
The moratorium was extended for ten months and 15 days on August 17, 2021 and extended again for a
second year on June 14, 2022. The moratorium is now set to expire on July 14, 2023. The moratorium
intends to allow the City staff time to study the issue and any potential impacts fractional housing may
have on the health, safety, and welfare of those who live in surrounding homes and on the City as a whole.
A copy of the urgency ordinance and staff report is included in Appendix B.
City of Carlsbad, CA
The City of Carlsbad noted that the use of fractional properties constitutes a timeshare. They have an
existing timeshare ordinance (Appendix C), which they would enforce if they received a complaint. The
City has not had an issue with operation of the fractional homes.
City of Carmel by the Sea, CA
The City is aware of fractional ownership companies and their assertation that they sell and manage
properties, not timeshares. The City disagrees with this position and is of the opinion that any fractional
housing has the same impacts on surrounding residential areas as short‐term vacation rentals. Not only is
it unlawful for any fractional ownership company to commence or carry on any kind of business in the
City without first procuring a business license and pay the applicable business license tax, but any such
business would be in violation of the City’s prohibition of timeshares. The City noted that their regulations
on transient commercial use of residential property have been previously adjudicated.9
Carmel by the Sea has issued a cease‐and‐desist order (Appendix D), ordering Pacaso to stop all advertising
and sale of fractional ownership of residential properties within the City and will proceed through its code
enforcement authority to obtain compliance.
City of Encinitas, CA
The City is aware of the fractional ownership model and that other communities are working on
regulations. Since Encinitas has not had any issues with fractional homeownership, they are not working
on any code updates or taking enforcement actions.
9 Ewing v. City of Carmel‐by‐the‐Sea (1991) 234 Cal.App.3d 1579
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City of Fort Lauderdale, FL
The City of Fort Lauderdale does not regulate fractional housing since they are considered transient
lodging. Within the State of Florida, transient lodging is regulated by the State. Provided the fractional
housing is within any zone which permits transient lodging, it would be allowed.
City of Hermosa Beach, CA
The City of Hermosa Beach classifies fractional housing as a timeshare. They are concerned that the
operation of the fractional housing and timeshares could change the character of residential
neighborhoods as the guest of the units may naturally stay out later, entertain more, and gather in larger
numbers while on vacation. Currently, the Hermosa Beach Municipal Code does not regulate timeshares,
but the City is processing a code amendment to prohibit timeshares in residential zones. If approved, the
code amendment would allow timeshares in commercial zones with approval of a Conditional Use Permit.
The Planning Commission conducted a public hearing on the code amendment on April 19, 2022, at which
the Commission adopted a resolution (Appendix E) to recommend the City Council approve the code
amendment. This amendment is currently scheduled for a public hearing before the Council on September
27, 2022.
City of Indian Wells, CA
The City of Indian wells does not currently regulate fractional housing but has received complaints from
residents regarding impacts being created. The City Council discussed the matter on May 19, 2022, at
which time the City Council was split if fractional housing constituents a timeshare or not. They expressed
concerns about taking legal action on the fractional ownership companies due to the ongoing litigation in
other jurisdictions. The City Council directed the City Attorney to return with options for them to consider
on how to proceed. At this time, it is not known when this discussion will be taken back to the City Council.
County of Monterey, CA
Within areas of Monterey County that fall under the County’s zoning jurisdiction, fractional ownerships
are classified as timeshares. Pursuant to the Monterey County Municipal Code, timeshare projects are
only allowed in zones where a hotel, motel, or similar visitor accommodation use would be permitted,
and in such cases a Use Permit or a Coastal Development Permit would be required.
Monterey County is aware of certain homes advertised as fractional housing that are located in the Carmel
Highlands and the Del Monte Forest. Both areas are within the County’s zoning jurisdiction and are within
residential zones. Monterey County has issued a cease‐and‐desist order (Appendix F), ordering Pacaso to
stop all advertising and sale of fractional ownership of residential properties within these areas and will
proceed through its code enforcement authority to obtain compliance.
City of Napa, CA
The City of Napa does not have an ordinance regulating fractional ownership citywide but does have a
Master Development Plan (MDP) for the Stanly Ranch area. This MDP requires fractional ownership
properties to pay a transient oriented tax for stays more than 14 days, but research indicates that no
fractional ownership property has paid the TOT. In 2021, the City Council conducted a hearing to discuss
the matter, during which residents complained of not wanting their neighborhoods to turn into a business
venture for the wealthy. There has been no further discussion regarding fractional ownership.
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Village of North Haven, NY
The Board of Trustees of the Village of North Haven enacted a prohibition on fractional ownership,
timesharing, and interval uses in single‐family homes in January 2022 (Appendix G). The Board found that
the needs of transients are adverse to the interest that protect and preserve single‐family homes.
Furthermore, the prohibition was deemed necessary to prevent the unwarranted commercialization of
residential areas. In a discussion with the Town staff, the ordinance would be enforced through code
enforcement if they receive a complaint, but they were unable to confirm if action had been taken on any
existing units.
City of Oceanside, CA
The City of Oceanside is not aware of any specific issues surrounding single‐family homes used as
fractional ownerships. The City does allow fractional ownership in their Downtown District as it pertains
to traditional timeshare listings, provided a Conditional Use Permit is approved for the use. Given that
most of these fractional ownership listings resemble short‐term rental models, staff would consider
fractional housing has short‐term rentals in single‐family homes, which would require the issuance of a
short‐term rental permit.
City of Pacific Grove, CA
Currently the City of Pacific Grove prohibits timeshares throughout the City. The City Council accepted
public comment on fractional housing and timeshares on May 18, 2022, at the conclusion of which the
Council directed staff to review the City’s current timeshare ordinance and recommend changes to better
effectuate the City’s prohibition of timeshare projects, including fractional housing. The City anticipates
having the draft ordinance to their Planning Commission in October 2022 and to the City Council by the
end of year.
City of Palm Desert, CA
In November 2021, the City Council discussed the emergence of fractional ownership businesses within
the City. In the Staff Report, the City Attorney opined that the fractional homeownership “model fits within
that definition of "time‐ share plan" as co ‐owners receive ownership rights to use a property for less than
a year on a recurring basis” (Appendix H). The City only allows timeshares in the Planned Residential,
General Commercial, and Planned Commercial Resort zones. On May 12, 2022, the City Council adopted
an ordinance updating the timeshare provisions of the Palm Desert Municipal Code. The updates include
expanding the definition of timeshare that includes the shared use of any property, where the owners
have the right of occupancy for less than full year during any given year. The ordinance also established
enforcement procedures for violations of the timeshare ordinance.
City of Palm Springs, CA
The City of Palm Springs regulates where timeshares can be located within the City and taxes occupancy
of timeshares. Timeshares are only permitted in zoning districts where hotel uses are permitted and with
approval of a Conditional Use Permit. Notably, timeshares are not permitted in single‐family zones.
Furthermore, the City’s business license ordinance requires any party that is transacting any business
within the City to first procure a business license and pay the applicable business license tax.
Although the fractional ownership companies claim that they only purchase and sell luxury homes, and
therefore they do not impact the availability of affordable housing. However, the City believes the basic
laws of supply and demand dictate that every home that is made unavailable to a full‐time resident,
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whether “luxury” or not, necessarily reduces the supply of homes, and therefore reduces the affordability
of housing in the City. In addition to the loss of housing, fractional ownership companies who involve
multiple investors will result in their guests rotating the occupancy of the dwelling throughout the year.
Although the fractional owners are not technically renters, the City believes the neighbors can expect the
property to have many of the same secondary impacts that are caused by vacation rentals.
The City of Palm Springs has issued a cease‐and‐desist order (Appendix I), ordering Pacaso to stop all
advertising and sale of fractional ownership of residential properties within the City and will proceed
through its code enforcement authority to obtain compliance.
City of Park City, UT
Park City, Utah allows fractional ownership in single‐family homes provided the ownership obtains
approval of a Conditional Use Permit. The areas in which the City allows fractional ownership are identified
in the City’s General Plan and consists of areas that support the resort economy. These are the same areas
that allow timeshares and private residential clubs. The fractional ownership properties must comply with
specific prohibitions such as on‐street parking, nightly rentals, the outdoor display of goods and
merchandise, and signage. Additionally, the fractional housing must obtain approval of a management
plan that outlines a satisfactory level of management and maintenance of the fractional housing.
The City is currently preparing a code amendment which would prohibit fractional ownership in most
single‐family zones. The amendments would allow fractional housing in zones where timeshares and
private residential clubs are currently permitted. The amendment would also require a business license
for fractional ownerships, submittal of a management plan, and prohibition of nightly rentals, on‐street
parking, outdoor display of goods, signs, and commercial uses (Appendix J). On August 30, 2022, the
Planning Commission and City Council are scheduled to conduct a joint work session on the proposed
amendments.
City of Santa Barbara, CA
The City of Santa Barbara does not have any regulation for fractional ownership. The City has received
complaints regarding fractional housing in single‐family residential area. The Planning Commission and
City Council have conducted hearings on the matter but have not given staff direction for future research
to regulate these ownerships.
City of Santa Cruz, CA
Even with fractional homes being offered within city limits, City staff was not aware of this type of
ownership model. The City does not currently regulate fractional ownership or timeshares.
Notwithstanding this, the City Council has placed a ballot initiative on the November election to establish
a tax on residential properties that are occupied less than 120‐days a year (Appendix K).
City of South Lake Tahoe, CA
The City stated that a property sale or deed that results ownership rights in or the right to use
accommodations for a period of time less than full year during any given year is considered timeshare.
Even though timeshares ten or fewer units are not subject to the Vacation Ownership and Timeshare Act
of 200410, they are still subject to local authority. In fact, Section 11280(b) of the Business and Professions
10 California Business and Professions Code §§1121‐11288
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Code expressly preserves the authority of local jurisdictions to regulate timeshares through “zoning,
subdivision, or building code or other real estate use law, ordinance, or regulation.”
South Lake Tahoe has issued a cease‐and‐desist order (Appendix L), ordering Pacaso to stop all advertising
and sale of fractional ownership of residential properties within the City until such time they comply with
the City’s timeshare ordinance.
City of Sonoma, CA
On January 19th, 2022, the Sonoma City Council voted unanimously to adopt an urgency ordinance to
prohibit timeshares and fractional housing. The Council adopted the urgency ordinance due to concerns
that these uses threaten to reduce the housing supply in the City by turning long‐term housing in the City
into vacation rentals and reducing the affordable housing stock in the City. Furthermore, there are
concerns that timeshare and fractional housing interest uses increase traffic and noise impacts as they
have the same character as commercial hotels, motels, and other transient occupancy uses making them
inappropriate for residential zones. On June 15, 2022, the Sonoma City Council adopted an ordinance
(Appendix M) to amend the code to prohibit all timeshares and fractional housing in the City.
City of St. Helena, CA
Within St. Helena, timeshares are only permitted in Service Commercial District and Central Business
District. The City Council recently updated the timeshare ordinance to specifically prohibit co‐ownership
of residential properties (Appendix N). The ordinance updated the definition of a timeshare to broaden
its applicability to incorporate fractional housing and limits timeshares uses to their Service Commercial
and Central Business District zone. The ordinance also bolsters the City’s enforcement authority by
including a specific prohibition on timeshare uses in most zones, but also outlines the enforcement
process and mechanisms. The enforcement provision was modeled after the City’s short‐term rental
ordinance to which they note has been very effective.
It is important to note that Pacaso filed a lawsuit against the City in federal court11 (Appendix O). Pacaso
seeks to stop the City from enforcing their timeshare ordinance against Pacaso and other fractional
ownership properties because they feel the timeshare ordinance is invalid and enforcement of said
ordinance violates the fractional homeowners and Pacaso’s due process protection afforded by the 14th
amendment to the U.S. Constitution. Pacaso had also claimed that the City’s enforcement actions
constituted an intentional interference with prospective economic advantage; however, the Court
rejected this portion of the claim. The lawsuit remains pending.
Town of Truckee, CA
In May 2022 the Town of Truckee adopted a general zoning code cleanup ordinance (Appendix P). Among
the various amendments included in the ordinance, the Town Council approved changes to the Town’s
timeshare uses. This includes outlining the application process, development standards and enforcement
and violation protocols for time‐share uses; as well as clarifying that timeshare properties are only allowed
within existing legal nonconforming single‐family residences in the CG (General Commercial) and CN
(Neighborhood Commercial) zones.
11 Pacaso Inc. v. City of St. Helena, 21‐cv‐02493‐WHO (N.D. Cal. Jul. 15, 2021)
19
FRACTIONAL HOUSING
‐ 10 ‐
City of Vail, CO
The City does not have regulations regarding fractional ownership. Explaining the concerns of the business
model, the City Attorney would agree it resembles a timeshare model but does not see how any City
ordinance would be able to regulate it since it is the ownership of a property rather than a use in a portion
of a building.
APPENDICES
20
Due to bulk, appendices available online at :
www.newportbeachca.gov/fractionalownership
21
1
Rodriguez, Clarivel
Subject:FW: Planning Commission Special Mtg - 2022-10-06 - CODE UPDATE RELATED TO FRACTIONAL
HOMEOWNERSHIP (PA2022-0202)
Attachments:2022-09-27 City Council Mtg_Comments to Fractional Ownership.pdf; Pacaso Mailed Flyer
Encouraging Fractional Ownership.pdf; Sirkin Law_Fractional Ownership Resources and Articles.pdf;
Pacaso_Homeowner Scheduling FAQs.pdf; Email to City Council - Mtg 2022-09-13 - SS2 Fractional
Home Ownership Update.pdf; Sirkin Law_Fractional Ownership & Timeshare Law In
CA_Highlighted.pdf
From: Carmen Rawson <carmen_rawson@att.net>
Date: October 5, 2022 at 2:28:36 PM PDT
To: "Kleiman, Lauren" <lkleiman@newportbeachca.gov>, "Ellmore, Curtis" <CEllmore@newportbeachca.gov>, "Rosene,
Mark" <mrosene@newportbeachca.gov>, "Harris, Tristan" <THarris@newportbeachca.gov>, "Klaustermeier, Sarah"
<sklaustermeier@newportbeachca.gov>, "Lowrey, Lee" <llowrey@newportbeachca.gov>, "Weigand, Erik"
<eweigand@newportbeachca.gov>
Cc: "Jurjis, Seimone" <sjurjis@newportbeachca.gov>, "Campbell, Jim" <JCampbell@newportbeachca.gov>, "Murillo,
Jaime" <JMurillo@newportbeachca.gov>, "Leung, Grace" <gleung@newportbeachca.gov>, "Nichols, Heather"
<hnichols@newportbeachca.gov>
Subject: Planning Commission Special Mtg ‐ 2022‐10‐06 ‐ CODE UPDATE RELATED TO FRACTIONAL HOMEOWNERSHIP
(PA2022‐0202)
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the content is safe.
Planning Commissioners,
As a resident of Newport Beach (Balboa Peninsula) I am concerned regarding the proliferation of "Fractional Ownership"
(Shared Deeded Ownership Timeshares)" in our city's residential zoning areas (R-1, R-2, R-M).
I am forwarding to your attention a letter and attachments I had sent to City Council members and City staff addressing
the "City Council Mtg 2022-09-27 - Special 4:00 PM Meeting_Fractional Home Ownership". I am also attaching an email I
had sent City Council members and City staff addressing the "City Council Mtg 2022-09-13 - SS2 Fractional Home
Ownership Update".
Since November 16, 2021, when the "Fractional Ownership" issue was first discussed at a City Council meeting the
number of known "Fractional Ownership" (Timeshares) has grown from 1 to 12. That is in less than 1 year so it is
imperative to expedite the regulation/control/ban of the "Fractional Ownership" as a timeshare business model.
Here is a list of the known properties being operated as "Fractional Ownership" timeshares:
Pacaso (9): 117 25th St
121 Emerald Av (Balboa Island)
305 Grand Canal (Balboa Island)
307 Goldenrod Av (Corona del Mar)
506 W Oceanfront
1703 Plaza Del Sur (Balboa Peninsula Point)
2628 Ocean Blvd (Corona del Mar)
3803 Marcus Av (Newport Island)
4106 River Av
Ember (2): 315 E Bay Av
2137 Miramar Dr (Balboa Peninsula Point)
Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received Code Update Related to Fractional Homeownership (PA2022-0202)
2
Nelson Family Estates (1): 310 Fernando St
During the City Council Mtg on 2022-09-27 Pacaso's representatives and Pacaso's operated fractional share owners
insisted they are not a "timeshare". By all intent and purposes they are.
Further to the information I provided in my letter a question to Pacaso is: can two (2) separate fractional share owners
occupy the property at the same time? If the answer is "No" then Pacaso's business model is a "timeshare".
Pacaso also stated, during the 2022-09-27 City Council mtg, they do not limit the time a fractional share owner may use
the property. That is not what their FAQs state (see attached). Each 1/8 owner is allowed a total of 44 nights in a 365
day period and to be able to stay at the property for additional nights (when available) the fractional share owner is
charged a fee by Pacaso. Here is exactly what Pacaso's FAQs say:
"WHAT IF I WA NT TO ENJOY MORE STAYS IN MY HOME?
As a benefit to owners, you are able to book time beyond your maximum annual stay night threshold of 44 nights,
pending home availability. A modest nightly operating fee is assessed to cover operating and ownership costs. The
fee is used to offset costs for other owners, and there is no markup added. Owners will find rates to be dramatically
less than booking a similar, non-Pacaso home."
I also would like to bring to everyone's attention the reason Pacaso and other "Fractional Ownership" (Timeshare)
operators limit the number of fractional ownership to eight (8) is because that way they are not regulated by
the California’s “Vacation Ownership and Time-share Act of 2004” (Chapters 11210 - 11288) - see attachment,
which states:
In Chapter 11210 (Application) the following is written:
(b) This chapter does not apply to any of the following:
(1) Time-share plans, whether or not an accommodation is located in this state, consisting of 10 or fewer time-
share interests. Use of an exchange program by owners of time-share interests to secure access to other
accommodations shall not affect this exemption.
In Chapter 11212 (Definitions) the following is written:
(z) “Time-share plan” means any arrangement, plan, scheme, or similar device, other than an exchange program,
whether by membership agreement, sale, lease, deed, license, right to use agreement, or by any other means,
whereby a purchaser, in exchange for consideration, receives ownership rights in or the right to use accommodations
for a period of time less than a full year during any given year, on a recurring basis for more than one year, but not
necessarily for consecutive years. A time-share plan may be either of the following:
(1) A “single site time-share plan,” which is the right to use accommodations at a single time-share property.
The definition of "Time-share plan" used by other cities came from the California's "Vacation Ownership and Time-share
Act of 2004" (Chapter 11210). Again, the "Fractional Share Owners" that are part of Pacaso and other operators business
model/properties do not have the "right to use accommodations for a period of time less than a full year during any given
year". Their operations are "Timeshares".
I also would like to address Pacaso's 2022-09-27 comment stating that the City of Newport Beach has tools to regulate
their properties. As one of those tools they mentioned the Short Term Lodging (STL) Ordinances the City has
enacted. Note the STL Ordinances do not apply to the "Fractional Ownership" business model. When a STL unit does
not follow the established ordinances/regulations the City of Newport Beach has the means to suspend or even further
revoke a STL permit. With "Fractional Ownership" there is nothing the City will be able to do. You can not suspend or
revoke someone's property ownership.
Please take into consideration the information provided herein when reviewing the subject matter and as you provide City
staff the path forward/direction regarding "Fractional Ownership" as a "Timeshare" operation in our city's residential
zoning areas.
Sincerely,
Carmen Rawson
Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received Code Update Related to Fractional Homeownership (PA2022-0202)
City Council Meeting 2022-09-27 – Special Meeting at 4:00 pm – Fractional Homeownership
City Council Members and City Staff,
Timeshares are Not Allowed in Newport Beach’s Residential Coastal Zoning Districts
As mentioned during the 2022-09-13 City Council Mtg (SS2 Fractional Home Ownership Update) the
business model being operated by Pacaso, Ember Homes, Nelson Family Estates (and potentially other
companies we still do not know about) in residential zoning districts of Newport Beach is not allowed by the
Newport Beach Municipal Code (NBMC) as their business model is a “Shared Deed Ownership Timeshare”.
NBMC Chapter 21.18 Residential Coastal Zoning Districts
Time Shares are not allowed per Table 21.18-1 (under Visitor Accommodations only Bed and Breakfast
Inns and STLs are allowed in R-2 and RM zoning)
The City of Newport Beach already has the tools to issue to Pacaso, Ember Homes and the Nelson
Family Estates an “Immediately Cease and Desist Unlawful Operations” letter as done by other
cities dealing with the proliferation of this business model in their communities. Or as an option a
Moratorium on “Fractional Ownership (Timeshare)” must be urgently issued.
Note Pacaso is mailing flyers to Newport Beach homeowners actively encouraging the “fractional
ownership” concept. See attached copy of the Pacaso’s flyer we received this week.
Pacaso/Ember/Nelson Business Model is a “Shared Deed OwnershipTimeshare”
These companies disguise their “shared deeded ownership timeshare” business under the term of
“fractional ownership”.
Please refer to Investopedia where, under the definition of Timeshare, two (2) types of Timeshare
Ownership are described. Timeshares are typically structured as shared deeded ownership or shared
leased ownership interest.
Shared Deeded Ownership: Shared deeded ownership gives each buyer a percentage share of the
physical property, corresponding to the time period purchased. Shared deeded ownership interest is often
held in perpetuity and can be resold to another party or willed to one's estate.
Shared Leased Ownership Interest: Shared leased ownership interest entitles the buyer to use a specific
property for a fixed or floating week (or weeks) each year for a certain number of years. In this structure, the
timeshare developer retains the deeded title to the property, unlike the shared deeded ownership structure
where the owner holds the deed.
Due to the bad reputation associated with traditional (shared leased ownership interest) timeshares
companies such as Pacaso have cleverly use a different term for their business model. And “fractional
ownership” is not the only term being used in the industry. As City Staff looks into this matter please ensure
all other terms are addressed (private residence club, destination club, vacation club, condotel, etc). For
your reference see attached Adobe file named “Sirkin Law_Fractional Ownership Resources and Articles”
where the replacement of the term “timeshare” by terms such as “fractional ownership” is discussed.
Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received Code Update Related to Fractional Homeownership (PA2022-0202)
“Fractional Ownership” versus “Shared Deeded (Fractional) Ownership Timeshare”
The issue under review is not a fractional ownership (co-ownership) through an LLC, Trust, etc where the
fractional owners are family members and/or friends. What is under review is a fractional ownership where
specific/structured time restrictions exist for the use of the dwelling by the various co-owners (who are
mostly strangers among them).
Several family members or friends (co-owners) co-owning a property through an LLC, Trust, etc is allowed
as they do not have the time restrictions Pacaso’s business model has. For said LLCs, Trusts, etc several
co-owners may occupy the dwelling simultaneously and if one co-owner does not use the dwelling other co-
owners may use the dwelling instead with no specific time limit.
Pacaso’s “fractional ownership” business model has a structured/restrictive control of the time each
fractional owner can spend at the dwelling. Pacaso’s website clearly states, under FAQs and for an 1/8
ownership (see attached file), a) each fractional owner can have a maximum of 6 stays, b) each stay must
be no less than 2 nights and no more than 14 nights, c) each owner has the right to a maximum of 44
nights in a year. That is a “Shared Deeded Ownership Timeshare” – no matter what “label” Pacaso (or
Ember Homes or Nelson Family Estates” uses to name it.
Regarding the fact that a large percentage of properties in Newport Beach have titles held under LLCs,
Trusts, etc, as Pacaso highlighted during the 2022-09-13 city council meeting, is immaterial to this
discussion. Many property titles are held by LLCs, Trusts, etc due to Estate Planning or even to reduce
liability - not because the properties have “fractional ownership”.
Timeshares are allowed in Newport Beach’s Mixed-Use and/or Commercial Coastal Zoning Districts
The Newport Beach Municipal Code does allow timeshares in other areas of the city:
NBMC Chapter 21.20 Commercial Coastal Zoning Districts
Time Share Facilities are only allowed in specific commercial zoning, per Table 21.20-1 (under Visitor
Accommodations only allowed in CG and CV zoning)
NBMC Chapter 21.22 Mixed-Use Coastal Zoning Districts
Time Shares are allowed in all mixed-use zoning districts, per Table 21.22-1 (under Visitor
Accommodations)
However, all the Newport Beach properties so far identified as part of Pacaso, Ember Homes and Nelson
Family Estates “porfolio” are located in residential zoning districts.
Time Share Definitions in the Newport Beach Municipal Code
The following definitions are listed under NBMC Chapter 21.70 – Definitions, Section 21.70.020 –
Definitions of Specialized Terms and Phrases, Under “Visitor Accommodations (Land Use)”
“Time share project” means a development in which a purchaser receives the right in perpetuity, for life,
or for a term of years, to the recurrent, exclusive use or occupancy of an ownership interest in a lot, unit,
room(s), or segment of real property, annually or on some other seasonal or periodic basis, for a period
of time that has been or will be allotted from the use or occupancy periods into which the project has
been divided and shall include, but not be limited to, time share estate, interval ownership, fractional
Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received Code Update Related to Fractional Homeownership (PA2022-0202)
ownership, vacation license, vacation lease, club membership, time share use, hotel/condominium, or
uses of a similar nature See also “Limited-Use Overnight Visitor Accommodations (LUOVA).”
“Time share estate” means a right of occupancy in a time share project that is coupled with an estate in
the real property.
On 2022-09-13, during the city council meeting break, I was told by City Staff (Mr. Seimone Jurjis and Mr.
Campbell) that the concern was the inclusion of the word “development” as part of the “Time share project”
definition. And my question is why is that a concern?
The following definition is listed under NBMC Chapter 21.70 – Definitions, Section 21.70.020 – Definitions of
Specialized Terms and Phrases, Under “Visitor Accommodations (Land Use)”
“Development” means on land, in or under water, the placement or erection of solid material or a
structure; discharge or disposal of dredged material or of gaseous, liquid, solid, or thermal waste;
grading, removing, dredging, mining, or extraction of materials; change in the density or intensity of use
of land, including, but not limited to, subdivision in compliance with the Subdivision Map Act
(commencing with Government Code Section 66410), and another division of land, including lot splits,
except where the land division is brought about in connection with the purchase of the land by a public
agency for public recreational use; change in the intensity of use of water, or of access thereto;
construction, reconstruction, demolition, or alteration of the size of a structure, including a facility of a
private, public, or municipal utility; and the removal or harvesting of major vegetation other than for
agricultural purposes and kelp harvesting.
Having an existing single family (or duplex or multi-family) dwelling (a structure) on a plot of land is covered
by the “Development” definition contained in the NBMC.
Note the above listed definition of “Time share project” (as shown in the NBMC) is not stating the
“development” has to be “new” (non existing, in the future). It also does not specify the “development” has
to be a large number of units (as it may apply to “Time Share Facilities”). So I would like to understand why
the inclusion of the word “development”, in the “Time share project” definition, is a concern for City Staff.
I urge City Council members and City Staff to take immediate action to stop the “Shared Deed Ownership
Timeshare” operations in our city’s residential areas. Prompt action is needed.
Sincerely,
Carmen Rawson
Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received Code Update Related to Fractional Homeownership (PA2022-0202)
4/12/22, 10:51 AM Homeowner Scheduling FAQs | Pacaso
https://www.pacaso.com/faq/scheduling 2/7
We're here to help
HO W MUCH T IME WIL L I HAVE IN MY HO ME EACH Y EAR ?
Your access depends on the number of shares you own. Each share gives owners up to 44 stay
nights, and they are tracked on a 365-day basis. For example, if your ownership anniversary date
is October 18, 2021, we’d count the total number of stayed nights between October 19, 2021, and
October 19, 2022.
WHAT IF I WANT T O ENJ O Y MO R E ST AY S IN MY HO ME?
As a bene t to owners, you are able to book time beyond your maximum annual stay night
threshold of 44 nights, pending home availability. A modest nightly operating fee is assessed to
cover operating and ownership costs. The fee is used to o set costs for other owners, and
there is no markup added. Owners will nd rates to be dramatically less than booking a similar,
non-Pacaso home.
HO W DO SHO R T-NO T ICE ST AY S WO R K ?
Short-notice stays give owners more exibility to book time in their homes without having to plan
far in advance. Open dates in the Pacaso app can be booked as short-notice stays 2 30 days
ahead of your arrival date. Short-notice stays do not count toward an owner’s general stay count
6 general stays per share of ownership), but they do contribute to your total annual stay nights .
(Note: For homes with unsold shares, the short-notice booking window is 2 7 days ahead of the
arrival date.)
HO W DO ES T HE SCHEDUL ING APP WO R K ?
The Pacaso app is powered by our SmartStay™ scheduling system. It’s easy to use and
equitable for owners based on their number of shares owned. The app displays real-time
availability and supports two types of owner stays: general and short-notice.
General stays are made 8 days to 24 months in advance, and each owner has access to a
general stay that falls on a special date (e.g., federal holidays or popular local events).
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Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received
Code Update Related to Fractional Homeownership (PA2022-0202)
4/12/22, 10:51 AM Homeowner Scheduling FAQs | Pacaso
https://www.pacaso.com/faq/scheduling 3/7
Short-notice stays are made 2 to 30 days in advance of arrival. (Note: For homes with unsold
shares, the short-notice booking window is 2 7 days ahead of the arrival date.)
Over time, the SmartStay system will learn each owner’s stay preferences and make
DO O WNER S HAVE A PR IO R IT Y R ANK O R DER F O R SCHEDUL ING ?
No, owners schedule their stays based on real-time availability; there is no set ranking order to
select dates. This gives all owners equal access to dates important to them, regardless of when
they purchased their home.
HO W MANY G ENER AL ST AY S CAN I SCHEDUL E?
Owners may hold up to six general stays at a time per 1/8 share owned. Stays must be for a
minimum of two nights. A stay with a duration of 2 7 nights counts as one general stay, while a
stay with a duration of 8 14 nights counts as 2 general stays.
HO W LO NG AR E O WNER ST AY S?
The maximum length of a stay is based on shares owned. Owners of one share can enjoy a stay
anywhere from 2 to 14 nights. A stay with a duration of 2 7 nights counts as one general stay,
while a stay with a duration of 8 14 nights counts as 2 general stays. Owners of two shares have
the option to book stays up to 28 nights. In o -season periods, owners also have the option to
extend the length of their stay.
CAN I BO O K BACK-T O -BACK ST AY S?
No. To ensure ongoing access for all owners, the period between your arrival date and your prior
departure must be equal to or greater than the number of nights of your last stay.
WHAT IS A SPECIAL DAT E?
Special dates include select U.S. federal holidays as well as popular local events. They vary for
each region, but they are clearly marked with a blue dot in the scheduling calendar in the Pacaso
app. Special date stays require a 3-night minimum.
HO W MANY SPECIAL DAT ES CAN AN O WNER HO L D?
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Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received
Code Update Related to Fractional Homeownership (PA2022-0202)
4/12/22, 10:51 AM Homeowner Scheduling FAQs | Pacaso
https://www.pacaso.com/faq/scheduling 4/7
Owners may hold up to one special date stay at a time per share.
WHAT IF I DO N’ T G ET T HE SPECIAL DAT E I WANT ?
SmartStay is designed to be equitable, and each owner is guaranteed one special date per
share. We recognize you may not always secure your rst choice of a special date in a given year
(e.g., Christmas), but our 24-month stay calendar gives you the opportunity to request the date
in the future.
HO W F AR AHEAD CAN I BO O K A ST AY ?
WHAT IF I NEED T O CANCEL A ST AY T HAT I' VE BO O K ED?
Owners can cancel with no penalty 60 or more days before arrival. Cancellations will trigger a
noti cation to other owners, alerting them of the newly available dates. For cancellations made
within 59 days of arrival, there is no penalty for the cancelling owner if the dates are rebooked by
another owner. If the dates are not rebooked, the dates count toward the cancelling owner’s
annual stay night cycle for the year.
AR E AL L ST AY R EQ UEST S ACCEPT ED? HO W AM I NO T IF IED O F T HE
ST AT US O F MY R EQ UEST ?
If a date is shown as available in the calendar, you can instantly secure the stay, and you will see
your booked stay dates listed in the Upcoming tab under Stays in the Pacaso app.
WHAT T IME IS AR R IVAL AND DEPAR T UR E F O R O WNER S?
Standard arrival and departure is noon, but owners can request earlier arrivals and later
departures. All e orts will be made to accommodate your requests if the calendar and cleaning
schedules permit. You will be noti ed if this is possible 48 hours prior to your arrival and/or
departure.
WHAT IS T HE R O L E O F T HE HO ME MANAG ER ?
Every region has a dedicated Home Manager who supports owners with scheduling, home
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Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received
Code Update Related to Fractional Homeownership (PA2022-0202)
Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received Code Update Related to Fractional Homeownership (PA2022-0202)
10/5/22, 12:46 PM AT&T Yahoo Mail - City Council Mtg 2022-09-13 - SS2 Fractional Home Ownership Update
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City Council Mtg 2022-09-13 - SS2 Fractional Home Ownership Update
From:Carmen Rawson (carmen_rawson@att.net)
To:citycouncil@newportbeachca.gov
Cc:gleung@newportbeachca.gov
Date:Monday, September 12, 2022 at 04:15 PM PDT
City Council members,
Regarding the comprehensive Fractional Homeownership report, prepared by Sagecrest and submitted by City staff for the
subject meeting, please note the following additional information:
1. In addition to the Newport Beach property addresses listed in the Table, on page 5 of the report, please note that as of today
Pacaso is also advertising the sale of fractional ownership for the property located at 307 Goldenrod Av (see attached file).
Also, note that 1703 Plaza Del Sur is advertised by Pacaso (in addition to Compass, see attached file).
2. Pacaso FAQs (see attached file) state the fractional owner stay can be as short as 2 nights and as long as 14 nights, with
each owner having a total of 44 nights (based on 1/8 ownership). The FAQs also state each owner can have "up to six general
stays at a time". I am not sure what "at a time" means in that sentence. However, if each owner can have 6 stays in a 12
months period then that could translate into a total of 48 separate stays in a 12 month period. From an operation stand point
this is very similar to the operation of a a Short-Term Lodging Unit (STL Unit).
3. Ember Homes (Ember) has a similar scheduling practice (see attached file). Note that for a 1/12 ownership each fractional
owner gets a total of 30 nights and the stay can only be a maximum of 10 nights. However, the total number of stays in a 12
months period would still be 48 separate stays.
4. Besides Pacaso and Ember there are other companies advertising Fractional Ownership deals in the internet. Although
these companies may not been operating in Newport Beach today they may be planning to bring their business to our city in the
near future. So action must be taken now to stop the fractional ownership tsunami.
5. Elite Destination Homes (Elite) is an international company already expanding their business in the USA. They have
fractional ownership listings as well as rental listings in La Jolla - California, Wisconsin, North Carolina, Wyoming, etc.
6. Note Elite offers a "Home Exchange" program where you can exchange a stay at the property you (fractionally) own with a
stay at another property. So how is this different than a "time share"? Also, Elite offers to rent out the property you (fractionally)
own and get you rental income if you do not want to use all your days/stays. So how is this different than a STL Unit? See
attached 4 files covering this information.
7. Another company offering Fractional Ownership is Luxury Fractional Guide (see attached 2 files).
8. Note that VacatiaPlus (see attached file) offers a Fractional Owners Exchange program (as does Elite).
9. Companies selling the Fractional Ownership concept firmly state that fractional ownership is not the same than having a time
share. It is interesting to see that Re/Max Premier Timeshare Resale is reselling Fractional Ownership (see attached file).
10. For your information I have attached 2 articles about Arrived Homes (Arrived). Arrived is funded by Forerunner Ventures
and backed up by Jeff Bezos. They say someone could buy a Fractional Ownership of a (vacation) property for as little as a
$100 investment. So forget the 1/8 or 1/12 Fractional Ownership scheme. How about the 1/100 Fractional Ownership case?
11. Lastly, Fractional Ownership controlled/administered by Pacaso and/or Ember may be decently managed as they claim they
will not allow Fractional Owners to rent out the property and apparently they do not have (so far) an Exchange Program. But
how about the Fractional Ownership properties that may be managed by the individual Fractional Owners without rules among
themselves about renting and/or exchanging the property? Without City established regulations we may get chaos.
It is my understanding that the current City of Newport Beach Municipal Code does not allow "time shares" in the city. And as
we all know the STL units are regulated in our city (business license and STL permit required, operators must pay TOT and
comply with the enacted Ordinances, maximum number of STL units allowed in the city, etc).
I urge you to take action and approve/adopt a Moratorium on Fractional Ownership properties in Newport Beach right
away. That would provide additional time for City staff and our City Attorney to further research the options the City
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has to stop/contain/regulate Fractional Ownership in our community.
Please take all the information provided herein into consideration during the subject meeting.
Sincerely,
Carmen Rawson
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Fractional Ownership Resources and Articles
Introduction To Fractional Ownership
The phrase “fractional ownership” is typically used to describe shared ownership of a vacation or resort
property by people in an arrangement which allocates usage rights based on time. In other words, only
one owner will be allowed to use a particular home or apartment at a particular time. The terms, private
residence club (or “PRC”), destination club, vacation club, quartershare, timeshare, and vacation home
partnership are also used to describe variations on these arrangements, and there are no consistent
distinctions in the use of these descriptions. Fractional ownership arrangements should not be confused
with condohotels or condotels, in which each participant has whole ownership of a particular hotel room
or suite.
Fractional ownership arrangements can be applied to a single home or apartment (typically referred to
as a “one-off fractional”) or to a multi-unit building or resort development. In multi-unit developments,
each co-owner may have ownership rights to all the units, some of the units, or only one unit, and
his/her usage rights, and cost obligations, may or may not correspond to his/her ownership rights.
Groups can be assembled by a real estate development or hotel company, an individual builder, Realtor
or seller, one or more of the prospective buyers/users, or groups of friends or family members.
In recent years, there has been an explosion of interest in fractional ownership arrangements involving a
single home or apartment led by the launch of several web-based platforms designed to organize,
facilitate and manage these arrangements. For example, SirkinLaw client Pacaso locates suitable
properties, solicits and qualifies prospective members for each owner group, provides purchase money
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financing, renovates and outfits the shared home, provides ongoing calendaring, maintenance and
management services, and even offers an “assessment guarantee” under which it effectively removes
the risk theoretically created when a group member does not pay his/her share of costs.
The advent of well-capitalized and comprehensive marketing and support platforms has created a
disruption or inflection point in the fractional ownership/timeshare industry similar to those spawned by
Uber in the taxi industry and AirBNB in the hotel industry. Recall that there was a time when private,
independent car owners carrying paying passengers, or individual homeowners hosting paying guests
on a nightly basis, were considered fringe economic activities that would never become serious
alternatives to taxis and hotels (respectively). For may years, that same skepticism applied to the idea of
small groups of strangers sharing a vacation home. (Believe me, I know: for over 15 years, I touted the
idea of single-home fractional ownership at fractional ownership/timeshare industry conventions and
symposia around the world, and was routinely treated with respectful dismissiveness.) Today, single-
home vacation fractionals represent the fastest-growing segment of fractional ownership.
The Difference Between Fractional Ownership and Timeshare
It is incorrect to say that timeshare involves the sale of time, weeks or usage, while fractional ownership
involves full titled ownership. Today, many timeshare properties involve titled ownership. The real
differences between timeshares and fractional ownership arrangements are:
Fractional ownership typically involves more usage than timeshare for each owner each year
Fractional ownership typically involves fewer owners than timeshare
Fractional ownership is typically more expensive than timeshare
Why Is Fractional Ownership Becoming So Popular?
Although many people dream of owning vacation property, most either can’t afford the type of property
they want, or reason that they would not use the vacation home often enough to justify the expense.
Fractional ownership provides a solution to these problems by allowing each co-owner to pay only a
fraction of the costs and ongoing expenses of vacation home ownership, and share the risks of
unforeseen maintenance problems and value depreciation with others.
Fractional ownership is increasingly popular among those who already own a vacation home (or even a
primary residence in a resort community) but feel burdened by the expense, upkeep and management of
a property they use infrequently or are regularly absent from during certain seasons. Rather than sell a
home they love, these people opt to sell one or more fractional ownership interests to others who will
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use the home when the original owner does not and will help share the costs and burdens. Besides
lowering cost and time burdens, shared ownership can free capital for the purchase of other resort
property, or for alternative investments. It can also provide an alternative when selling the entire home
proves difficult due to market conditions.
Fractional ownership can be a significantly less expensive and more attractive alternative offering in a
new development, giving some buyers an incentive or opportunity to purchase that would otherwise be
lacking. The builder or developer can thus open up a new market and access a different group of
potential customers by offering fractional ownership, a particularly attractive opportunity when whole
ownership sales are slow. Marketing a less costly ownership option may also increase the overall
visibility of, and traffic to, the project sales sites, and increase sales volume of whole ownership. Finally,
opening a project to fractional ownership will generally increase overall usage of the property, which can
enhance the viability and financial performance of amenities and ancillary services such as a spa, golf
course, ski resort, or restaurant.
Learn More About Fractional Ownership
This page is a gateway to many articles on all aspects of fractional ownership, categorized for easy
navigation under the links below.
General Information on Fractional Ownership
Get started with the basics of fractional ownership and other vacation home sharing arrangements with
a short overview of fractional ownership, a more comprehensive explanation of fractional ownership,
definitions of fractional ownership terms and lingo, characteristics of fractional ownership and
timeshare product categories, and essential tips for smaller, less formal vacation home sharing
partnerships and family ownership groups.
Designing and Creating Fractional Ownership Arrangements
Guides and tips for vacation home owners, developers, and real estate professionals interested in selling
property as fractional ownership, and individual buyers interested in organizing a fractional ownership
group. Step-by-step instructions for analyzing the fractional ownership potential of individual homes
and condominiums, and assessing the feasiblity of offering fractional ownership within a resort or other
real estate development. A detailed article describing the various fractional ownership usage
arrangements, and another explaining how to price fractional ownership offerings.
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Marketing and Selling Fractional Ownership
Learn the most effective marketing and sales techniques for fractional ownership, private residence
clubs, destination clubs, and quartershares. Most people quickly understand the benefits of fractional
ownership arrangements, but can find many reasons to delay the decision to buy. To sell out a fractional
ownership project quickly and cost-effectively, it is critical to understand how to expose the property to
the right customers, explain the concept of fractional ownership in a clear and compelling way, and then
convince the customer to buy now instead of later. These articles will explain the best practices used
with the most successful fractional ownership properties, from individual homes to large private
residence clubs.
Fractional Ownership and Residence Club Buyer Guide
Discover how to compare and choose between different fractional offerings.Which fractional is the best
deal, and why? Which one will remain a good deal over time when owner dues are compared with other
accommodations? Which ones will remain attractive and make you want to return? Which will best hold
resale value? How valuable are exchange programs, and which ones are best? Get the tools you need to
make an informed fractional buying decision.
Operating and Managing Fractional Ownership Groups
Everything you need to know to smoothly start and operate a fractional ownership group, whether you
are a professional property manager or just someone who wants to manage a fractional with your
family and friends. Learn what tax and governmental filings you need to make, how to open bank
accounts, what records to keep, how to call and run meetings, how to create a budget and collect dues,
how to keep repair replacement reserves, and how to organize and control decision-making. Most
important, learn how to keep your fractional ownership associations running smoothly and without
arguments or disputes.
Fractional Ownership and Timeshare Law
Articles on fractional ownership and timeshare law throughout the United States and Europe as well as
resources to help you find the law in your jurisdiction.
Fractional Ownership Resources
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Additional articles, podcasts and lists on various fractional ownership related topics including a list of
books on fractional ownership, and sources for fractional ownership financing.
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Home » Fractional Ownership Resources and Articles » Fractional Ownership and Timeshare Law »
Fractional Ownership and Timeshare Law In California
11210
This chapter may be cited as the Vacation
Ownership and Time-share Act of 2004.
The purposes of this chapter are to do all of the following: (a) Provide full and fair disclosure to the
purchasers and prospective purchasers of time-share plans.
(b) Require certain time-share plans offered for sale or created and existing in this state to be subject to
the provisions of this chapter.
(c) Recognize that the tourism industry in this state is a vital part of the state’s economy; that the sale,
promotion, and use of time-share plans is an emerging, distinct segment of the tourism industry; that
this segment of the tourism industry continues to grow, both in volume of sales and in complexity and
variety of product structures; and that a uniform and consistent method of regulation is necessary in
order to safeguard California’s tourism industry and the state’s economic well-being.
(d) In order to protect the quality of California time-share plans and the consumers who purchase them,
it is the intent of the Legislature that this chapter be interpreted broadly in order to encompass all forms
of time-share plans with a duration of at least three years that are created with respect to
accommodations that are located in the state or that are offered for sale in the state, including, but not
limited to, condominiums, cooperatives, vacation clubs, and multisite vacation plans.
(e) It is the intent of the Legislature that this chapter not be interpreted to preempt the application of, the
enforcement of, or alter the standards of, the general consumer protection laws of this state set forth in
Sections 17200 to 17209, inclusive, and Sections 17500 to 17539.1, inclusive, of the Business and
Professions Code. 11211.5.
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(a) This chapter applies to all of the following:
(1) Time-share plans with an accommodation or component site in this state.
(2) Time-share plans without an accommodation or component site in this state, if those time-
share plans are sold or offered to be sold to any individual located within this state.
(3) Exchange programs as defined in this chapter.
(4) Short-term products as defined in this chapter.
(b) This chapter does not apply to any of the following:
(1) Time-share plans, whether or not an accommodation is located in this state, consisting of 10 or
fewer time-share interests. Use of an exchange program by owners of time-share interests to secure
access to other accommodations shall not affect this exemption.
(2) Time-share plans, whether or not an accommodation is located in this state, the use of which
extends over any period of three years or less.
(3) Time-share plans, whether or not an accommodation is located in this state, under which the
prospective purchaser’s total financial obligation will be equal to or less than three thousand dollars
($3,000) during the entire term of the time-share plan.
(c) For purposes of determining the term of a time-share plan, the period of any renewal or renewal
option shall be included.
(d) Single site time-share plans located outside the state and component sites of multisite time-
share plans located outside the state, that are offered for sale or sold in this state are subject only to
Sections 11210 to 11219, inclusive, Sections 11225 to 11245, inclusive, Sections 11250 to 11256,
inclusive, paragraphs
(1),
(2),
(3), and
(4) of subdivision
(a), and subdivisions
(b) and
(c), of Section 11265, subdivision
(g) of Section 11266, subdivisions
(a) and
(c) of Section 11267, Sections 11272 and 11273, subdivisions
(b),
(c), and
(d) of Section 11274, and Sections 11280 to 11287, inclusive. 11211.7.
(a) Any time-share plan registered pursuant to this chapter to which the Davis-Stirling Common Interest
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Development Act
(Chapter 1
(commencing with Section 1350) of Part 4 of Division 2 of the Civil Code) might otherwise apply is
exempt from that act, except for Sections 1354, 1355, 1355.5, 1356, 1357, 1358, 1361, 1361.5, 1362,
1363.05, 1364, 1365.5, 1370, and 1371 of the Civil Code.
(b)
(1) To the extent that a single site time-share plan or component site of a multisite time-share plan
located in the state is structured as a condominium or other common interest development, and there is
any inconsistency between the applicable provisions of this chapter and the Davis-Stirling Common
Interest Development Act, the applicable provisions of this chapter shall control.
(2) To the extent that a time-share plan is part of a mixed use project where the time-share plan
comprises a portion of a condominium or other common interest development, the applicable provisions
of this chapter shall apply to that portion of the project uniquely comprising the time-share plan, and the
Davis-Stirling Common Interest Development Act shall apply to the project as a whole.
(c)
(1) The offering of any time-share plan, exchange program, incidental benefit, or short term product in
this state that is subject to the provisions of this chapter shall be exempt from Sections 1689.5 to
1689.14, inclusive, of the Civil Code
(Home Solicitation Sales), Sections 1689.20 to 1689.24, inclusive, of the Civil Code
(Seminar Sales), and Sections 1812.100 to 1812.129, inclusive, of the Civil Code
(Contracts for Discount Buying Services).
(2) A developer or exchange company that, in connection with a time-share sales presentation or offer to
arrange an exchange, offers a purchaser the opportunity to utilize the services of an affiliate, subsidiary,
or third-party entity in connection with wholesale or retail air or sea transportation, shall not, in and of
itself, cause the developer or exchange company to be considered a seller of travel subject to Sections
17550 to 17550.34, inclusive, of the Business and Professions Code, so long as the entity that actually
provides or arranges the air or sea transportation is registered as a seller of travel with the California
Attorney General’s office or is otherwise exempt under those sections.
(d) To the extent certain sections in this chapter require information and disclosure that by their terms
only apply to real property time-share plans, those requirements shall not apply to personal
property time-share plans.
11212
As used in this chapter, the following definitions apply: (a) “Accommodation” means any apartment,
condominium or cooperative unit, cabin, lodge, hotel or motel room, or other private or commercial
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structure containing toilet facilities therein that is designed and available, pursuant to applicable law, for
use and occupancy as a residence by one or more individuals, or any unit or berth on a commercial
passenger ship, which is included in the offering of a time-share plan.
(b) “Advertisement” means any written, oral, or electronic communication that is directed to or targeted
to persons within the state or such a communication made from this state or relating to a time-
share plan located in this state and contains a promotion, inducement, or offer to sell a time-share plan,
including, but not limited to, brochures, pamphlets, radio and television scripts, electronic media,
telephone and direct mail solicitations, and other means of promotion.
(c) “Association” means the organized body consisting of the purchasers of time-share interests in
a time-share plan.
(d) “Assessment” means the share of funds required for the payment of common expenses which is
assessed from time to time against each purchaser by the managing entity.
(e) “Commissioner” means the Real Estate Commissioner.
(f) “Component site” means a specific geographic location where accommodations that are part of a
multisite time-share plan are located. Separate phases of a time-share property in a specific geographic
location and under common management shall not be deemed a component site.
(g) “Conspicuous type” means either of the following:
(1) Type in upper and lower case letters two point sizes larger than the nearest nonconspicuous type,
exclusive of headings, on the page on which it appears but in at least 10-point type.
(2) Conspicuous type may be utilized in contracts for purchase or public permits only where required by
law or as authorized by the commissioner.
(h) “Department” means the Department of Real Estate.
(i) “Developer” means and includes any person who creates a time-share plan or is in the business of
selling time-share interests, other than those employees or agents of the developer who sell time-
share interests on the developer’s behalf, or employs agents to do the same, or any person who
succeeds to the interest of a developer by sale, lease, assignment, mortgage, or other transfer, but the
term includes only those persons who offer time-share interests for disposition in the ordinary course of
business.
(j) “Dispose” or “disposition” means a voluntary transfer or assignment of any legal or equitable interest
in a time-share plan, other than the transfer, assignment, or release of a security interest.
(k) “Exchange company” means any person owning or operating, or both owning and operating, an
exchange program.
(l) “Exchange program” means any method, arrangement, or procedure for the voluntary exchange
of time-share interests or other property interests. The term does not include the assignment of the
right to use and occupy accommodations to owners of time-share interests within a single site time-
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share plan. Any method, arrangement, or procedure that otherwise meets this definition in which the
purchaser’s total contractual financial obligation exceeds three thousand dollars
($3,000) per any individual, recurring time-share period, shall be regulated as a time-share plan in
accordance with this chapter. For purposes of determining the purchaser’s total contractual financial
obligation, amounts to be paid as a result of renewals and options to renew shall be included in the term
except for the following:
(1) amounts to be paid as a result of any optional renewal that a purchaser, in his or her sole discretion
may elect to exercise,
(2) amounts to be paid as a result of any automatic renewal in which the purchaser has a right to
terminate during the renewal period at any time and receive a pro rata refund for the remaining
unexpired renewal term, or
(3) amounts to be paid as a result of an automatic renewal in which the purchaser receives a written
notice no less than 30 nor more than 90 days prior to the date of renewal informing the purchaser of the
right to terminate prior to the date of renewal. Notwithstanding these exceptions, if the contractual
financial obligation exceeds three thousand dollars
($3,000) for any three-year period of any renewal term, amounts to be paid as a result of that renewal
shall be included in determining the purchaser’s total contractual financial obligation.
(m) “Incidental benefit” is an accommodation, product, service, discount, or other benefit, other than an
exchange program, that is offered to a prospective purchaser of a time-share interest prior to the end of
the rescission period set forth in Section 11238, the continuing availability of which for the use and
enjoyment of owners of time-share interests in the time-share plan is limited to a term of not more than
three years, subject to renewal or extension. The term shall not include an offer of the use of the
accommodation, product, service, discount, or other benefit on a free or discounted one-time basis.
(n) “Managing entity” means the person who undertakes the duties, responsibilities, and obligations of
the management of a time-share plan.
(o) “Offer” means any inducement, solicitation, or other attempt, whether by marketing, advertisement,
oral or written presentation, or any other means, to encourage a person to acquire a time-share interest
in a time-share plan, other than as security for an obligation.
(p) “Person” means a natural person, corporation, limited liability company, partnership, joint venture,
association, estate, trust, government, governmental subdivision or agency, or other legal entity, or any
combination thereof.
(q) “Promotion” means a plan or device, including one involving the possibility of a prospective
purchaser receiving a vacation, discount vacation, gift, or prize, used by a developer, or an agent,
independent contractor, or employee of any of the same on behalf of the developer, in connection with
the offering and sale of time-share interests in a time-share plan.
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(r) “Public report” means a preliminary public report, conditional public report, final public report, or
other such disclosure document authorized for use in connection with the offering of time-
share interests pursuant to this chapter.
(s) “Purchaser” means any person, other than a developer, who by means of a voluntary transfer for
consideration acquires a legal or equitable interest in a time-share plan other than as security for an
obligation.
(t) “Purchase contract” means a document pursuant to which a developer becomes legally obligated to
sell, and a purchaser becomes legally obligated to buy, a time-share interest.
(u) “Reservation system” means the method, arrangement, or procedure by which a purchaser, in order
to reserve the use or occupancy of any accommodation of a multisite time-shareplan for one or
more time-share periods, is required to compete with other purchasers in the same multisite time-
share plan, regardless of whether the reservation system is operated and maintained by the
multisite time-share plan managing entity, an exchange company, or any other person. If a purchaser is
required to use an exchange program as the purchaser’s principal means of obtaining the right to use
and occupy accommodations in a multisite time-share plan, that arrangement shall be deemed a
reservation system. When an exchange company utilizes a mechanism for the exchange of use of time-
share periods among members of an exchange program, that utilization is not a reservation system of a
multisite time-share plan.
(v) “Short-term product” means the right to use accommodations on a one-time or recurring basis for a
period or periods not to exceed 30 days per stay and for a term of three years or less, and that includes
an agreement that all or a portion of the consideration paid by a person for the short-term product will
be applied to or credited against the price of a future purchase of a time-share interest or that the cost
of a future purchase of a time-share interest will be fixed or locked-in at a specified price.
(w) “Time-share instrument” means one or more documents, by whatever name denominated, creating
or governing the operation of a time-share plan and includes the declaration dedicating
accommodations to the time-share plan.
(x) “Time-share interest” means and includes either of the following:
(1) A “time-share estate,” which is the right to occupy a time-share property, coupled with a freehold
estate or an estate for years with a future interest in a time-share property or a specified portion
thereof.
(2) A “time-share use,” which is the right to occupy a time-share property, which right is neither coupled
with a freehold interest, nor coupled with an estate for years with a future interest, in a time-
share property.
(y) “Time-share period” means the period or periods of time when the purchaser of a time-share plan is
afforded the opportunity to use the accommodations of a time-share plan.
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(z) “Time-share plan” means any arrangement, plan, scheme, or similar device, other than an exchange
program, whether by membership agreement, sale, lease, deed, license, right to use agreement, or by
any other means, whereby a purchaser, in exchange for consideration, receives ownership rights in or
the right to use accommodations for a period of time less than a full year during any given year, on a
recurring basis for more than one year, but not necessarily for consecutive years. A time-share plan
may be either of the following:
(1) A “single site time-share plan,” which is the right to use accommodations at a single time-
share property.
(2) A “multisite time-share plan,” which includes either of the following:
(A) A “specific time-share interest,” which is the right to use accommodations at a specific time-
share property, together with use rights in accommodations at one or more other component sites
created by or acquired through the time-share plan’s reservation system.
(B) A “nonspecific time-share interest,” which is the right to use accommodations at more than one
component site created by or acquired through the time-share plan’s reservation system, but including
no specific right to use any particular accommodations.
(aa) “Time-share property” means one or more accommodations subject to the same time-
share instrument, together with any other property or rights to property appurtenant to those
accommodations.
11213
Each time-shareestate, as specified in paragraph
(1) of subdivision
(x) of Section 11212, constitutes, for purposes of title, a separate estate or interest in real property
including ownership in real property for tax purposes.
(a) The developer shall supervise, manage, and control all aspects of the offering of the time-shareplan
by or on behalf of the developer, including, but not limited to, promotion, advertising, contracting, and
closing. The developer is responsible for each time-shareplan registered with the commissioner and for
the actions of any sales or marketing entity utilized by the developer in the offering or selling of any
registered time-share plan. (b) Any violation of this chapter that occurs during the offering activities
shall be deemed to be a violation by the developer as well as by the person who actually committed the
violation.
11215
(a) The time-shareinstrument shall prohibit a person from seeking or obtaining, through any legal
procedures, judicial partition of the time-shareinterest or sale of the time-share interest, in lieu of
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partition and shall subordinate all rights that a time-share interest owner might otherwise have as a
tenant-in-common in real property to the terms of the time-share instrument. (b) Subdivision
(a) shall not be deemed to prohibit a sale of an accommodation upon termination of the time-share plan
or the removal of an accommodation from the time-share plan in accordance with applicable provisions
of the time-share instrument.
11216
(a) An exchange program is not a part of a time-shareplan offering and, except as provided in this
section and Section 11238, shall not be subject to either this chapter or the regulations of the
commissioner adopted pursuant to this chapter. (b) If a developer offers a purchaser the opportunity to
subscribe to or to become a member of an exchange program, the developer shall provide to the
purchaser in writing all of the information set forth in paragraphs
(1) to
(17), inclusive. If the exchange company is offering directly to the purchaser the opportunity to subscribe
to or become a member of an exchange company, the exchange company shall provide to the purchaser
in writing all of the information set forth in paragraphs
(1) to
(17), inclusive. In either case, the written information shall be provided prior to or concurrently with the
execution of any contract or subscription for membership in the exchange program.
(1) The name and address of the exchange company.
(2) The names of all officers, directors, and shareholders of the exchange company.
(3) Whether the exchange company or any of its officers or directors have any legal or beneficial interest
in any developer or managing entity for any time-share plan participating in the exchange program and,
if so, the identity of the time-share plan and the nature of the interest.
(4) A copy of the form of the contract between the purchaser and the exchange company, along with a
statement that the purchaser’s contract with the exchange company is a contract separate and distinct
from the purchaser’s contract with the seller of time-share interests.
(5) Whether the purchaser’s participation in the exchange program is dependent upon the continued
affiliation of the applicable time-share plan with the exchange program.
(6) Whether the purchaser’s participation in the exchange program is voluntary.
(7) A fair and accurate description of the terms and conditions of the purchaser’s contractual
relationship with the exchange program and the procedure by which changes thereto may be made.
(8) A fair and accurate description of the procedures necessary to qualify for and effectuate exchanges.
(9) A fair and accurate description of all limitations, restrictions, and priorities employed in the operation
of the exchange program, including, but not limited to, limitations on exchanges based on seasonality,
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accommodation size, or levels of occupancy, expressed in conspicuous type. If those limitations,
restrictions, or priorities are not uniformly applied by the exchange company, the information shall
include a clear description of the manner in which they are applied.
(10) Whether exchanges are arranged on a space available basis and whether any guarantees of
fulfillment of specific requests for exchanges are made by the exchange company.
(11) Whether and under what circumstances an owner, in dealing with the exchange program, may lose
the right to use and occupy an accommodation of the time-share plan during a reserved use period with
respect to any properly applied for exchange without being provided with substitute accommodations by
the exchange program.
(12) The fees or range of fees for participation by owners in the exchange program, a statement of
whether any such fees may be altered by the exchange company and the circumstances under which
alterations may be made.
(13) The name and address of the site of each accommodation included within a time-share plan
participating in the exchange program.
(14) The number of accommodations in each time-share plan that are available for occupancy and that
qualify for participation in the exchange program, expressed within the following numerical groups: 1-5;
6-10; 11-20; 21-50; and 51 and over.
(15) The number of currently enrolled owners for each time-share plan participating in the exchange
program, expressed within the following numerical groups: 1-100; 101-249; 250-499; 500-999; and
1,000 and over; and a statement of the criteria used to determine those owners who are currently
enrolled with the exchange program.
(16) The disposition made by the exchange company of use periods deposited with the exchange
program by owners enrolled in the exchange program and not used by the exchange company in
effecting exchanges.
(17) The following information for the preceding calendar year, which shall be independently audited by
a certified public accountant in accordance with the standards of the Accounting Standards Board of the
American Institute of Certified Public Accountants and reported annually no later than August 1 of each
year:
(A) The number of owners currently enrolled in the exchange program.
(B) The number of time-share plans that have current affiliation agreements with the exchange program.
(C) The percentage of confirmed exchanges, which is the number of exchanges confirmed by the
exchange program divided by the number of exchanges properly applied for, together with a complete
and accurate statement of the criteria used to determine whether an exchange request was properly
applied for.
(D) The number of use periods for which the exchange program has an outstanding obligation to provide
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an exchange to an owner who relinquished a use period during a particular year in exchange for a use
period in any future year.
(E) The number of exchanges confirmed by the exchange program during the year.
(F) A statement in conspicuous type to the effect that the percentage described in subparagraph
(C) is a summary of the exchange requests entered with the exchange program in the period reported
and that the percentage does not indicate the probabilities of an owner’s being confirmed to any specific
choice or range of choices.
(c) All written, visual, and electronic communications relating to an exchange company or an exchange
program shall be filed with the commissioner upon its request.
(d) The failure of an exchange company to observe the requirements of this section, and the use of any
unfair or deceptive act or practice in connection with the operation of an exchange program, is a
violation of this chapter.
(e) An exchange company may elect to deny exchange privileges to any owner whose use of the
accommodations of the owner’s time-share plan is denied, and no exchange program or exchange
company shall be liable to any of its members or any third parties on account of any such denial of
exchange privileges.
11217
(a) The following communications shall not be deemed an advertisement or promotion and are exempt
from this chapter so long as the communications are in compliance with Section 11245:
(1) Any stockholder communication, such as an annual report or interim financial report, proxy material,
a registration statement, a securities prospectus, a registration, a property report, or other material
required to be delivered to a prospective purchaser by an agency of any state or the federal government.
(2) Any oral or written statement disseminated by a developer to broadcast or print media, other than
paid advertising or promotional material, regarding plans for the acquisition or development of time-
share property. However, any rebroadcast or any other dissemination of the oral statements to a
prospective purchaser by a developer or any person in any manner, or any distribution of copies of
newspaper magazine articles or press releases, or any other dissemination of the written statements to
a prospective purchaser by a developer or any person in any manner, shall constitute an advertisement.
(3) Any advertisement or promotion in any medium to the general public if the advertisement or
promotion clearly states that it is not an offer in any jurisdiction in which any applicable registration
requirements have not been fully satisfied.
(4) Any audio, written, or visual publication or material relating to the availability of any accommodations
for transient rental, so long as a sales presentation is not a term or condition of the availability of the
accommodations and so long as the failure of any transient renter to take a tour of a time-
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share property or attend a sales presentation does not result in any reduction in the level of services
that would otherwise be available to the transient renter.
(b) Any communication regarding a time-share interest that is addressed to any person who has
previously executed a contract for the sale or purchase of that time-share interest and that does not
constitute a solicitation of a time-share interest, shall be exempt from this chapter.
11218
A time-shareinterest in a time-shareplan shall be deemed an interest in subdivided lands or a
subdivision for purposes of subdivision
(f) of Section 25100 of the Corporations Code.
11219
(a) Time-shareplans registered as Qualified Resort Vacation Club Projects under prior law shall continue
to operate under that prior law notwithstanding anything in this chapter to the contrary.
(b)
(1) All registrations of time-share plans in effect on the effective date of this chapter shall remain in full
force and effect and shall be considered registered pursuant to this chapter.
(2) All time-share plans included in this subdivision are subject to Sections 11217, 11219, 11238, 11239,
11245, 11250, and 11280 to 11286, inclusive, and shall be required to comply with the other provisions
of this chapter at the time they seek amendment or renewal of their existing registrations. When an
amendment or renewal of a time-share plan is filed with the commissioner, the existing registration
continues in full force and effect while the amendment or renewal is pending before the commissioner.
(c) Any existing injunction or temporary restraining order validly obtained that prohibits unregistered
practice of time-share developers, time-share plans, or their agents shall not be invalidated by the
enactment of this chapter and shall continue to have full force and effect on and after the effective date
of this chapter. Article 2. Registration, Sale Requirements, and Fees
11225
A person shall not be required to register a time-share plan with the commissioner pursuant to this
chapter if any of the following applies:
(a) The person is an owner of a time-share interest who has acquired the time-share interest for the
person’s own use and occupancy and who later offers it for resale.
(b) The person is a managing entity or an association that is not otherwise a developer of a time-
share plan in its own right, solely while acting as an association or under a contract with an association
to offer or sell a time-share interest transferred to the association through foreclosure, deed in lieu of
foreclosure, or gratuitous transfer, if these acts are performed in the regular course of, or as an incident
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to, the management of the association for its own account in the time-share plan. Notwithstanding the
exemption from registration, the association or managing entity shall provide each purchaser of a time-
share interest covered by this subdivision a copy of the time-share instruments, a copy of the then-
current budget, a written statement of the then-current assessment amounts, and shall provide the
purchaser the opportunity to rescind the purchase within seven days after receipt of these documents.
Immediately prior to the space reserved in the contract for the signature of the purchaser, the
association or managing entity shall disclose, in conspicuous type, substantially the following notice of
cancellation: YOU MAY CANCEL THIS CONTRACT WITHOUT ANY PENALTY OR OBLIGATION WITHIN SEVEN
CALENDAR DAYS OF RECEIPT OF THE PUBLIC REPORT OR AFTER THE DATE YOU SIGN THIS CONTRACT,
WHICHEVER DATE IS LATER. IF YOU DECIDE TO CANCEL THIS CONTRACT, YOU MUST NOTIFY THE
ASSOCIATION
(OR MANAGING ENTITY) IN WRITING OF YOUR INTENT TO CANCEL. YOUR NOTICE OF CANCELLATION
SHALL BE EFFECTIVE UPON THE DATE SENT AND SHALL BE SENT TO
(NAME OF ASSOCIATION OR MANAGING ENTITY) AT
(ADDRESS OF ASSOCIATION OR MANAGING ENTITY). YOUR NOTICE OF CANCELLATION MAY ALSO BE
SENT BY FACSIMILE TO
(FACSIMILE NUMBER OF THE ASSOCIATION OR MANAGING ENTITY) OR BY HAND-DELIVERY. ANY
ATTEMPT TO OBTAIN A WAIVER OF YOUR CANCELLATION RIGHT IS VOID AND OF NO EFFECT.
(c) The person is conveyed, assigned, or transferred more than seven time-share interests from a
developer in a single voluntary or involuntary transaction and subsequently conveys, assigns, or
transfers all of the time-share interests received from the developer to a single purchaser in a single
transaction.
(d)
(1) The developer is offering or disposing of a time-share interest to a purchaser who has previously
acquired a time-share interest from the same developer if the developer has a time-share plan
registered under this chapter, which was originally approved by the commissioner within the preceding
seven years, and the developer complies in all respects with the provisions of Section 11245, and,
further, provides the purchaser with
(A) a cancellation period of at least seven days,
(B) all the time-share disclosure documents that are required to be provided to purchasers as if the sale
occurred in the state or jurisdiction where the time-share property is located, and
(C) the following disclaimer in conspicuous type: WARNING: THE CALIFORNIA DEPARTMENT OF REAL
ESTATE HAS NOT EXAMINED THIS OFFERING, INCLUDING, BUT NOT LIMITED TO, THE CONDITION OF
TITLE, THE STATUS OF BLANKET LIENS ON THE PROJECT
(IF ANY), ARRANGEMENTS TO ASSURE PROJECT COMPLETION, ESCROW PRACTICES, CONTROL OVER
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PROJECT MANAGEMENT, RACIALLY DISCRIMINATORY PRACTICES
(IF ANY), TERMS, CONDITIONS, AND PRICE OF THE OFFER, CONTROL OVER ANNUAL ASSESSMENTS
(IF ANY), OR THE AVAILABILITY OF WATER, SERVICES, UTILITIES, OR IMPROVEMENTS. IT MAY BE
ADVISABLE FOR YOU TO CONSULT AN ATTORNEY OR OTHER KNOWLEDGEABLE PROFESSIONAL WHO IS
FAMILIAR WITH REAL ESTATE AND DEVELOPMENT LAW IN THE STATE WHERE THIS TIME-
SHARE PROPERTY IS SITUATED.
(2) By making such an offering or disposition, the person is deemed to consent to the jurisdiction of the
commissioner in the event of a dispute with the purchaser in connection with the offering or disposition.
(e) It is a single site time-share plan located outside of the boundaries of the United States or component
site of a specific time-share interest multisite time-share plan located wholly outside of the boundaries
of the United States, or a nonspecific time-share interest multisite time-share plan in which all
component sites are located wholly outside of the boundaries of the United States. However, it is
unlawful and a violation of this chapter for a person, in this state, to sell or lease or offer for sale or
lease a time-share interest in such a time-share plan, located outside the United States, unless the
printed material, literature, advertising, or invitation in this state relating to that sale, lease, or offer
clearly and conspicuously contains the following disclaimer in capital letters of at least 10-point type:
WARNING: THE CALIFORNIA DEPARTMENT OF REAL ESTATE HAS NOT EXAMINED THIS OFFERING,
INCLUDING, BUT NOT LIMITED TO, THE CONDITION OF TITLE, THE STATUS OF BLANKET LIENS ON THE
PROJECT
(IF ANY), ARRANGEMENTS TO ASSURE PROJECT COMPLETION, ESCROW PRACTICES, CONTROL OVER
PROJECT MANAGEMENT, RACIALLY DISCRIMINATORY PRACTICES
(IF ANY), TERMS, CONDITIONS, AND PRICE OF THE OFFER, CONTROL OVER ANNUAL ASSESSMENTS
(IF ANY), OR THE AVAILABILITY OF WATER, SERVICES, UTILITIES, OR IMPROVEMENTS. IT MAY BE
ADVISABLE FOR YOU TO CONSULT AN ATTORNEY OR OTHER KNOWLEDGEABLE PROFESSIONAL WHO IS
FAMILIAR WITH REAL ESTATE AND DEVELOPMENT LAW IN THE COUNTRY WHERE THIS TIME-SHARE
PROPERTY IS SITUATED.
(1) If an offer of time-share interest in a time-share plan described in subdivision
(e) is not initially made in writing, the foregoing disclaimer shall be received by the offeree in writing
prior to a visit to a location, sales presentation, or contact with a person representing the offeror, when
the visit or contact was scheduled or arranged by the offeror or its representative. The deposit of the
disclaimer in the United States mail, addressed to the offeree and with first-class postage prepaid, at
least five days prior to the scheduled or arranged visit or contact, shall be deemed to constitute delivery
for purposes of this section.
(2) If any California resident is presented with an agreement or purchase contract to lease or purchase
a time-share interest as described in subdivision
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(e), where an offer to lease or purchase that time-share interest was made to that resident in California,
a copy of the disclaimer set forth in subdivision
(e) shall be inserted in at least 10-point type at the top of the first page of that agreement or purchase
contract and shall be initialed by that California resident.
(3) Nothing contained in this subdivision shall be deemed to exempt from registration in this state a
nonspecific time-share interest multisite time-share plan in which any component site in the time-
share plan is located in the United States.
11226
(a) Any person who, to any individual located in the state, sells, offers to sell, or attempts to solicit
prospective purchasers to purchase a time-share interest, or any person who creates a time-share plan
with an accommodation in the state, shall register the time-share plan with the commissioner, unless
the time-share plan is otherwise exempt under this chapter.
(b) A developer, or any of its agents, shall not sell, offer, or dispose of a time-share interest in the state
unless all necessary registration requirements are provided and approved by the commissioner, or the
sale, offer, or disposition is otherwise permitted by this chapter, or while an order revoking or
suspending a registration is in effect.
(c) In registering a time-share plan, the developer shall provide all of the following information:
(1) The developer’s legal name, any assumed names used by the developer, principal office street
address, mailing address, primary contact person, and telephone number.
(2) The name of the developer’s authorized or registered agent in the state upon whom claims can be
served or service of process be had, the agent’s street address in California, and telephone number.
(3) The name, street address, mailing address, primary contact person, and telephone number of
any time-share plan being registered.
(4) The name, street address, mailing address, and telephone number of any managing entity of
the time-share plan.
(5) A public report that complies with the requirements of Section 11234 or for a time-share plan
located outside of the state a public report that has been authorized for use by the situs state regulatory
agency and that contains disclosures as determined by the commissioner upon review to be
substantially equivalent to or greater than the information required to be disclosed pursuant to Section
11234.
(6) A description of the inventory control system that will ensure compliance with Section 11250.
(7) Any other information regarding the developer, time-share plan, or managing entities as established
by regulation.
(d) An applicant for a public report for a time-share plan shall present evidence of the following for each
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accommodation of the time-share plan:
(1) That the accommodation is presently suitable for human occupancy or that financial arrangements
have been made to complete construction or renovation of the accommodation to make it suitable for
human occupancy on or before the first date for occupancy by a time-share interest owner.
(2) That the accommodation is owned or leased by the developer of the time-share plan or is the subject
of an enforceable option or contract under which the developer will build, purchase, or lease the
accommodation. Notwithstanding this subdivision, the developer shall present evidence prior to the
receipt of a final public report that the accommodation to be sold is owned or leased by the developer
and that the accommodation is free and clear of encumbrances in accordance with Sections 11244 and
11255.
(e) If an accommodation in a time-share plan is located within a local governmental jurisdiction or
subdivision of real property in which the dedication of accommodations to time-sharing is expressly
prohibited by ordinance or recorded restriction, either absolutely or without a permit or other
entitlement from the governing body, the applicant for a public report shall present evidence of a permit
or other entitlement by the appropriate authority for the local government or the subdivision.
(f)
(1) The developer shall amend or supplement its disclosure documents and registration information, to
reflect any material change in any information required by this chapter or the regulations implementing
this chapter. The developer shall notify the commissioner of the material change prior to
implementation of the change, unless the change is beyond the control of the developer; in which event,
the developer shall provide written notice to the commissioner as soon as reasonably practicable after
the occurrence of the event necessitating the change. All amendments, supplements, and facts relevant
to the material change shall be filed with the commissioner within 20-calendar days of the material
change.
(2) The developer may continue to sell time-share interests in the time-share plan so long as, prior to
closing, the developer provides a notice to each purchaser that describes the material change and
provides to each purchaser the previously approved public report.
(A) If the change is material and adverse to the purchaser, all purchaser funds shall be held in escrow, or
pursuant to alternative assurances permitted by subdivision
(c) of Section 11243, and no closing shall occur until the amendment relating to the material and
adverse change has been approved by the commissioner. After the amendment relating to the material
and adverse change has been approved and the amended public report has been issued, the amended
public report shall be sent to the purchaser, and an additional seven-day rescission period shall
commence. The developer shall be required to maintain evidence of the receipt by each such purchaser
of the amended public report.
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(B) If the commissioner refuses to approve the amendment relating to the material and adverse change,
all sales made using the notice shall be subject to rescission and all funds returned.
(3) The developer shall update the public report to reflect any changes to the time-share plan that are
not material and adverse, including the addition of any component sites, within a reasonable time, and
may continue to sell and close time-share interests prior to the date that the amended public report is
approved.
11227
(a) Subject to subdivision
(h), the commissioner shall issue a final public report if all registration requirements have been met as
set forth in this chapter and if all deficiencies and substantive inadequacies in the substantially
complete application for a final public report for the time-share plan have been corrected.
(b) The commissioner may issue a conditional public report prior to issuing a final public report for
a time-share plan if the requirements of subdivision
(c) are met, all deficiencies and substantive inadequacies in the substantially complete application for a
final public report for the time-share plan have been corrected, the material elements of the offering to
be made under the authority of the conditional public report have been established, and all
requirements for the issuance of the conditional public report have been met, except for one or more of
the following requirements, as may be applicable:
(1) A final map has not been recorded.
(2) A condominium plan has not been recorded.
(3) A declaration of covenants, conditions, and restrictions has not been recorded.
(4) A declaration of annexation has not been recorded.
(5) A recorded subordination of existing liens to the time-share instruments or declaration of annexation
or escrow instructions to effect recordation prior to the first sale, are lacking.
(6) Filed articles of incorporation are lacking.
(7) A current preliminary report of a licensed title insurance company issued after filing of the final map
and recording of the time-share instrument covering all time-share interests to be included in the public
report has not been provided.
(8) Other requirements the commissioner determines are likely to be timely satisfied by the applicant.
(c) An applicant for a conditional public report shall submit the following information and documents
with the applicable filing fee:
(1) A copy of the statement set forth in subdivision
(e).
(2) A sales agreement or lease to be used in any transaction conducted under authority of the
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conditional public report. The sales agreement or lease shall include all of the following provisions:
(A) No escrow will close, funds will not be released from escrow, and the interest contracted for will not
be conveyed until a current final public report for the time-share plan is furnished to the purchaser.
(B) The contract may be rescinded, in which event the entire sum of money paid or advanced by the
purchaser shall be returned if
(i) a final public report has not been issued within six months after the date of issuance of the
conditional public report if the conditional public report is not renewed,
(ii) the final public report is not issued within 12 months after the initial conditional public report is
received if the conditional public report has been renewed for an additional six-month period, or
(iii) the purchaser or lessee is dissatisfied with the final public report because of a material and adverse
change.
(3) Escrow instructions to be used in any transaction conducted under authority of the conditional public
report that includes at least the following information:
(A) The name and address of the escrow depository.
(B) A description of the nature of the transaction.
(C) Provisions ensuring compliance with Section 11243.
(D) Provisions ensuring that no escrow will close, funds will not be released from escrow, and the
interest contracted for will not be conveyed until a current final public report for the time-share plan is
furnished to the purchaser or lessee.
(E) Provisions for the return of money as prescribed in subparagraph
(B) of paragraph
(2).
(d) A decision by the commissioner to not issue a conditional public report shall be noticed in writing to
the applicant within five business days after his or her decision and that notice shall specifically state
the reasons why the report is not being issued.
(e) A person may sell or lease, or offer for sale or lease, time-share interests in a time-share plan
pursuant to a conditional public report if, as a condition of the sale or lease or offer for sale or lease,
delivery of legal title or other interest contracted for will not take place until issuance of a final public
report and provided that the requirements of subdivision
(c) are met.
(f) A developer, principal, or his or her agent shall provide a prospective purchaser a copy of the
conditional public report and a written statement including all of the following information:
(1) Specification of the information required for issuance of a final public report.
(2) Specification of the information required in the final public report that is not available in the
conditional public report, along with a statement of the reasons why that information is not available at
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the time of issuance of the conditional public report.
(3) A statement that no person acting as a principal or agent shall sell or lease, or offer for sale or
lease, time-share interests in a time-share plan for which a conditional public report has been issued
except as provided in this chapter.
(4) Specification of the requirements of subdivision
(e).
(g) The prospective purchaser shall sign a receipt that he or she has received and has read the
conditional public report and the written statement provided pursuant to subdivision
(f).
(h) The term of a conditional public report may not exceed six months unless renewed pursuant to this
subdivision. The conditional public report may be renewed for one additional six-month period if the
commissioner determines that the requirements for issuance of a final public report are likely to be
satisfied during the renewal term. The renewal of a conditional public report shall not act to afford a
purchaser who received the initial conditional public report any additional rescission rights other than
those provided to a purchaser when a final public report is issued and a material and adverse change
has been made.
(i) For single site time-share plans and component sites of a multisite time-share plan located outside of
the state, a disclosure document that has been authorized for use by the state regulatory agency in the
state in which the time-share plan or component site is located that contains the disclosures as
determined by the commissioner upon review to be substantially equivalent to or greater than the
information required to be disclosed pursuant to Section 11234, shall be accepted in lieu of a public
report required pursuant to this section. The disclosure document shall contain a cover page issued by
the commissioner certifying the approval of its use in lieu of the public report required herein.
(j) Notwithstanding anything in this section to the contrary, the commissioner may grant a 12-month
preliminary public report allowing the developer to begin offering and selling time-share interests, in
a time-share plan regardless of whether the accommodations of the time-share plan are located within
or outside of the state, while the registration is pending with the commissioner. The commissioner may
grant one additional 12-month period if the developer is actively and diligently pursuing registration
under this chapter. The preliminary public report shall automatically terminate with respect to
those time-share interests covered by a final public report that is issued before the scheduled
termination date of the preliminary report. To obtain a preliminary public report, the developer shall
provide all of the following:
(1) Submit the reservation instrument to be used in a form previously approved by the department with
at least the following provisions:
(A) The right of both the developer and the potential purchaser to unilaterally cancel the reservation at
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any time.
(B) The payment to the potential purchaser of his or her total deposit following cancellation of the
reservation by either party.
(C) The placing of the deposit into an interest bearing escrow account.
(2) Agree to provide each potential purchaser with a copy of the preliminary public report and an
executed receipt for a copy before any money or other thing of value has been accepted by or on behalf
of the developer in connection with the reservation.
(3) Agree to provide a copy of the reservation instrument signed by the potential purchaser and by or on
behalf of the developer to the potential purchaser, and place any deposit taken from the potential
purchaser into a neutral escrow depository acceptable to the commissioner.
11228
The term of a final public report shall be limited to five years. A renewal shall be issued if the developer,
owner, or agent makes application for renewal of any report and has submitted the additional
information that the commissioner may require.
11229
(a) In connection with its review of the registration application of a time-share plan, the commissioner
may make an examination of any time-share property submitted for registration pursuant to this
chapter, and shall, unless there are grounds for denial, issue to the developer a public report authorizing
the sale or lease in this state of the time-share interests within the time-share plan submitted pursuant
to this chapter. The report shall contain the data obtained in accordance with Section 11234.
(b) The commissioner may deny the issuance of the public report based on the applicant’s failure to
comply with any of the provisions of this chapter or the regulations of the commissioner pertaining
thereto, including, but not limited to, all of the following:
(1) The sale or lease would constitute misrepresentation to, or deceit or fraud of, the purchasers or
lessees.
(2) Inability to deliver title or other interest contracted for.
(3) Inability to demonstrate, in accordance with this chapter, that adequate financial arrangements have
been made for all offsite improvements included in the offering.
(4) Inability to demonstrate, in accordance with this chapter, that adequate financial arrangements have
been made for any community, recreational, or other facilities included in the offering.
(5) Failure to make a showing that the parcels can be used for the purpose for which they are offered.
(6) Failure to provide in the contract or other writing the use or uses for which the parcels are offered,
together with any covenants or conditions relative thereto.
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(c) Any developer objecting to the denial of a public report may, within 30 days after receipt of the order
of denial, file a written request for a hearing. The commissioner shall hold the hearing within 20 days
thereafter unless the party requesting the hearing requests a postponement. If the hearing is not held
within 20 days after request for a hearing is received plus the period of the postponement or if a
proposed decision is not rendered within 45 days after submission and an order adopting or rejecting
the proposed decision is not issued within 15 days thereafter, the order of denial shall be rescinded and
a public report issued.
11230
If the time-shareplan, including any accommodations, or amenities within the common area are not
completed prior to the issuance of a final public report for the time-share plan, the developer shall
specify a reasonable date for completion and shall comply with any one of the following conditions:
(a) Arranges for lien and completion bond or bonds, enforceable by the association, in an amount and
subject to the terms, conditions, and coverage necessary to assure completion of the improvements
lien-free. The bond shall not exceed 120 percent of the cost for completion, and the bond shall provide
for the reduction of the bond amount as work is completed.
(b) All funds from the sale of time-share interests as the commissioner shall determine are sufficient to
assure construction of the improvement or improvements shall be bonded or impounded in a neutral
escrow depository acceptable to the commissioner until the improvements have been completed and all
applicable lien periods have expired.
(c) An amount sufficient to cover the costs of construction shall be deposited in a neutral escrow
depository acceptable to the commissioner under a written escrow agreement providing for
disbursements from the escrow as work is completed.
(d) An alternative plan that may be approved by the commissioner.
11231
Every registration required to be filed with the commissioner under this chapter shall be reviewed and
issued the specified public report in accordance with the following schedule:
(a) Time-share registration. Registration shall be effective only upon the issuance of a public report by
the commissioner that shall occur no later than 60 calendar days after the actual receipt by the
commissioner of the properly completed application. The commissioner shall provide a list of
deficiencies in the application, if any, within 60 calendar days of receipt. This same time period applies
when amending a public report to add additional phases or component sites of the time-share plan.
(b) Preliminary public report registration. A preliminary public report shall be issued within 15 calendar
days of receipt, unless the commissioner provides to the applicant a written list of deficiencies in the
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application, if any, within 15 calendar days of receipt of an application.
(c) Amended public report where no additional phases or component sites are added. An effective date
for an amendment to a public report should occur no more than 45 calendar days after actual receipt by
the commissioner of the amendment. The commissioner shall provide a list of deficiencies regarding the
amendments, if any, within 45 calendar days of receipt.
11232
(a) The commissioner may by regulation prescribe filing fees in connection with applications to the
Department of Real Estate for a public report pursuant to the provisions of this chapter that are lower
than the maximum fees specified in subdivision
(b) if the commissioner determines that the lower fees are sufficient to offset the costs and expenses
incurred in the administration of this chapter. The commissioner shall hold at least one hearing each
calendar year to determine if lower fees than those specified in subdivision
(b) should be prescribed.
(b) The filing fees for an application for a public report to be issued under authority of this chapter shall
not exceed the following for each time-share plan, location, or phase of the time-share plan in which
interests are to be offered for sale or lease:
(1) One thousand seven hundred dollars
($1,700) plus ten dollars
($10) for each time-share interest to be offered for an original public report application.
(2) Six hundred dollars
($600) plus ten dollars
($10) for each time-share plan interest to be offered that was not permitted to be offered under the
public report to be renewed for a renewal public report or permit application.
(3) Five hundred dollars
($500) plus ten dollars
($10) for each time-share interest to be offered under the amended public report for which a fee has not
previously been paid for an amended public report application.
(4) Five hundred dollars
($500) for a conditional public report application.
(c) Fees collected by the commissioner under authority of this chapter shall be deposited into the Real
Estate Fund pursuant to Chapter 6
(commencing with Section 10450) of Part 1. Fees received by the commissioner pursuant to this article
shall be deemed earned upon receipt. No part of any fee is refundable unless the commissioner
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determines that it was paid as a result of mistake or inadvertency. This section shall remain in effect
unless it is superseded pursuant to Section 10266 or subdivision
(a) of Section 10266.5, whichever is applicable.
11233
An applicant for a public report for a time-shareplan in which the use and occupancy of the time-
share interest purchased in the time-share plan is determined according to a point system shall include
in the application the following information:
(a) Whether additional points may be acquired by purchase or otherwise, in the future and the manner in
which future purchases of points may be made.
(b) The transferability of points to other persons, other years or other time-share plans.
(c) A copy of the then-current point value use directory, along with rules and procedures for changes by
the developer or the association in the manner in which point values may be used.
(1) No change exceeding 10 percent per annum in the manner in which point values may be used may
be made without the assent of at least 25 percent of the voting power of the association other than the
developer.
(2) No time-share interest owner shall be prevented from using a time-share plan as a result of changes
in the manner in which point values may be used.
(3) In the event point values are changed or adjusted, no time-share owner shall be prevented from
using his or her home resort in the same manner as was provided for under the original purchase
contract.
(d) Any limitations or restrictions upon the use of point values.
(e) A description of an inventory control system that will ensure compliance with Section 11250.
11234
A developer shall prepare, for issuance by the commissioner, a public report that shall fully and
accurately disclose those facts concerning the time-share developer and time-share plan that are
required by this chapter or by regulation. The developer shall provide the public report to each
purchaser of a time-share interest in any time-share plan at the time of purchase. The public report
shall be in writing and dated and shall require the purchaser to certify in writing the receipt thereof. The
public report for a single site time-share plan is subject to the requirements of subdivision
(a). The public report for a specific time-share interest multisite time-share plan is subject to the
requirements of both subdivisions
(a) and
(b). The public report for a nonspecific time-share interest multisite time-share plan is subject to the
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requirements of subdivision
(c). For time-share plans located outside of the state, a public report that has been authorized for use by
the situs state regulatory agency and that contains disclosures as determined by the commissioner
upon review to be substantially equivalent to or greater than the information required to be disclosed
pursuant to this section may be used by the developer to meet the requirements of this section.
(a) Public reports for a single site and those component sites of a specific time-share interest
multisite time-share plan that are offered in this state shall include the following:
(1) The name and address of the developer and the type of time-share plan being offered and the name
and address of the time-share project.
(2) A description of the existing or proposed accommodations, including the type and number of time-
share interests in the accommodations, and if the accommodations are proposed or not yet complete or
fully functional, an estimated date of completion.
(3) The number of accommodations and time-share interests, expressed in periods of seven-day use
availability or other time increments applicable to the time-share plan, committed to the multisite time-
share plan, and available for use by purchasers and a representation about the percentage of
useable time authorized for sale, and if that percentage is 100 percent, then a statement describing how
adequate periods of time for maintenance and repair will be provided.
(4) A description of any existing or proposed amenities of the time-share plan and, if the amenities are
proposed or not yet complete or fully functional, the estimated date of completion.
(5) The extent to which financial arrangements have been made for the completion of any incomplete,
promised improvements.
(6) A description of the duration, phases, and operation of the time-share plan.
(7) The name and principal address of the managing entity and a description of the procedures, if any,
for altering the powers and responsibilities of the managing entity and for removing or replacing it.
(8) The current annual budget as required by Section 11240, along with the projected assessments and
a description of the method for calculating and apportioning the assessments among purchasers, all of
which shall be attached as an exhibit to the public report.
(9) Any initial or special fee due from the purchaser at closing together with a description of the purpose
and the method of calculating the fee.
(10) A description of any financing offered by or available through the developer.
(11) A description of any liens, defects, or encumbrances on or affecting the title to the time-
share interests.
(12) A description of any bankruptcies, pending civil or criminal suits, adjudications, or disciplinary
actions of which the developer has knowledge, that would have a material effect on the developer’s
ability to perform its obligations.
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(13) Any current or expected fees or charges to be paid by time-share purchasers for the use of any
amenities related to the time-share plan.
(14) A description and amount of insurance coverage provided for the protection of the purchaser.
(15) The extent to which a time-share interest may become subject to a tax lien or other lien arising out
of claims against purchasers of different time-share interests.
(16) A statement disclosing any right of first refusal or other restraint on the transfer of all or any
portion of a time-share interest.
(17) A statement disclosing that any deposit made in connection with the purchase of a time-
share interest shall be held by an escrow agent until expiration of any right to cancel the contract and
that any deposit shall be returned to the purchaser if he or she elects to exercise his or her right of
cancellation. Alternatively, if the commissioner has accepted from the developer a surety bond,
irrevocable letter of credit, or other financial assurance, each of which shall be enforceable by the
association, in lieu of placing deposits in an escrow account:
(A) a statement disclosing that the developer has provided a surety bond, irrevocable letter of credit, or
other financial assurance in an amount equal to or in excess of the funds that would otherwise be
placed in an escrow account,
(B) a description of the type of financial assurance that has been obtained,
(C) a statement that if the purchaser elects to exercise his or her right of cancellation as provided in the
contract, the developer shall return the deposit, and
(D) a description of the person or entity to whom the purchaser should apply for payment.
(18) A statement that the assessments collected from the purchasers will be kept in a segregated
account separate from the assessments collected from the purchasers of other time-share plans
managed by the same managing entity, along with a statement identifying the location of the account
and a disclosure of the rights of owners to inspect the records pertaining to their accounts.
(19) If the time-share plan provides purchasers with the opportunity to participate in an exchange
program, a description of the name and address of the exchange company and the method by which a
purchaser accesses the exchange program.
(20) Any other information that the developer, with the approval of the commissioner, desires to include
in the public report.
(21) Any other information reasonably requested by the commissioner.
(b) Public reports for specific time-share interest multisite time-share plans shall include the following
additional disclosures:
(1) A description of each component site, including the name and address of each component site.
(2) The number of accommodations and time-share interests, expressed in periods of seven-day use
availability or other time increments applicable to each component site of the time-share plan,
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committed to the multisite time-share plan and available for use by purchasers and a representation
about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a
statement describing how adequate periods of time for maintenance and repair will be provided.
(3) Each type of accommodation in terms of the number of bedrooms, bathrooms, and sleeping capacity,
and a statement of whether or not the accommodation contains a full kitchen. For purposes of this
description, a “full kitchen” means a kitchen having a minimum of a dishwasher, range, sink, oven, and
refrigerator.
(4) A description of amenities available for use by the purchaser at each component site.
(5) A description of the reservation system, which shall include the following:
(A) The entity responsible for operating the reservation system, its relationship to the developer, and the
duration of any agreement for operation of the reservation system.
(B) A summary of the rules and regulations governing access to and use of the reservation system.
(C) The existence of and an explanation regarding any priority reservation features that affect a
purchaser’s ability to make reservations for the use of a given accommodation on a first-come-first-
served basis.
(6) The name and principal address of the managing entity for the multisite time-share plan and a
description of the procedures, if any, for altering the powers and responsibilities of the managing entity
and for removing or replacing it.
(7) A description of any right to make any additions, substitutions, or deletions of accommodations,
amenities, or component sites, and a description of the basis upon which accommodations, amenities,
or component sites may be added to, substituted in, or deleted from the multisite time-share plan.
(8) A description of the purchaser’s liability for any fees associated with the multisite time-share plan.
(9) The location of each component site of the multisite time-share plan, the historical occupancy of each
component site for the prior 12-month period, if the component site was part of the multisite time-
share plan during the 12-month time period, as well as any periodic adjustment or amendment to the
reservation system that may be needed in order to respond to actual purchaser use patterns and
changes in purchaser use demand for the accommodations existing at that time within the
multisite time-share plan.
(10) Any other information that the developer, with the approval of the commissioner, desires to include
in the time-share disclosure statement.
(c) Public reports for nonspecific time-share interest multisite time-share plans shall include the
following:
(1) The name and address of the developer.
(2) A description of the type of interest and usage rights the purchaser will receive.
(3) A description of the duration and operation of the time-share plan.
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(4) A description of the type of insurance coverage provided for each component site.
(5) An explanation of who holds title to the accommodations of each component site.
(6) A description of each component site, including the name and address of each component site.
(7) The number of accommodations and time-share interests, expressed in periods of seven-day use
availability or other time increments applicable to the multisite time-share plan for each component site
committed to the multisite time-share plan and available for use by purchasers and a representation
about the percentage of useable time authorized for sale, and if that percentage is 100 percent, then a
statement describing how adequate periods of time for maintenance and repair will be provided.
(8) Each type of accommodation in terms of the number of bedrooms, bathrooms, and sleeping capacity,
and a statement of whether or not the accommodation contains a full kitchen. For purposes of this
description, a “full kitchen” means a kitchen having a minimum of a dishwasher, range, sink, oven, and
refrigerator.
(9) A description of amenities available for use by the purchaser at each component site.
(10) A description of any incomplete amenities at any of the component sites along with a statement as
to any assurance for completion and the estimated date the amenities will be available.
(11) The location of each component site of the multisite time-share plan, the historical occupancy of
each component site for the prior 12-month period, if the component site was part of the multisite time-
share plan during such 12-month time period, as well as any periodic adjustment or amendment to the
reservation system that may be needed in order to respond to actual purchaser use patterns and
changes in purchaser use demand for the accommodations existing at that time within the
multisite time-share plan.
(12) A description of any right to make any additions, substitutions, or deletions of accommodations,
amenities, or component sites, and a description of the basis upon which accommodations, amenities,
or component sites may be added to, substituted in, or deleted from the multisite time-share plan.
(13) A description of the reservation system that shall include all of the following:
(A) The entity responsible for operating the reservation system, its relationship to the developer, and the
duration of any agreement for operation of the reservation system.
(B) A summary of the rules and regulations governing access to and use of the reservation system.
(C) The existence of and an explanation regarding any priority reservation features that affect a
purchaser’s ability to make reservations for the use of a given accommodation on a first-come-first-
served basis.
(14) A description of any liens, defects, or encumbrances that materially affect the purchaser’s use
rights.
(15) The name and principal address of the managing entity for the multisite time-share plan and a
description of the procedures, if any, for altering the powers and responsibilities of the managing entity
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and for removing or replacing it, and a description of the relationship between a multisite time-
share plan managing entity and the managing entity of the component sites of a multisite time-share
plan, if different from the multisite time-share plan managing entity.
(16) The current annual budget as provided in Section 11240, along with the projected assessments and
a description of the method for calculating and apportioning the assessments among purchasers, all of
which shall be attached as an exhibit to the public report.
(17) Any current fees or charges to be paid by time-share purchasers for the use of any amenities
related to the time-share plan and a statement that the fees or charges are subject to change.
(18) Any initial or special fee due from the purchaser at closing, together with a description of the
purpose and method of calculating the fee.
(19) A description of any financing offered by or available through the developer.
(20) A description of any bankruptcies, pending civil or criminal suits, adjudications, or disciplinary
actions of which the developer has knowledge, which would have a material effect on the developer’s
ability to perform its obligations.
(21) A statement disclosing any right of first refusal or other restraint on the transfer of all or any
portion of a time-share interest.
(22) A statement disclosing that any deposit made in connection with the purchase of a time-
share interest shall be held by an escrow agent until expiration of any right to cancel the contract and
that any deposit shall be returned to the purchaser if he or she elects to exercise his or her right of
cancellation. Alternatively, if the commissioner has accepted from the developer a surety bond,
irrevocable letter of credit, or other financial assurance in lieu of placing deposits in an escrow account:
(A) a statement disclosing that the developer has provided a surety bond, irrevocable letter of credit, or
other financial assurance in an amount equal to or in excess of the funds that would otherwise be
placed in an escrow account,
(B) a description of the type of financial assurance that has been arranged,
(C) a statement that if the purchaser elects to exercise his or her right of cancellation as provided in the
contract, the developer shall return the deposit, and
(D) a description of the person or entity to whom the purchaser should apply for payment.
(23) If the time-share plan provides purchasers with the opportunity to participate in an exchange
program, a description of the name and address of the exchange company and the method by which a
purchaser accesses the exchange program.
(24) Any other information that the developer, with the approval of the commissioner, desires to include
in the time-share disclosure statement.
(d) The commissioner may establish by regulation provisions regarding the delivery of the public report
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and other required information through alternative media forms.
(e) The commissioner may, upon finding that the subject matter is otherwise adequately covered or the
information is unnecessary or inapplicable, waive any requirement set forth in this section.
11235
(a) A person who has entered into a contract to purchase a short-term product shall have the right to
rescind the contract until midnight of the seventh calendar day, or a later time as provided in the
contract, following the day on which the contract is first made, in which event the purchaser shall be
entitled to a refund of 100 percent of the consideration paid under the contract, without deduction.
(b) The developer or other person who offers a short-term product shall clearly and conspicuously
disclose, in writing, to all purchasers of a short-term product, all of the following:
(1) The right of rescission provided for in subdivision
(a).
(2) That reservations for accommodations under the contract are subject to availability and that there is
no guarantee that a purchaser will be able to obtain specific accommodations during a
specific time period, if applicable.
(3) Specific blackout dates, if applicable.
(4) That the earlier the purchaser requests a reservation, the greater the opportunity to received a
confirmed reservation.
(5) That, if the purchaser later purchases a time-share interest, the developer shall provide the
purchaser with the then-current public report for the time-share plan being purchased and that the
purchaser shall have until midnight of the seventh calendar day following receipt of the public report to
cancel the purchase of the time-share interest.
(c) If a purchaser is unable to obtain a confirmed reservation for a specific accommodation
and time period requested, the developer or other person who offers the short-term product shall
attempt to provide the purchaser with a substantially similar alternative to the reservation requested. If
the developer or other person who offers the short-term product is unable to provide the reservation
requested or an acceptable alternative during the initial term of the contract, the purchaser may request
and be granted an extension of the contract for a period of 12 months.
(d) The contract for the purchase of a short-term product shall include the date of the contract and shall
contain, in immediate proximity to the space reserved for the signature of the purchaser, a conspicuous
statement as follows: “YOU HAVE THE RIGHT TO CANCEL THIS CONTRACT AT ANY TIME PRIOR TO
MIDNIGHT OF THE SEVENTH
(7TH)
(or later) CALENDAR DAY AFTER THE DATE OF THIS CONTRACT AND RECEIVE A FULL REFUND. YOU MAY
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EXERCISE YOUR RIGHT TO CANCEL BY SENDING A FACSIMILE, OR BY DEPOSIT, FIRST-CLASS POSTAGE
PREPAID, INTO THE UNITED STATES MAIL TO THE FOLLOWING ADDRESS:
(SPECIFIC CONTACT INFORMATION)”
(e) A purchaser of a short-term product may exercise the right of rescission by giving written notice to
the owner of the short-term product as specified in subdivision
(b), using a preprinted form provided by the developer. The developer or other person who offers the
short-term product shall cause any deposit given by a purchaser who has exercised the right to rescind
described in subdivision
(a) to be returned to the purchaser not later than the last to occur of 10 business days following receipt
of the purchaser’s written notice of rescission, or 10 business days following the date upon which any
deposit becomes good and immediately available funds.
(f) A developer or other person who offers a short-term product shall do one of the following:
(1) Place any purchase money funds received from the purchaser of a short-term product into an
independent escrow depository until the seven-day period for rescission described in subdivision
(a) has expired.
(2) Post a bond to secure the return of a purchaser’s purchase money funds in a form and in an amount
prescribed by the commissioner.
(3) Make alternative arrangements satisfactory to the commissioner to secure the owner’s obligation to
return the purchase money funds.
(g) If applicable, the developer shall disclose to the purchaser the type of alternative arrangement to be
used and, in the event of a claim, to whom the purchaser should apply for payment under the alternative
arrangement.
(h) The developer shall compensate the association for any services acquired from the association or for
any of the association’ s property used when fulfilling a short-term product in excess of services or use
of property provided to other owners.
(i) If the contract for a short-term product is negotiated primarily in Spanish, Chinese, Tagalog,
Vietnamese, or Korean, orally or in writing, the developer shall provide to the prospective purchaser
prior to the commencement of the rescission period an unexecuted translation of the contract in the
language in which the contract was negotiated. The terms of the short-term contract that is executed in
the English language shall determine the rights and obligations of the parties.
11236
(a) A receipt on the form specified herein shall be taken by or on behalf of the developer from each
person executing a reservation agreement under authority of a preliminary public report and each
person who has made a written offer to purchase or lease a time-share interest under authority of a
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preliminary, conditional, or final public report.
(b) The developer or his or her agent shall retain each receipt for a final public report for a period of
three years from the date of the receipt and shall make the receipts available for inspection by the
commissioner or his or her designated representative during regular business hours.
(c) The form approved by the commissioner for the acknowledgment of receipt of a preliminary,
conditional, or final public report shall be as follows: “RECEIPT FOR PUBLIC REPORT The Law and
Regulations of the commissioner require that you as a prospective purchaser or lessee be afforded an
opportunity to read the public report for this time-share before you execute a contract to purchase or
lease a time-share interest or before any money or other consideration toward purchase or lease of
a time-share interest is accepted from you. You must be afforded an opportunity to read the report
before a written reservation or any deposit in connection therewith is accepted from you. DO NOT SIGN
THIS RECEIPT UNTIL YOU HAVE RECEIVED A COPY OF THE REPORT AND HAVE READ IT. I have read the
commissioner’s public report on ____
(File No., Tract No., or Name). I understand the report is not a recommendation or endorsement of
the time-share, but is for information only. The date of the public report which I received and read is
____. Developer Is Required to Retain This Receipt for Three Years.
11237
(a) If a purchaser of a time-shareinterest in a time-share plan is offered the opportunity to acquire an
incidental benefit in connection with the sale of a time-share interest, the developer shall provide the
purchaser with a disclosure statement containing all of the following information:
(1) A general description of the incidental benefit, including the terms and conditions governing the use
of the incidental benefit.
(2) A statement that the continued availability of the incidental benefit is not necessary for the use and
enjoyment of the purchaser’s use of any accommodation of the time-share plan.
(3) A statement that the purchaser’s use of or participation in the incidental benefit is completely
voluntary, and payment of any fee or other cost associated with the incidental benefit is required only
upon that use or participation.
(4) A listing of the fees, if any, that the purchaser will be required to pay to use the incidental benefit.
(5) A statement that no costs of acquisition, operation, maintenance, or repair of the incidental benefit
shall be passed on to purchasers of time-share interests in the time-share plan as a common expense
of the time-share plan.
(b) A developer shall include in its initial application for registration, a description of any incidental
benefits which may be used by the developer. The developer may, but shall not be required to describe
the incidental benefits in the public report for the time-share plan.
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(c) The incidental benefit disclosure is not required to be filed with the commissioner prior to the use of
the disclosure. However, the commissioner may request and review the records of the developer to
ensure that the incidental benefit disclosure required by this section has been given to purchasers and
to ensure that the statements required to be made in the disclosure are accurate as to the operation of
each incidental benefit offered by the developer. The developer shall deliver the records to the
commissioner within 10 business days of the commissioner’s request.
11238
(a) The purchase contract entered into by any person who has made an offer to purchase a time-
share interest or interests, any incidental benefit, made on the same day or within seven calendar days
after the person attended a sales presentation for a time-share interest, or any right under an exchange
program, made on the same day or within seven calendar days after the person attended a sales
presentation for a time-share interest, shall be voidable by the purchaser, without penalty, within seven
calendar days, or a longer period as provided in the contract, after the receipt of the public report or the
execution of the purchase contract, whichever is later.
(1) The purchase contract shall provide notice of the seven-day cancellation period, together with the
name and mailing address to which any notice of cancellation shall be delivered.
(2) Notice of cancellation shall be deemed timely if given not later than midnight of the seventh calendar
day.
(b) A person who has made an offer to purchase a time-share interest, incidental benefit, or rights under
an exchange program as described above may exercise the right of cancellation granted by this section
by giving written notification of the notice to cancel to the developer at the place of business designated
by the developer in the purchase contract.
(c) If the notice of cancellation is by United States mail, a rebuttable presumption shall exist that notice
was given on the date that it is postmarked. If the notice is sent by facsimile, it shall be considered given
on the date of a confirmed transmission. If the notice is by means of a writing sent other than by United
States mail or telegraph, it shall be considered as given at the time of delivery at the place of business
designated by the developer. Exercising the rescission rights of the time-share interest shall also
automatically rescind any agreement for the purchase of an incidental benefit or an enrollment into an
exchange program where the agreements were entered into in conjunction with the purchase of
the time-share interest.
(d) Each developer shall utilize and furnish each purchaser with a fully completed and executed copy of
a contract pertaining to the sale of a time-share interest, which contract shall include the following
information:
(1) The actual date the contract is executed by each party.
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(2) The names and addresses of the developer and time-share plan.
(3) The initial purchase price and any additional charges to which the purchaser may be subject to in
connection with the purchase of the time-share interest, including, but not limited to, financing, or other
amounts that will be collected from the purchaser on or before closing, such as the current year’s
annual assessment for common expenses.
(4) The estimated date of completion of construction of each accommodation promised to be completed
which is not completed at the time the contract is executed.
(5) A brief description of the nature and duration of the time-share interest being sold, including whether
any interest in real property is being conveyed.
(6) The specific number of years of the term of the time-share plan.
(7) Immediately prior to the space reserved in the contract for the signature of the purchaser, the
developer shall disclose, in conspicuous type, substantially the following notice of cancellation: You may
cancel this contract without any penalty or obligation within seven calendar days of receipt of the public
report or after the date you sign this contract, whichever date is later. If you decide to cancel this
contract, you must notify the developer in writing of your intent to cancel. Your notice of cancellation
shall be effective upon the date sent and shall be sent to
(name of developer) at
(address of developer). Your notice of cancellation may also be sent by facsimile to
(facsimile number of the developer) or by hand-delivery. Any attempt to obtain a waiver of your
cancellation right is void and of no effect.
(8) The purchase contract for an interest in a single site or specific time-share interest multisite time-
share plan without an accommodation in this state shall include the following additional disclosure in
conspicuous type: The accommodations of this time-share plan are located outside of California. As
such, the management
(including all matters relating to the association, the association budget, and any management contract)
of this time-share plan is not governed by California law, but by the applicable law, if any, of the
jurisdiction in which the accommodations are located as stated in the public report. You should review
the governing documents related to the association, the association’s budget, and the management of
the time-share plan.
(e) If rescission is sought and granted for a violation of this section, the court may also award reasonable
attorneys’ fees and costs to the prevailing purchaser.
11239
(a) To inform a purchaser of his or her right of cancellation under Section 11238, the developer shall
attach to the face page of every copy of a public report given to a prospective purchaser, the cancellation
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notice set forth in subdivision
(b) thereof printed in conspicuous type.
(b) The form and content of the notice shall be as follows: NOTICE OF CANCELLATION RIGHTS You may
cancel the purchase of the time-share interest(s) in the time-share plan identified below without any
penalty or obligation and are legally entitled to the return of all money and other considerations that you
have given toward the purchase. If you decide to cancel your purchase, you must notify the developer in
writing of your intent to cancel within seven calendar days of receipt of the public report or the date you
sign the purchase contract, whichever date is later. Your notice of cancellation shall be effective upon
the date sent and shall be sent to the developer at the address or facsimile number provided in your
purchase contract. Any attempt to obtain a waiver of your cancellation right is void and of no effect.
(c) Each notice shall also contain the following form. The form shall have all developer-related
information completed by the developer and may be used by a purchaser to cancel the sale of the
time- share interest:
(Name of Developer)
(Address of Developer)
(Facsimile Number of Developer)
(Name of Time-share Plan)
(DRE Registration File Number) RE: ELECTION TO CANCEL THE SALE OF A TIME-SHARE INTEREST(S) I
hereby elect to cancel my purchase of the time-share interest(s) in the above-name time-share plan.
_______________________________
(Date) _______________________________ ______________________________
(Signature)
(Print Name) _______________________________ ______________________________
(Signature)
(Print Name)
11240
An estimated operating budget for the time-shareplan shall be filed with the commissioner along with
the other information required to be registered pursuant to this chapter, and shall contain the following
information:
(a) The estimated annual expenses of the time-share plan along with the estimated revenue of the
association from all sources, including the amounts collectible from purchasers as assessments. The
estimated payments by the purchaser for assessments shall also be stated in the estimated amounts
for the times when they will be due. Expenses shall be shown in a manner that enables the purchaser to
calculate the annual expenses associated with the time-share interest being purchased. Expenses that
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are personal to purchasers that are not uniformly incurred by all purchasers or that are not provided for
or contemplated by the time-share plan documents may be excluded from this estimate.
(b)
(1) The estimated items of expenses of the time-share plan and the association, except as excluded
under subdivision
(a), including, but not limited to, if applicable, the following items, that shall be stated either as
association expenses collectible by assessments or as expenses of the purchaser payable to persons
other than the association:
(2) Expenses for the association:
(A) Administration of the association.
(B) Management fees.
(C) Maintenance.
(D) Rent for accommodations.
(E) Taxes upon time-share property.
(F) Taxes upon leased areas.
(G) Insurance.
(H) Security provisions.
(I) Other expenses.
(J) Operating capital.
(K) Equitable apportionment of expenses between time-share and non-time-share uses of the common
area, if applicable.
(L) Reserves for deferred maintenance and reserves for capital expenditures. All reserves for any
accommodations and common areas of a time-share plan located in this state shall be based upon the
estimated life and replacement cost of accommodations and common elements of the time-share plan.
For any accommodations and common elements of a time-share plan located outside of this state, the
developer shall disclose the amount of reserves for deferred maintenance and capital expenditures
required by the law of the situs state, if applicable, and maintained for those accommodations and
common elements, which amount of reserves shall be based on the estimated life and replacement cost
of each reserve item. The developer or the association shall include in the budget a reasonable reserve
accumulation plan. A plan that
(i) provides for reserves to be funded within five years at a level of 50 percent of the amount specified in
the reserve study as fully funded, and
(ii) requires those reserves collected in any given year to equal or exceed the amount of reserve
expenditures estimated for that year shall be deemed to be a reasonable reserve accumulation plan.
The funding of reserves may be based on collection of reserve amounts in conjunction with annual
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assessments, or on some alternative mechanism, including, but not limited to, a bond, letter of credit, or
similar mechanism. Collection of required reserve amounts solely by one or more special assessments
is not reasonable. If control of the association is in owners other than the developer, and such owners
vote not to maintain reserves or to maintain reserves at less than 50 percent, the failure to maintain the
required level of reserves shall not be cause for denying the developer a public report.
(c) The estimated amounts shall be stated for a period of at least 12 months and may distinguish
between the period prior to the time that purchasers elect a majority of the board of administration and
the period after that date.
(d) The budget of a phase time-share plan shall contain a note identifying the number of time-
share interests covered by the budget, indicating the number of time-share interests, if any, estimated to
be declared as part of the time-share plan during that calendar year, and projecting the common
expenses for the time-share plan based upon the number of time-share interests estimated to be
declared as part of the time-share plan during that calendar year.
(e) For single site time-share plans and component sites of a multisite time-share plan located outside
of the state, the budget shall include the subject matter set forth in subdivisions
(a) to
(d), inclusive. The budget shall be in compliance with the applicable laws of the state or jurisdiction in
which the time-share property or component site is located, and if there is a conflict between the
affirmative standards set forth in the laws of the situs state and the requirements set forth in this
section, the law of the situs state shall control. If the budget provides for the matters contained in
subdivisions
(a) to
(d), inclusive, the budget shall be deemed to be in compliance with the requirements of this section, and
the developer shall not be required to make revisions in order to comply with this section.
(f) The budget shall include a certification subscribed and sworn by an expert in the preparation of time-
share plan budgets, who may be
(1) an independent public accountant,
(2) a certified public accountant, who is an employee of the developer, or
(3) at the discretion of the commissioner, another qualified individual or entity. If the budget certification
is prepared by a certified public accountant who is an employee of the developer who is not the chief
financial officer, the certification shall also be signed on behalf of the developer by an appropriate
officer, if the developer is a corporation, or the managing member, if the developer is a limited liability
company. The certification concerning the adequacy of the budget shall be in the following form: On
behalf of the developer of the captioned time-share plan, I/my firm has reviewed or prepared the budget
containing projections of income and expenses for time-share operation. My/our experience in this field
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includes: I/we have reviewed the budget and investigated the facts set forth in the budget and the facts
underlying it with due diligence in order to form a basis for this certification. I/we certify that the
projections in the budget appear reasonable and adequate based on present prices
(adjusted to reflect continued inflation and present levels of consumption for comparable units similarly
situated) or, for an existing project, based on historical data for the project. I/we certify that the budget:
(1) Sets forth in detail the terms of the transaction as it relates to the budget and is complete, current,
and accurate.
(2) Affords potential investors, purchasers, and participants an adequate basis upon which to found their
judgment.
(3) Does not omit any material fact.
(4) Does not contain any untrue statement of a material fact.
(5) Does not contain any fraud, deception, concealment, or suppression.
(6) Does not contain any promise or representation as to the future which is beyond reasonable
expectation or unwarranted by existing circumstances.
(7) Does not contain any representation or statement which is false, where I/we:
(A) Knew the truth.
(B) With reasonable effort could have known the truth.
(C) Made no reasonable effort to ascertain the truth.
(D) Did not have knowledge concerning the representation or statement made. I/we understand that a
copy of this certification is intended to be incorporated into the public report so that prospective
purchasers may rely on it. This certification is made under the penalty of perjury for the benefit of all
persons to whom this offer is made. We understand that violations are subject to the civil and criminal
penalties of the laws of California. The certification shall be dated within 90 days prior to the date of the
submission of the budget to the commissioner. The expert’s certification shall be based on experience in
the management of hotel, resort, or time-share properties and disclose the approximate number of
properties managed and length of time managed, together with other relevant real estate experience,
qualifications, and licenses.
(g) Any budget that is not certified by an independent certified public accountant or an employee of the
developer who is licensed as a certified public accountant may be reviewed by the commissioner to
confirm the accuracy of the certification.
(h) The certified budget for the time-share plan shall be prepared and submitted by the developer to the
commissioner annually for as long as the registration is in effect. If the budget is increased more than
20 percent in any year, the developer shall submit to the commissioner, along with the increased budget,
evidence that the requirements of paragraph
(5) of subdivision
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(a) of Section 11265 have been met. The budget shall be submitted at least 15 days prior to the first day
of the period that it covers. Upon the submission of each annual budget, the exhibit to the public report
specified in paragraph
(8) of subdivision
(a) of, and paragraph
(16) of subdivision
(c) of, Section 11234 shall be updated. The updating of the exhibit shall not be considered to constitute
an amendment of the public report.
(i) The audited financial statements of the association prepared pursuant to paragraph
(2) of subdivision
(b) of Section 11272 shall be delivered to the commissioner upon request.
(j) At the time an application is submitted for renewal of the public report or any amendment of the
public report that affects the budget for the time-share plan, the developer shall submit with the
application a copy of the most recent audited financial statement for the time-share plan, along with a
certified copy of the budget reflecting the amendment or renewal. If the commissioner, upon reasonable
comparison of the budget and the prior year’s audited financial statements, determines that the budget
is deficient, the commissioner may subject the budget to a substantive review.
11241
(a) The developer is obligated for the expenses associated with unsold inventory held by the developer.
The obligation can be fulfilled in either of the following ways:
(1) The developer shall pay the full maintenance fee for each of the interests owned by the developer.
(2) The developer shall enter into a subsidy agreement with the association to subsidize the association
budget by covering any shortfall from expenses incurred and assessments collected from other owners.
(b) To assure the fulfillment of the obligations of the developer of a time-share plan to either pay
assessments as an owner of time-share interests in the time-share plan or to pay a subsidy, the
commissioner shall require that the developer furnish a surety bond, cash deposit, letter of credit, or
other alternate assurance enforceable by the association and acceptable to the commissioner and that
assurance shall be in the amount required by subdivision
(c) and shall be in compliance with either paragraph
(1) or
(2) of subdivision
(c).
(c) The amount of the assurance shall be equal to the lesser of 50 percent of the anticipated cost of
operation and maintenance of the time-share plan, including the establishment of reserves for
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replacement and major repair, for an operational period of one year or 100 percent of the assessments
attributed to the total amount of the total unsold time-share interests owned by the developer and
registered pursuant to this chapter. The security shall be delivered to a neutral escrow depository, or to
the trustee if title to the time-share property has been delivered to the trustee, along with instructions
signed by the developer for the benefit of the association which shall provide as follows:
(1) Where the developer pays full maintenance fees on unsold inventory the security shall remain
available to pay any assessments for which the developer is liable and delinquent until the depository or
trustee has received both of the following:
(A) Written notice, from the developer that sales of 80 percent of the time-share interest in the time-
share plan have been closed.
(B) Written notice from the association that the developer is not delinquent in the payment of
assessments for which it is obligated.
(2) Where the developer subsidizes the association in lieu of paying full maintenance fees, the developer
shall enter into a subsidy agreement in accordance with the provisions of Section 11242.
(d) If there is a dispute between the developer and the association with respect to the question of
satisfaction of the conditions for exoneration or release of the security, the issue shall, at the request of
either party, be submitted to arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The fee payable to the American Arbitration Association to initiate the
arbitration shall be remitted by the developer. The cost of arbitration shall ultimately be borne as
determined by the arbitrator under these rules.
11242
(a) In any time-shareplan in which the developer undertakes to subsidize the cost of operating and
maintaining the time-share plan, the developer shall do all of the following:
(1) Enter into a contract with the association that specifies in detail the obligations of the developer and
the methods to be used in valuing the goods and services furnished under the time-share plan. The
department will not approve a subsidization program unless provisions are made for the accumulation
of reserves for replacement and major maintenance of the time-share property in accordance with
accepted property management practices and the transfer of the reserve fund to the association on
termination of the program.
(2) Furnish the association with an executed copy of the subsidization contract within 10 days after
closing of escrow of the first sale or lease of a time-share interest.
(3) Furnish the assurance required by Section 11241.
(b) The assurance specified in paragraph
(3) of subdivision
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(a) shall be delivered to the trustee or an escrow depository acceptable to the department along with an
executed copy of the subsidization contract and instructions to the escrow signed by the developer and
on behalf of the association. The instructions shall provide for both of the following:
(1) The escrow agent shall not release or exonerate the security device until it has received written
notice, from the association that the developer has faithfully performed all of his or her obligations
under the subsidization contract.
(2) If there is a dispute between the developer and the association with respect to the questions of
satisfaction of the conditions for exoneration or release of the security, the issue or issues shall, at the
request of either party, be submitted to arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association.
(c) The fee payable to the American Arbitration Association to initiate arbitration shall be submitted by
the developer. The costs of arbitration shall be borne by the party as determined by the arbitrator
pursuant to the rules specified in paragraph
(2) of subdivision
(b).
11243
The developer shall comply with the following escrow requirements:
(a) A developer of a time-share plan shall deposit into an escrow account in an acceptable escrow
depository 100 percent of all funds that are received during the purchaser’s rescission period. An
acceptable escrow depository includes, when qualified to do business in this state, escrow agents
licensed by the Commissioner of Corporations, banks, trust companies, savings and loan associations,
title insurers, and underwritten title companies. The deposit of these funds shall be evidenced by an
executed escrow agreement between the escrow agent and the developer, that shall include provisions
that state the following:
(1) Funds may be disbursed to the developer by the escrow agent from the escrow account only after
expiration of the purchaser’s rescission period and in accordance with the purchase contract, subject to
subdivision
(b).
(2) If a prospective purchaser properly cancels the purchase contract pursuant to its terms, the funds
shall be paid to the prospective purchaser or paid to the developer if the prospective purchaser’s funds
have been previously refunded by the developer.
(b) If a developer contracts to sell a time-share interest and the construction of any property in which
the time-share interest is located has not been completed, the developer, upon expiration of the
rescission period, shall continue to maintain in an escrow account all funds received by or on behalf of
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the developer from the prospective purchaser under his or her purchase contract. The commissioner
shall establish, by regulation, the types of documentation which shall be required for evidence of
completion, including, but not limited to, a certificate of occupancy, a certificate of substantial
completion, or an inspection by the State Fire Marshal designee or an equivalent public safety inspection
agency in the applicable jurisdiction. Unless the developer submits financial assurances, in accordance
with subdivision
(c), funds shall not be released from escrow until a certificate of occupancy, or its equivalent, has been
obtained and the rescission period has passed, and the time-share interest can be transferred free and
clear of blanket encumbrances, including mechanics’ liens. Funds to be released from escrow shall be
released as follows:
(1) If a prospective purchaser properly cancels the purchase contract pursuant to its terms, the funds
shall be paid to the prospective purchaser or paid to the developer if the prospective purchaser’s funds
have been previously refunded by the developer.
(2) If a prospective purchaser defaults in the performance of the prospective purchaser’s obligations
under the purchase contract, the funds shall be paid to the developer.
(3) If the funds of a prospective purchaser have not been previously disbursed in accordance with the
provisions of this subdivision, they may be disbursed to the developer by the escrow agent upon the
issuance of acceptable evidence of completion of construction.
(c) In lieu of the provisions in subdivisions
(a) and
(b), the commissioner may accept from the developer a surety bond, escrow bond, irrevocable letter of
credit, or other financial assurance or arrangement acceptable to the commissioner. Any acceptable
financial assurance shall be in an amount equal to or in excess of the lesser of
(1) the funds that would otherwise be placed in escrow, or
(2) in an amount equal to the cost to complete the incomplete property in which the time-share interest
is located. However, in no event shall the amount be less than the amount of funds that would otherwise
be placed in escrow pursuant to paragraph
(1) of subdivision
(a).
(d) The developer shall provide escrow account information to the commissioner and shall execute in
writing an authorization consenting to an audit or examination of the account by the commissioner on
forms provided by the commissioner. The developer shall comply with the reconciliation and records
requirements established by regulation by the commissioner. The developer shall make documents
related to the escrow account or escrow obligation available to the commissioner upon the department’s
request. The escrow agent shall maintain any disputed funds in the escrow account until either of the
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following occurs:
(1) Receipt of written direction agreed to by signature of all parties.
(2) Deposit of the funds with a court of competent jurisdiction in which a civil action regarding the funds
has been filed.
11244
(a) Excluding any encumbrance placed against the purchaser’ s time-share interest securing the
purchaser’s payment of purchase money financing for the purchase, the developer shall not be entitled
to the release of any funds escrowed under Section 11243 with respect to each time-share interest and
any other property or rights to property appurtenant to the time-share interest, including any amenities
represented to the purchaser as being part of the time-share plan, until the developer has provided
satisfactory evidence to the commissioner of one of the following:
(1) The time-share interest, including, but not limited to, a time-share interest in any component sites of
a nonspecific time-share interest multisite time-share plan, together with any other property or rights to
property appurtenant to the time-share interest, including any amenities represented to the purchaser
as being part of the time-share plan, are free and clear of any of the claims of the developer, any owner
of the underlying fee, a mortgagee, judgment creditor, or other lienor, or any other person having an
interest in or lien or encumbrance against the time-share interest or appurtenant property or property
rights.
(2) The developer, any owner of the underlying fee, a mortgagee, judgment creditor, or other lienor, or
any other person having an interest in or lien or encumbrance against the time-share interest or
appurtenant property or property rights, including any amenities represented to the purchaser as being
part of the time-share plan, has recorded a subordination and notice to creditors document in the
appropriate public records of the jurisdiction in which the time-share interest is located. The
subordination document shall expressly and effectively provide that the interest holder’s right, lien, or
encumbrance shall not adversely affect, and shall be subordinate to, the rights of the owners of
the time-share interests in the time-share plan regardless of the date of purchase, from and after the
effective date of the subordination document.
(3) The developer, any owner of the underlying fee, a mortgagee, judgment creditor, or other lienor, or
any other person having an interest in or lien or encumbrance against the time-share interest or
appurtenant property or property rights, including any amenities represented to the purchaser as being
part of the time-share plan, has transferred the subject accommodations, amenities, or all use rights in
the amenities to a nonprofit organization or owners’ association to be held for the use and benefit of the
owners of the time-share plan, which shall act as a fiduciary to the purchasers, the developer has
transferred control of the entity to the owners or does not exercise its voting rights in the entity with
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respect to the subject accommodations or amenities. Prior to the transfer, any lien or other
encumbrance against the accommodation or facility shall be made subject to a subordination and notice
to creditors’ instrument pursuant to paragraph
(2).
(4) Alternative arrangements have been made which are adequate to protect the rights of the
purchasers of the time-share interests and approved by the commissioner.
(b) Nothing in this section shall prevent a developer from accessing any escrow funds if the developer
has complied with subdivision
(c) of Section 11243.
(c) The developer shall notify the commissioner of the extent to which an accommodation may become
subject to a tax or other lien arising out of claims against other purchasers in the same time-share plan.
The commissioner may require the developer to notify a prospective purchaser of any such potential tax
or lien that would materially and adversely affect the prospective purchaser.
11245
(a) No person subject to this chapter shall do any of the following:
(1) Make any material misrepresentation that is false or misleading in connection with any
advertisement or promotion of a time-share plan.
(2) Make a prediction of any increases in the resale price or resale value of the time-share interest.
(3) Materially misrepresent the size, nature, extent, qualities, or characteristics of the offered time-
share plan.
(4) Materially misrepresent the conditions under which a purchaser may exchange the right to use
accommodations in one location for the right to use accommodations in another location.
(5) Materially misrepresent the current or future availability of a resale or rental program offered by or
on behalf of the developer.
(6) Materially misrepresent the nature or extent of any incidental benefit.
(7) Fail to deliver any item offered in connection with a promotion to a prospective purchaser upon the
conclusion of the sales presentation, or fail to deliver any item offered in connection with a promotion to
a prospective purchaser, upon request, reasonably approximate to the conclusion of the length
of time for the sales presentation that was previously represented to the prospective purchaser.
(8) Fail to disclose, in a manner that meets the requirements of Section 17537.1 or 17537.2 of the
Business and Professions Code, that a certificate, coupon, or raincheck redeemable for fulfillment for
goods or services will be provided in connection with a promotion for the purchase of a time-
share interest, if that is the case.
(9) State that the purchase of a time-share interest constitutes a financial investment.
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(10) Fail to clearly and conspicuously disclose, prior to the execution of any purchase contract, the
annual maintenance and association dues or any separately billed taxes, when applicable.
(11) Fail to clearly disclose in writing any automatic charging or billing procedure, and fail thereafter to
obtain the express written authorization from the prospective purchaser for any purchase, subscription,
or enrollment that results in that automatic charging or billing of initial or periodic amounts to the
prospective purchaser.
(12) If the contract for a time-share interest is negotiated primarily in Spanish, Chinese, Tagalog,
Vietnamese, or Korean, orally or in writing, and the developer fails to provide to the prospective
purchaser prior to the commencement of the rescission period an unexecuted translation of the contract
in the language in which the contract was negotiated.
(13) Fail to inform, verbally or in writing, any prospective purchaser that he or she can take as
much time as he or she requires in order to read the public report, and any and all other documents
necessary to consummate a sale before leaving the premises or signing a contract, and not allowing,
upon request, the prospective purchaser the time and opportunity to do so. If the prospective purchaser
requests that he or she be able to return the next calendar day to complete the review of the documents
before signing, the developer shall accommodate such a request, and the return visit shall not disqualify
the prospective purchaser from receiving any price reduction or other incentive for purchasing on the
day of the scheduled sales presentation. Further, it shall not be fraudulent or misleading for a developer
to honor the request even if presented as an incentive only available on the day of the offer.
(14) Inform prospective purchasers that they are finalists in winning an item offered in connection with a
promotion or have already won a specific prize, unless it is true.
(15) Offer as a promotional incentive any travel certificate or coupon redeemable for transportation,
accommodations, or other travel-related service that does not allow the recipient to activate or redeem
the incentive without incurring any additional telephone expenses charged by or on behalf of the
developer other than the usual toll costs imposed by the prospective purchaser’s telephone service.
(16) Offer as a promotional incentive any travel certificate or coupon redeemable for fixed air
transportation or hotel accommodations or other travel-related service that entitles the prospective
purchaser to a trip of a specified duration unless the offeror states at the time of the offer that there are
terms or conditions that must be followed in order to utilize the incentive and that the details of the
terms will be sent to the consumer in writing in time to be received by the consumer prior to leaving his
or her house to attend the scheduled sales presentation. The writing shall include the approximate
times of the air or sea transportation’ s departure and return, if applicable, and all other material
conditions, including any limitations as to the dates or times available for use of the incentive.
(17) Misrepresent or fail to disclose that a prospective purchaser is required to attend a sales
presentation to obtain a prize or promotional item, if attendance is a requirement of the promotion.
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(18) Fail to inform any prospective purchaser who contacts the developer with a request to cancel a
purchase within the rescission period provided by this chapter all of the procedures necessary to
effectively cancel the purchase.
(19) Fail to cancel a purchase upon the receipt of a valid timely written notice of rescission. No person
may obtain from the person a waiver or cancellation of the rescission.
(20) Fail to provide any refund of moneys, within the required timeframe, due to the prospective
purchaser upon receipt of a valid timely written notice of rescission.
(21) Fail to provide a mechanism for an equitable apportionment of expenses between the time-
share owner’s association and any commercial operation on the property not operated by the time-
share owner’s association.
(b) For any time-share plan in which the managing entity is an affiliate of the developer, neither the
developer nor the managing entity shall, during any applicable priority reservation period, hold out for
rental to the public on a given day, developer owned or controlled time-share periods in a number
greater than the total number of time-share periods owned or controlled by the developer in a particular
season, multiplied by a fraction wherein the numerator is the number of time-share periods owned or
controlled by the developer in that particular season, and the denominator is the total number or time-
share periods in that particular season. For example, if the developer owns or controls 1,000 time-
share periods in a particular season, out of a total of 4,000 time-share periods available during that
season, then the developer may not hold out for rental to the public during any applicable priority
reservation period, more than 250 time-share periods on a given day during that season
(1,000 X 1,000/4,000=250). The number of time-share interests permitted to be rented under this
subdivision shall be in addition to any time-share interests that the developer may have the right to rent
or use by virtue of having acquired those rights from another owner. The developer or managing entity
may, at any time, rent any inventory transferred to the developer or managing entity by another owner in
exchange for hotel accommodations, future use rights, or other considerations. For any use or rental by
a developer of time-share interests owned or controlled by the developer, the developer shall reimburse
the association for any increased expenses for housekeeping services that exceed the amount allocated
in the assessment for maintenance for the use or rental.
11246
With each application for an amendment or renewal of a public report, and with the initial submittal of
an application for a time-share plan in which sales have occurred prior to obtaining a California public
report, the developer shall submit to the commissioner a certification by an independent third party
acceptable to the commissioner and dated not more than three months prior to the submittal of the
application, stating that the inventory control system, described in paragraph
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(6) of subdivision
(c) of Section 11226 functions in accordance with the description set forth in that section. The
certification shall be based on a random sampling of transactions performed within the six months
preceding the date of the application. Inventory control systems that cover time-share estates for which
the developer offers, and the title insurance company agrees to provide title insurance, shall not require
certification. Independent title insurance companies licensed to do business as such in this state and
independent certified public accountants shall be deemed acceptable third parties in accordance with
this section. Article 3. Time-Share Plan Requirements
11250
A time-shareplan may be created in any accommodation unless otherwise prohibited. All time-
share plans shall maintain a one-to-one purchaser to accommodation ratio, which means the ratio of
the number of purchasers eligible to use the accommodations of a time-share plan on a given night to
the number of accommodations available for use within the plan on that night, such that the total
number of purchasers eligible to use the accommodations of the time-share plan during a given
calendar year never exceeds the total number of accommodations available for use in the time-
share plan during that year. For purposes of the calculation under this section, each purchaser must be
counted at least once, and no individual accommodation may be counted more than 365 times per
calendar year or more than 366 times per leap year. A purchaser who is delinquent in the payment
of time-share plan assessments shall continue to be considered eligible to use the accommodations of
the time-share plan for purposes of calculating the one-to-one purchaser to accommodation ratio.
11251
(a) The developer of a single site time-shareplan and for the component sites of a multisite time-
share plan located in the state, shall cause to be recorded prior to the closing of the first sale of a time-
share interest in each accommodation in the time-share plan, covenants dedicating the
accommodations to the time-share plan and incorporating all covenants of the grantor or lessor of the
time-share interests, and the following provisions:
(1) Organization of an association of time-share interest owners.
(2) A description of the real property for the common ownership or use of the time-share interest
owners. Where the time-share plan is a personal property time-share plan, a description of the personal
property for common use of the time-share interest owners.
(3) A description of the method for calculating and collecting regular and special assessments
from time-share interest owners to defray expenses of the time-share property and for related
purposes.
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(4) A description of the method for terminating the membership and selling the interest of a time-
share interest owner for failure to pay regular or special assessments.
(5) A description of the method for the disciplining of time-share interest owners for the late payment of
assessments.
(6) Provisions requiring comprehensive general liability insurance and adequate property and casualty
insurance covering the time-share property.
(7) Restrictions upon partition of an accommodation of the time-share plan.
(8) A description of the method for amending the covenants affecting the time-share plan.
(9) Where applicable, a description of the method relating to the annexation or de-annexation of
additional accommodations, phases, or properties to the time-share plan.
(10) A description of the procedures in the event of condemnation, destruction, or extensive damage to
an accommodation, including provisions for the disposition of insurance proceeds or damages payable
on account of damage or condemnation.
(11) A method of the procedures on regular termination of the time-share plan.
(12) Where applicable, allocation of the cost of maintenance and operation between different elements
or mixed uses within the portions of a project or relating to reciprocal rights and obligations between
the time-share project and other property.
(13) A description of the method for entry into accommodations of the time-share plan under authority
granted by the association for the purpose of cleaning, maid service, maintenance, and repair including
emergency repairs and for the purpose of abating a nuisance or a known or suspected dangerous or
unlawful activity.
(14) Delineate all reserved rights of the developer.
(15) For projects located within the state, the covenants shall, insofar as reasonably possible, satisfy the
requirements of Section 1468 or Sections 1469 and 1470 of the Civil Code for real property located in
this state.
(b) For single site time-share plans and component sites of a multisite time-share plan located outside
of the state, the developer shall cause to be recorded a declaration dedicating the accommodations to
the time-share plan and incorporating all covenants of the grantor or lessor of the time-share interests.
The declaration shall include the subject matter set forth in paragraphs
(1) to
(14), inclusive, of subdivision
(a). If there is no provision for the recording of a declaration in the state or jurisdiction in which the time-
share property or component site is located, alternatively, the developer shall establish that the
declaration is otherwise enforceable in the state or jurisdiction in which the time-share property or
component site is located. The declaration shall be in compliance with the applicable laws of the state or
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jurisdiction in which the time-share property or component site is located, and if a conflict exists
between laws of the situs state and the requirements set forth in this section, the law of the situs state
shall control. If the declaration provides for the matters contained in paragraphs
(1) to
(14), inclusive, of subdivision
(a), the declaration shall be deemed to be in compliance with the requirements of subdivision
(a) and this subdivision and the developer shall not be required to make revisions in order to comply
with subdivision
(a) and this subdivision.
(c) The developer of a time-share plan located within the state shall make provisions in the time-
share instruments for all of the following:
(1) A description of the services to be made available to time-share interest owners under the time-
share plan.
(2) A description, to be contained in the declaration or the bylaws of the association, of the procedures
regarding transfer to the association of control over the time-share property and services comprising
the time-share plan.
(3) A description of the method for preparation and availability to time-share interest owners of budgets,
financial statements, and other information related to the time-share plan.
(4) A description of the methods for employing and for terminating the employment of a managing entity
for the time-share plan.
(5) A description of the method for adoption of standards and rules of conduct for the use of
accommodations by time-share interest owners.
(6) A description of the method for establishment of the rights of time-share interest owners to the use
of an accommodation according to schedule or under a first-reserved, first-served priority system.
(7) A description of the method for compensating use periods or monetary compensation for an owner
of a time-share estate if an accommodation cannot be made available for the period of use to which the
owner is entitled by schedule or under a reservation system because of an error by the association or
managing entity.
(8) A description of the method for the use of accommodations for transient accommodations or other
income-producing purpose during periods of nonuse by time-share interest owners.
(9) A description of the method for the inspection of the books and records of the association by time-
share interest owners.
(10) A description of the method for collective decisionmaking and the undertaking of action by or in the
name of the association including, where applicable, representation of time-share accommodations in
an association for the time-share in which the accommodations are located.
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(d) For single site time-share plans and component sites of a multisite time-share plan located outside
of the state, the developer shall cause to be included in the time-share instrument the subject matter set
forth in subdivision
(c). The time-share instruments shall be in compliance with the applicable laws of the state or
jurisdiction in which the time-share property or component site is located, and if there is a conflict
between laws of the situs state and the requirements set forth in this section, the law of the situs state
shall control. If the time-share instruments provide for the matters contained in subdivision
(c), the time-share instruments shall be deemed to be in compliance with the requirements of
subdivision
(c) and this subdivision and the developer shall not be required to make revisions in order to comply
with subdivision
(c) and this subdivision.
11252
In a time-shareplan offering time-shareuse interests, the developer shall not encumber the
accommodations of the time-share plan in a manner that could materially and adversely affect the use
rights of the purchasers of the accommodations without the written assent of not less than 51 percent
of the time-share interest owners other than the developer. This section shall not prevent the developer
from encumbering the purchaser’s use rights so long as the developer has sufficient protection as
permitted by Section 11244.
11253
For single site time-shareplans and component sites of multisite time-share plans located in this state,
the time-share instrument shall require that the following insurance be at all times maintained in force
to protect time-share interest owners in the time-share plan:
(a) Insurance against property damage as a result of fire and other hazards commonly insured against,
covering all real and personal property comprising the time-share plan in an amount not less than 80
percent of the full replacement value of the time-share property.
(1) In a time-share use offering, the trustee shall be a named coinsured, and if for any reason, title to the
accommodation is not held in trust, the association shall be named as a coinsured as the agent for each
of the time-share interest owners.
(2) In a time-share estate offering, the association shall be named as a coinsured if it has title to the
property or as a coinsured as agent for each of the time-share interests owners if title is held by the
owners as tenants in common.
(3) If, after control of the governing body of the association has passed to the owners other than the
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developer, and the association amends the time-share instrument to reduce the percentage below 80
percent, the failure of the association to maintain coverage at 80 percent of replacement value shall not
be grounds for denial of a public report.
(b) Liability insurance against death, bodily injury, and property damage arising out of or in connection
with the use, ownership, or maintenance of the accommodations of the time-share plan.
(1) The amounts of the insurance shall be determined by the association, but shall not be less than five
hundred thousand dollars
($500,000) to one million dollars
($1,000,000) for personal injury and one hundred thousand dollars
($100,000) for property damage.
(2) The liability insurance policy shall provide for all of the following:
(A) All time-share interest owners as a class are named as additional insureds in a policy issued to the
association.
(B) The waiver by the insurer of its right to subrogation under the policy against any time-share interest
owner or member of his or her household.
(C) No act or omission by a time-share interest owner, unless acting within the scope of his or her
authority on behalf of the association, shall void the policy or operate as a condition to recovery under
the policy by any other person.
11254
(a) In a time-shareplan in which the fee or a long-term leasehold interest in all or some of the
accommodations and in appurtenant real and personal property is to be transferred to the association
or to a corporate trustee under a trust agreement, the conveyance shall be made prior to the closing of
the escrow for the first sale of a time-share interest in the accommodation.
(b) The developer may reserve easements in the real property conveyed for purposes reasonably related
to the conduct of commercial activities in the time-share property, if the developer covenants to use the
easements in a manner that will minimize any adverse impact on the use and enjoyment of the
accommodation by any time-share interest owner occupying it.
11255
(a) The department shall require that each of the accommodations in a time-share plan offering time-
share use interests be conveyed to a trustee or an association acceptable to the commissioner prior to
the closing of the escrow for the first sale of a time-share use interest that entitles the purchaser to
occupy the accommodation in question.
(b) If the accommodation in a time-share plan offering time-share use interests that is free and clear of
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blanket encumbrances, other than a lien of current real property taxes, is conveyed to a trustee or an
association, the trust or association instruments shall include, but not be limited to, all of the following:
(1) Transfer of title to the accommodations to the trustee or association.
(2) If the time-share use interests are conveyed to a trust, the association as a party to the trust or an
express third-party beneficiary of the trust.
(3) Notice to the department of the intention of the trustee to resign, if applicable.
(4) Continuance of the trustee in that capacity until a successor trustee acceptable to the department
assumes the position, if applicable.
(5) Prohibition against any amendments of the trust or association instruments adversely affecting the
interests or rights of time-share interest owners without the prior approval of the association.
(6) Instructions for the distribution of condemnation or insurance proceeds by the trustee or the
association.
(c) The department may require that each of the accommodations in a time-share plan offering time-
share estate interests that is subject to a blanket encumbrance be conveyed to a trustee acceptable to
the department prior to the closing of the escrow for the first sale of a time-share estate which entitles
the purchaser to occupy the accommodation in question.
(d) If an accommodation in the time-share plan is conveyed to a trustee pursuant to subdivision
(c), the trust instrument shall include all of the following provisions in addition to those set forth in
subdivision
(b):
(1) The deposit into trust, and the retention for the duration of the trust, of nondelinquent installment
sales contracts or promissory notes of time-share interests purchases having an aggregate principal
balance owing not ordinarily less than 150 percent of the difference between the aggregate principal
balance owing under blanket encumbrances against the accommodation and the amount of money, or
its equivalent, in the trust and available at any time to be applied to the reduction of the principal
balance of the blanket encumbrances.
(A) The trust instrument shall further provide that if the 150 percent requirement has not been met
within six months after execution of the trust instrument by the developer, the trustee shall thereafter
retain in the trust, or apply to debt service on the blanket encumbrance, the entire amount of all
installment payments received on contracts or promissory notes until the 150 percent requirement has
been met.
(B) For purposes of this regulation, a contract or promissory note is deemed delinquent when an
installment payment is more than 60 days past due.
(C) If the developer for purposes of satisfying the requirements of this subdivision proposes to deposit
installment sales contracts or promissory notes of obligor other than purchasers of interests in
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the time-share plan into the trust, the developer shall have the burden of establishing the liquidated
value of the notes and contracts to the satisfaction of the department.
(2) The deposit into trust, and the retention for the duration of the trust, of funds in an amount at all
times sufficient to pay the total of three successive monthly installments of debt service on the blanket
encumbrance.
(A) If installments of debt service on a blanket encumbrance that is fully amortized are due less
frequently than monthly, the funds retained in the trust shall be sufficient to pay all installments
becoming due within the next succeeding six months, or, if no installments are due within the next
succeeding six months the next installment due.
(B) If a blanket encumbrance against the trust property is an interest-only loan, contains a balloon
payment provision, or is otherwise not fully amortized under the terms for repayment, the trust
instrument shall require that the developer make monthly payments into the trust sufficient to pay debt
service installments as they become due and to create a sinking fund to extinguish the debt at its
maturity.
(3) Payment by the trustee of debt service on the blanket encumbrance, property taxes, or assessments
on insurance premiums, either as the entity having primary responsibilities for the payments or the
entity secondarily responsible if the person with primary responsibility fails to make the payments in a
timely manner.
(4) The deposit or investment by the trustee of funds constituting a part of the trust corpus in interest
bearing accounts, treasury bills, certificates of deposit, or similar investments.
(e) In the case of a time-share plan offering time-share use interests that have been conveyed to a
trustee, the trust for the accommodation shall be irrevocable during the time that any time-
share interest owner has a right to the occupancy of an accommodation.
(f) In the case of a time-share plan offering time-share use interests that have been conveyed to an
association, the association shall not be dissolved or terminated during the time that any time-
share interest owner has the right to occupancy of an accommodation.
(g) In a time-share plan offering time-share estate interests, the trust for an accommodation shall be
irrevocable until the extinguishment of all blanket monetary encumbrances against the accommodation.
11256
(a) The contract proposed to be used by a developer applying for a public report for the sale or lease
of time-share interests shall provide that if the escrow for sale or lease of a time-share interest does not
close on or before the date set forth in the contract, or a later closing date mutually agreed to by the
developer and the prospective purchaser or lessee, within 15 days after the closing date set forth in the
contract or an extended closing date mutually agreed to by the developer and the prospective purchaser
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or lessee, the developer shall, except as provided in subdivisions
(c) to
(h), inclusive, order all of the money remitted by the prospective purchaser or lessee under the terms of
the contract for acquisition of the time-share interest
(purchase money) to be refunded to the prospective purchaser or lessee. Any extension of the closing of
escrow shall be in writing and shall clearly and conspicuously disclose that the purchaser is not
obligated to extend the closing of escrow.
(b) The contract may provide for disbursements or charges to be made against purchase money for
payments to third parties for credit reports, escrow services, preliminary title reports, appraisals, and
loan processing services by the parties if the contract includes the following:
(1) Specific enumeration of all of the disbursements or charges that may be made against purchase
money.
(2) The developer’s estimate of the total amount of the disbursements and charges.
(c) Any contractual provision that calls for disbursement or a charge against purchase money based
upon the prospective purchaser’s or lessee’s alleged failure to complete the purchase of the time-
share interest shall conform with Sections 1675, 1676, 1677, and 1678 of the Civil Code.
(d) Except for a disbursement made following substantial compliance with the procedures set forth in
subdivision
(f) or pursuant to a written agreement of the parties that either cancels the contract or is executed after
the final closing date specified by the parties, a disbursement or charge against purchase money as
liquidated damages may be done only pursuant to a determination by a court of law, or by an arbitrator
if the parties have so provided by contract, that the developer is entitled to a disbursement or charge
against purchase money as liquidated damages.
(e) A contractual provision for a determination by arbitration that the developer is entitled to a
disbursement or charge against purchase money as liquidated damages shall require that the
arbitration be conducted in accordance with procedures that are equivalent in substance to the
Commercial Arbitration Rules of the American Arbitration Association, that any arbitration include every
cause of action that has arisen between the prospective purchaser or lessee and the developer under
the contract, and that the developer remit the fee to initiate arbitration with the costs of the arbitration
ultimately to be borne as determined by the arbitrator.
(f) The contract of sale may include a procedure under which purchase money may be disbursed by the
escrowholder to the developer as liquidated damages upon the prospective purchaser’s or lessee’s
failure to timely give the escrowholder the prospective purchaser’s or lessee’s written objection to
disbursement of purchase money as liquidated damages. This procedure shall contain at least the
following elements:
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(1) The developer shall give written notice, in the manner prescribed by Section 116.340 of the Code of
Civil Procedure for service in a small claims action, to the escrowholder and to the prospective
purchaser or lessee that the prospective purchaser or lessee is in default under the contract that the
developer is demanding that the escrowholder remit _____ dollars
($____) from the purchase money to the developer as liquidated damages unless, within 20 days, the
prospective purchaser or lessee gives the escrowholder the prospective purchaser’s or lessee’s written
objection to the disbursement of purchase money as liquidated damages.
(2) The prospective purchaser or lessee shall have a period of 20 days from the date of receipt of the
developer’s 20-day notice and demand in which to give the escrowholder the prospective purchaser or
lessee written objection to the disbursement of purchase money as liquidated damages.
(g) The contract may not make the prospective purchaser’s or lessee’s failure to timely give the
escrowholder the aforesaid written objection a waiver of any cause of action the prospective purchaser
or lessee may have against the developer under the contract unless the waiver is conditioned upon
service of the developer’s 20-day notice and demand in a manner prescribed by Section 116.340 of the
Code of Civil Procedure for service in a small claims action.
(h) If the developer has had the use of purchase money pending consummation of the sale or lease
transaction under authorization by the department pursuant to Section 11243, the developer shall
immediately upon alleging the default of the prospective purchaser or lessee, transmit to the
escrowholder, funds equal to all of the purchase money paid by the prospective purchaser or lessee.
Article 4. Management and Governance
11265
(a) For single site time-shareplans and component sites of a specific time-share interest multisite time-
share plan, the following requirements apply:
(1) Except as provided in paragraph
(2), regular assessments to defray the expenses of maintaining the time-share property and operating
the time-share plan shall be levied against each time-share interest owner according to the ratio that
the number of time-share interests owned by a time-share interest owner assessed bears to the total
number of time-share interests subject to assessments. Regular assessments levied by the association
shall not exceed the amount necessary to defray the estimated expenses for which the assessments are
levied.
(2) The assessment against each owner in the time-share plan may be determined according to a
formula or schedule under which assessments against each time-share interest owner are equitably
apportioned in accordance with operational and maintenance costs attributable to each time-
share interest owner.
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(3) A special assessment shall be levied upon the same basis as that prescribed for the levying of
regular assessments except in the case where the special assessment is levied against a time-share
interest owner for the purpose of reimbursing the association for costs incurred in bringing the time-
share interest owner into compliance with provisions of the governing instruments for the time-
share plan.
(4) All time-share interests in the time-share plan for which a public report has been issued including
those time-share interests held by the developer of the time-share plan are interests subject to the
payment of regular and special assessments.
(5) The governing body of the association may be authorized by the governing instruments to impose,
without the vote or written assent of the association, a regular annual assessment per time-share
interest that is as much as 20 percent greater than the regular annual assessment for the immediately
preceding fiscal year. An annual assessment for each time-share interest that is more than 20 percent
greater than the regular assessment per time-share interest for the immediately preceding fiscal year
may not be levied without the vote or written assent of a majority of the voting power of the association
residing in members other than the developer. An increase in the annual assessment attributable to an
increase in real property taxes against accommodations of the time-share property shall be excluded in
determining whether the annual assessment is more than 20 percent greater than the regular
assessment per interest for the preceding fiscal year.
(6) Except as provided in this section, special assessments against time-share interest owners in a time-
share plan may not be imposed without the vote or written assent of a majority of the voting power of
the association residing in members other than the developer. The governing body of the association
may be authorized by the governing instruments to impose special assessments without the vote or
written assent of the association as follows:
(A) Special assessments against all time-share interest owners in the time-share plan, other than a
special assessment to restore or rebuild because of damage or destruction to an accommodation, which
in the aggregate in any fiscal year do not exceed 5 percent of the budgeted gross expenses of the
association for that fiscal year.
(B) A special assessment for the repair or rebuilding of an accommodation that does not exceed 10
percent of the budgeted gross expenses of the association for the fiscal year in which the assessment is
levied.
(C) Special assessments against a time-share interest owner or owners for the purpose of reimbursing
the association for costs incurred in bringing the time-share interest owner into compliance with
provisions of the governing instruments for the time-share plan.
(7) Regular assessments against all of the time-share interests in an accommodation of the time-
share plan shall commence on the same date. Regular assessments shall commence on the first day of
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the month following the closing of the escrow of the first sale of a time-share interest in the time-
share plan, but may be delayed to the date of commencement of time-share interest owners’ occupancy
rights in the accommodation or to a date that is not more than six months later than the date of closing
of the first sale involving a right to use the accommodation, whichever occurs earlier in time.
(b) For single site time-share plans and component sites of a multisite time-share plan located outside
of the state the time-share instruments shall include the subject matter set forth in paragraphs
(1) to
(4), inclusive, of subdivision
(a). The time-share instruments shall be in compliance with the applicable laws of the state or
jurisdiction in which the time-share property or component site is located, and if a conflict exists
between the affirmative standards of the laws of the situs state and the requirements set forth in this
section, the law of the situs state shall control. If the time-share instruments provide for the matters
contained in paragraphs
(1) to
(4), inclusive, of subdivision
(a), the time-share instruments shall be deemed to be in compliance with the requirements of
paragraphs
(1) to
(4), inclusive, of subdivision
(a) and this subdivision and the developer shall not be required to make revisions in order to comply
with paragraphs
(1) to
(4), inclusive, of subdivision
(a) and this subdivision. If the maximum increase in annual assessments for a time-share plan located
outside of this state is greater than the 20 percent set forth in paragraph
(5) of subdivision
(a), the public report shall include the following disclosure in conspicuous 14-point type: YOUR ANNUAL
ASSESSMENTS ARE NOT SUBJECT TO THE CALIFORNIA LIMITATION OF A 20% ANNUAL INCREASE
WITHOUT THE VOTE OF THE OWNERS OTHER THAN THE DEVELOPER. YOUR ASSESSMENT MAY BE
INCREASED BY AS MUCH AS ____% PER YEAR.
(c) For nonspecific time-share interest multisite time-share plans the following requirements apply:
(1) Except as provided in paragraph
(2), regular assessments to defray the expenses of maintaining and operating the multisite time-
share plan shall be levied against each time-share interest owner according to the ratio that the number
of time-share interests owned by a time-share interest owner assessed bears to the total number
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of time-share interests subject to assessments.
(2) The assessment against each time-share interest owner in the multisite time-share plan may be
determined according to a formula or schedule under which assessments against each time-
share interest owner are equitably apportioned in accordance with operational and maintenance costs
attributable to each time-share interest owner.
(3) A special assessment shall be levied upon the same basis as that prescribed for the levying of
regular assessments except in the case where the special assessment is levied against a time-share
interest owner for the purpose of reimbursing the association for costs incurred in bringing the time-
share interest owner into compliance with provisions of the governing instruments for the time-
share plan.
(4) All time-share interests in the multisite time-share plan for which a public report has been issued
including those time-share interests held by the developer of the multisite time-share plan are interests
subject to the payment of regular and special assessments.
11266
(a) An amendment of a provision of the declaration or other document establishing the time-share plan
may not be adopted without the vote or written assent of at least 25 percent of the voting power of the
association residing in members other than the developer.
(b) An amendment of the articles of incorporation or association may not be enacted without the vote or
written assent of at least 25 percent of the governing body and 25 percent of the voting power of the
association residing in members other than the developer.
(c) An amendment of the bylaws of the association may not be enacted without the vote or written
assent of at least 10 percent of the voting power of the association residing in members other than the
developer.
(d) An amendment to the rules and regulations of the association may not be enacted without the vote or
written assent of at least a majority of the governing body of the association.
(e) The percentage of the voting power necessary to amend a specific clause or provision in the time-
share instrument, articles, or bylaws shall not be less than the prescribed percentage of affirmative
votes or written assents required for action to be taken under that clause.
(f) In addition to the restrictions upon the enactment of amendments of the governing instruments set
forth in this section, the governing instruments may include provisions consistent with subdivision
(c) of Section 11269 whereby the vote of the developer must be given effect in the amendatory process.
(g) For a single site time-share plan or a component site of a specific time-share interest time-
share plan or a nonspecific time-share interest multisite time-share plan located outside this state, that
is being offered in this state, the public report shall include the following disclosure in conspicuous 14-
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point type: THE DECLARATION OR OTHER DOCUMENT ESTABLISHING THIS TIME-SHARE PLAN MAY BE
AMENDED BY A VOTE OF ____% OF THE MEMBERS OF THE ASSOCIATION. THE BYLAWS OF THE
ASSOCIATION MAY BE AMENDED BY A VOTE OF ____% OF THE MEMBERS.
11267
(a) The time-shareinstruments shall require the employment of a managing entity for the time-
share plan or component site pursuant to a written management agreement that shall include all of the
following provisions:
(1) Delegation of authority to the managing entity to carry out the duties and obligations of the
association or the developer to the time-share interest owners.
(2) Authority of the managing entity to employ subagents, if applicable.
(3) A term of not more than five years with automatic renewals for successive three-year periods after
expiration of the first term unless the association by the vote or written assent of a majority of the voting
power residing in members other than the developer determines not to renew the contract and gives
appropriate notice of that determination. However, in those time-share plans where the association is
controlled by owners other than the developer, the management agreement shall not be subject to the
term limitations set forth in this section, and any longer term shall not be grounds for denial of a public
report, unless the longer term of the management contract is the result of the developer exercising
control.
(4) Termination for cause at any time by the governing body of the association. If the single site time-
share plan or the component site of a multisite time-share plan is located within the state, then that
termination provision shall include a provision for arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association if requested by or on behalf of the managing
entity.
(5) Not less than 90 days’ written notice to the association of the intention of the managing entity to
resign.
(6) Enumeration of the powers and duties of the managing entity in the operation of time-share plan and
the maintenance of the accommodations comprising the time-share plan.
(7) Compensation to be paid to the managing entity.
(8) Records to be maintained by the managing entity.
(9) A requirement that the managing entity provide a policy for fidelity insurance or bond for the
activities of the managing entity, payable to the association, in the sum of the largest amount of funds
expected to be held or controlled by the managing entity at any time during the year, pursuant to the
budget.
(10) Errors and omissions insurance coverage for the managing entity, if available.
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(11) Delineation of the authority of the managing entity and persons authorized by the managing entity
to enter into accommodations of the time-share plan for the purpose of cleaning, maid service,
maintenance and repair including emergency repairs, and for the purpose of abating a nuisance or
dangerous, unlawful, or prohibited activity being conducted in the accommodation.
(12) Description of the duties of the managing entity, including, but not limited to, the following:
(A) Collection of all assessments as provided in the time-share instruments.
(B) Maintenance of all books and records concerning the time-share plan.
(C) Scheduling occupancy of accommodations, when purchasers are not entitled to use specific time-
share periods, so that all purchasers will be provided the opportunity for use and possession of the
accommodations of the time-share plan, that they have purchased.
(D) Providing for the annual meeting of the association of owners.
(E) Performing any other functions and duties related to the maintenance of the accommodations or that
are required by the time-share instrument.
(b) Any written management agreement in existence as of the effective date of this chapter shall not be
subject to the term limitations set forth above.
(c) For single site time-share plans and component sites of a multisite time-share plan located outside
of the state, the time-share instruments shall include the subject matter set forth in subdivision
(a). The time-share instruments shall be in compliance with the applicable laws of the state or
jurisdiction in which the time-share property or component site is located, and if a conflict exists
between laws of the situs state and the requirements set forth in this section, the law of the situs state
shall control. If the time-share instruments provide for the matters contained in subdivision
(a), the time-share instruments shall be deemed to be in compliance with the requirements of
subdivision
(a) and the developer shall not be required to make revisions in order to comply with subdivision
(a) and this subdivision.
11268
(a) Unless impracticable because of the number of members of the association, their places of residence
in relation to each other, the international nature of the offering, or other factors, provision shall be
made for regular meetings of members of the association of time-share interest owners. Ordinarily
regular meetings of members shall be scheduled not less frequently than once each calendar year at
a time and place to be fixed by the bylaws or by resolution of the governing body. The first meeting of the
association shall be scheduled not later than one year after the closing of the escrow for the first sale of
a time-share interest in the time-share plan or completion of construction, whichever shall first occur.
(b) Provision shall be made for special meetings of the association to be promptly called by the
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governing body upon either of the following:
(1) The vote of a majority of the governing body.
(2) Receipt of a written request signed by members representing at least 5 percent of the voting power
of the association residing in members other than the developer.
(c) Meetings of the association shall be held at a suitable location that is readily accessible at reasonable
cost to the largest possible number of members.
(d) Written notice of regular and special meetings shall be given to members by first-class mail. This
notice shall be given not less than 14 days and not more than 90 days before the scheduled date of the
meeting. The notice, whether for a regular or special meeting shall specify the place, day, and hour of
the meeting and a brief statement of the matters which the governing body intends to present, or
believes that others will present, for action by the members.
(e)
(1) The bylaws of the association shall establish the quorum for a meeting of members at not less than 5
percent nor more than 331/3 percent, of the voting power of the association residing in members other
than the developer, represented in person or by proxy.
(2) In the absence of a quorum as prescribed by the bylaws, no business shall be conducted and the
presiding officer shall adjourn the meeting sine die.
(3) If less than one-third of the total voting power of the association is in attendance, in person or by
proxy, at a regular or special meeting of the association, only those matters of business, the general
nature of which was given in the notice of the meeting may be voted upon by the members.
(f) Any action that may be taken at any regular or special meeting of members may be taken without a
meeting if the following requirements are met:
(1) A written ballot is distributed to every member entitled to vote setting forth the proposed action,
providing an opportunity to signify approval or disapproval of the proposal, and providing a
reasonable time for the members to return the ballot to the association.
(2) The number of votes cast by ballot within the specified time period equals or exceeds the quorum
required to be present at a meeting authorizing the action.
(3) The number of approvals of the action equals or exceeds the number of votes required to approve the
action at a meeting at which the total number of votes cast was the same as the number of votes cast by
written ballot.
(4) The written ballot distributed to members of the association affords an opportunity for the member
to specify a choice between approval and disapproval of each order of business proposed to be acted
upon by the association and further provides that the vote of the members shall be cast in accordance
with the choice specified.
(g) The bylaws of the association may provide that governing body members may be elected by written
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ballot.
(h) A form of proxy may be distributed to each member to afford him or her the opportunity to vote in
absentia at a meeting of members of the association provided that it meets the requirements for a
written ballot set forth in paragraph
(4) of subdivision
(f) and includes the name or names of members who expect to be in attendance in person at the
meeting to whom the proxy is to be given for the purpose of casting the vote to reflect the absent
member’s vote as specified in the form of proxy.
11269
(a) A member of an association including associations that provide for unequal assessments against
members, shall be entitled to one vote for each time-share interest owned.
(b) An association may have two classes of members for voting purposes according to the following
provisions:
(1) Each time-share interest owner other than the developer of the time-share plan shall be a class A
member. If a time-share interest is owned by more than one person, each time-share interest owner
shall be a class A member, but only one vote may be cast for each interest.
(2) The developer shall be the class B member and shall have one vote for each time-share interest
owned by him or her which has been authorized to be offered for sale by the issuance of a public report.
(3) Class B membership shall be automatically converted to class A membership, and class B
membership shall thereafter cease to exist, when the total outstanding votes held by the class B
member falls below 20 percent of the total voting power of the association.
(c) Except as otherwise expressly provided, no regulation which requires the approval of a prescribed
percentage of the voting power residing in members other than the developer or a prescribed
percentage of the voting power of class A members, for action to be taken by the association, is intended
to preclude the developers from casting votes attributable to the time-share interests which he or she
owns. Governing instruments may specify the following with respect to approval of action by the
membership of the association other than an action to enforce an obligation of the developer:
(1) In those associations in which class A and class B memberships exist, the vote or written assent of a
prescribed percentage of the class A voting power and the vote or written assent of the class B member.
(2) In those associations in which a single class of voting membership exists, either as originally
established or after the conversion of the class B membership to class A memberships, the vote or
written assent of a prescribed percentage of the total voting power of the association and the vote or
written assent of a prescribed percentage of the voting power of members other than the developer.
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11270
(a) The governing body shall consist of three directors for an association that does not contemplate
more than 100 members and either five or seven directors for an association that contemplates more
than 100 members.
(b)
(1) The first governing body shall consist of directors appointed by the developer. These directors shall
serve until the first meeting of the association at which time an election of all of the directors for the
association shall be conducted.
(2) A special procedure shall be established by the governing instruments to assure that at the first
election of the governing body, and at all times thereafter, at least one of the incumbent directors has
been elected solely by the votes of members other than the developer.
(3) A director who has been elected to office solely by the votes of the members of the association other
than the developer may be removed from the governing body prior to the expiration of his or her term of
office only by a vote of a prescribed percentage of the voting power residing in members other than the
developer.
(c) The terms of office of governing body members may be staggered provided that no person may serve
a term of more than three years without standing for reelection.
(d) For board of director members serving at the appointment of the developer, the developer may
change the designated board member without the need of any further consent by the association.
However, the term of the applicable director’s seat on the governing body shall not be affected by that
change.
11271
(a) Regular meetings of the governing body of the association shall be held as prescribed in the bylaws,
but not less frequently than annually.
(b)
(1) Regular and special meetings of the governing body shall be held in or near the location of the time-
share plan unless a meeting at another location would significantly reduce the cost to the association or
the inconvenience to directors.
(2) If the time and place of the regular meeting of the governing body is not fixed by the governing
instruments, notice of the time and place of meeting shall be communicated in writing, including by
facsimile, electronic mail, or other form of written or electronic communication, to directors not less
than 14 days prior to the meeting. However, that notice of a meeting is not required to be given to any
governing body member who has signed a waiver of notice or a written consent to the holding of the
meeting.
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(c)
(1) A special meeting of the governing body may be called by written notice signed by any two members
of the governing body.
(2) The notice of a special meeting shall specify the time and place of the meeting and the nature of any
special business to be considered.
(3) Notice of a special meeting shall be communicated in writing, including by facsimile, electronic mail,
or other form of written or electronic communication, to directors not less than 14 days prior to the
meeting. However, notice of the meeting is not required to be given to any governing body member who
signed a waiver of notice or a written consent to the holding of the meeting.
(d)
(1) Regular and special meetings of the governing body shall be open to all members of the association
provided that members who are not on the governing body may not participate in any deliberations or
discussions unless expressly so authorized by the governing body.
(2) The governing body may, with the approval of a majority of a quorum of its members, adjourn a
meeting and reconvene in executive session to discuss and vote upon personnel matters, litigation in
which the association is or may become involved, and orders of business of a similar nature. The nature
of any and all business to be considered in executive session shall first be announced in open session.
(e) A bare majority of the total members of authorized members of the governing body shall constitute a
quorum for the conduct of business.
(f) The governing instruments for the time-share plan shall provide for reimbursement by the
association for transportation expenses incurred and reasonable per diem payments to governing body
members for attendance at regular and special meetings of the governing body.
11272
(a) The following information concerning the time-share plan shall be made available to all time-
share interest owners in the time-share plan:
(1) A proposed budget for each fiscal year consisting of the information required by Section 11240 shall
be distributed not less than 15 days prior to the beginning of the fiscal year to which the budget applies.
(2) An audit of the financial statements of the association by an independent certified public accountant
shall be performed each year and shall be made available upon request by a time-share owner 120 days
after the close of the fiscal year. The audited financial statements shall be included in a report that
includes all of the following:
(A) A balance sheet as of the end of the fiscal year.
(B) An operating
(income) statement for the fiscal year.
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(C) A statement of the net changes in the financial position of the time-share plan during the fiscal year.
(D) For any fiscal year in which the gross income to the association exceeds seventy-five thousand
dollars
($75,000), a copy of the review of the annual report prepared in accordance with generally accepted
accounting principles.
(E) A list of the names and methods of contacting the members of the governing body of the association.
(3) A list of the orders of business to be considered at the annual meeting of members of the association
shall be distributed not less than 14 days prior to the meeting date. This list shall include the name,
address, and a brief biographical sketch if available of each member of the association who is a
candidate for election to the governing body.
(b) In lieu of the distribution of the budget and report required by subdivision
(a), the governing body may elect to distribute a summary of the budget and report to all time-
share interest owners along with a written notice that the budget and report is available at the business
office of the association or at another suitable location within the boundaries of the development, and
that copies will be provided upon request and at the expense of the association. If any time-
share interest owner requests that a copy of the budget and report required by subdivision
(a) be provided to the time-share interest owner, the association shall provide the copy to the time-
share interest owner by facsimile, electronic mail, or first-class United States mail at the expense of the
association and delivered within 10 days. The written notice that is distributed to each of the time-
share interest owners shall be in conspicuous 14-point type on the front page of the summary of the
budget and report.
(c) Delivery of the information specified in subdivision
(a) may be combined where appropriate.
(d) For single site time-share plans and component sites of a multisite time-share plan located outside
of the state, the association shall be subject to the provisions set forth in this section. The association
must be in compliance with the applicable laws of the state or jurisdiction in which the time-
share property or component site is located, and if a conflict exists between laws of the situs state and
the requirements set forth in this section, the law of the situs state shall control. If the association
provides for the dissemination of information provided for in this section, the association shall be
deemed to be in compliance with the requirements of this section and neither the developer nor the
association shall be required to make revisions to the time-share instruments or budget in order to
comply with this section.
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11273
(a) The books of account, minutes of members and governing body meetings, and all other records of
the time-share plan maintained by the association or the managing entity shall be made available for
inspection and copying by any member, or by his or her duly appointed representative, at any
reasonable time for a purpose reasonably related to membership in the association.
(b) The records shall be made available for inspection at the office where the records are maintained.
Upon receipt of an authenticated written request from a member along with the fee prescribed by the
governing body to defray the costs of reproduction, the managing entity or other custodian of records of
the association or the time-share plan shall prepare and transmit to the member a copy of any and all
records requested.
(c) The governing body shall establish reasonable rules with respect to all of the following:
(1) Notice to be given to the managing entity or other custodian of the records by the member desiring to
make the inspection or to obtain copies.
(2) Hours and days of the week when a personal inspection of the records may be made.
(3) Payment of the cost of reproducing copies of records requested by a member.
(d) Every governing body member shall have the absolute right at any time to inspect all books, records,
and documents of the association and all real and personal properties owned and controlled by the
association.
(e) The association shall maintain among its records a complete list of the names and addresses of all
owners of time-share interests in the time-share plan. The association shall update this list no less
frequently than every six months. Unless otherwise provided in the time-share instruments, the
association may not publish this owner’s list or provide a copy of it to any time-share interest owner or
to any third party or use or sell the list for commercial purposes.
(f) For single site time-share plans and component sites of a multisite time-share plan located outside of
the state, the association shall be subject to the provisions set forth in this section. The association must
be in compliance with the applicable laws of the state or jurisdiction in which the time-share property or
component site is located, and if a conflict exists between laws of the situs state and the requirements
set forth in this section, the law of the situs state shall control. If the association and the time-
share instruments provide for the matters contained in this section, the association shall be deemed to
be in compliance with the requirements of this section and neither the developer nor the association
shall be required to make revisions to the time-share instruments in order to comply with the section.
11274
(a) The association shall not be authorized to cause the absolute forfeiture of a time-share interest
owner’s right, title, or interest in the time-share plan on account of the time-share interest owner’s
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failure to comply with provisions of the time-share instrument or the rules and regulations for the time-
share plan except pursuant to either of the following:
(1) The judgment of a court or the decision of an arbitrator as provided in the time-share instrument.
(2) A foreclosure or sale under a power of sale for the failure of a time-share interest owner to pay
assessments duly levied by the association.
(b) The time-share instrument may authorize the governing body of the association, or the managing
entity acting on behalf of the governing body, to suspend a time-share interest owner’s right to the
occupancy of an accommodation, and all related rights and privileges as a time-share interest owner of
a time-share interest in the time-share plan, during the period of time that the time-share interest
owner is delinquent in the payment of regular or special assessments or other charges duly levied by
the association. The time-share interest owner shall be given written notice of the suspension of his or
her rights and privileges immediately after the decision to suspend has been made.
(c) The time-share instrument may authorize the association to impose a monetary penalty to suspend
a time-share interest owner’s right to use an accommodation or other facility that is part of the time-
share plan or to take other disciplinary action that is appropriate, short of the forfeiture of the time-
share interest owner’ s right, title, and interest in the time-share plan, for violations of the provisions of
the time-share instrument and of the rules and regulations for operation of the time-share plan by
the time-share interest owner, his or her guests or persons under his or her control, including, but not
limited to, all of the following:
(1) Failure to vacate an accommodation upon expiration of the time-share interest owner’s use period.
(2) Damage to an accommodation or any other real or personal property that is part of the time-
share plan.
(3) Permitting a time-share interest to be subject to a lien, other than the lien of nondelinquent real
property taxes or assessments, claim, or charge that could result in the sale of time-share interests of
other time-share interest owners.
(4) Creating a disturbance that interferes with the use and enjoyment of facilities of the time-share plan
by other time-share interest owners.
(d) Before disciplinary action authorized under subdivision
(c) can be imposed by the association, the time-share interest owner against whom the action is
proposed to be taken shall be given 30-days prior written notice and the opportunity to present a written
or oral defense to the charges.
(1) The governing body of the association shall decide whether the time-share interest owner’s defense
shall be oral or written.
(2) The time-share interest owner shall be notified of the decision of the governing body of the
association before disciplinary action is taken.
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(e) The association may delegate to the managing entity, the power and authority to carry out
disciplinary actions duly imposed by the governing body.
(f) For single site time-share plans and component sites of specific time-share interest multisite time-
share plans and nonspecific time-share interest multisite time-share plans located outside this state,
and offered for sale in this state, the public report shall contain the following disclosure in conspicuous
14-point type: THIS TIME SHARE PLAN MAY NOT BE SUBJECT TO THE SAME PROTECTIONS AGAINST
FORFEITURE AND FORECLOSURE AS PROVIDED BY CALIFORNIA LAW. YOU SHOULD BECOME FAMILIAR
WITH THE PROCEDURES PROVIDED BY THE LAWS OF THE STATE IN WHICH THE TIME-SHARE PLAN IS
LOCATED.
11275
(a) Any contractual provision or other provision in the time-share instruments setting forth terms,
conditions, and procedures for resolution of a dispute or claim between a time-share interest owner and
a developer, or any provision in the time-share instruments setting forth terms, conditions, and
procedures for resolution of a dispute of a claim between an association and the developer, shall, at a
minimum, provide that the dispute or claim resolution process, proceeding, hearing, or trial be
conducted in accordance with the following rules:
(1) For the developer to advance the fees necessary to initiate the dispute or claim resolution process,
with the costs and fees, including ongoing costs and fees, if any, to be paid as agreed by the parties and
if they cannot agree then the costs and fees are to be paid as determined by the person or persons
presiding at the dispute or claim resolution proceeding or hearing.
(2) For a neutral or impartial person to administer and preside over the claim or dispute resolution
process.
(3) For the appointment or selection, as designation, or assignment of the person to administer and
preside over the claim or dispute resolution process within a specific period of time, which in no event
shall be more than 60 days from initiation of the claim or dispute resolution process or hearing. The
person appointed, selected, designated, or assigned to preside may be challenged for bias.
(4) For the venue of the claim or dispute resolution process to be in the county where the time-share is
located unless the parties agree to some other location.
(5) For the prompt and timely commencement of the claim or dispute resolution process. When the
contract provisions provide for a specific type of claim or dispute resolution process, the process shall
be deemed to be promptly and timely commenced if it is to be commenced in accordance with the rules
applicable to that process. If the rules do not specify a date by which the proceeding or hearing is
required to commence, then commencement shall be by a date agreed upon by the parties, and if they
cannot agree, a date shall be determined by the person presiding over the dispute resolution process.
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(6) For the claim or dispute resolution process to be conducted in accordance with rules and procedures
that are reasonable and fair to the parties.
(7) For the prompt and timely conclusion of the claim or dispute resolution process, including the
issuance of any decision or ruling following the proceeding or hearing.
(8) For the person presiding at the claim or dispute resolution process to be authorized to provide all
recognized remedies available in law or equity for any cause of action that is the basis of the proceeding
or hearing. The parties may authorize the limitation or prohibition of punitive damages.
(b) A copy of the rules applicable to the claim or dispute resolution process shall be submitted as part of
the application for a public report.
(c) If the claim or dispute resolution process provides or allows for a judicial remedy in accordance with
the laws of this state, it shall be presumed that the proceeding or hearing satisfies the provisions of
subdivision
(a). Article 5. Powers, Investigation, and Enforcement
11280
(a) Except as specifically provided in this section, the regulation of time-share plans and exchange
programs is an exclusive power and function of the state. A unit of local government may not
regulate time-share plans or exchange programs.
(b) Notwithstanding subdivision
(a), no provision of this chapter invalidates or modifies any provision of any zoning, subdivision, or
building code or other real estate use law, ordinance, or regulation.
11281
The commissioner may adopt, repeal, or amend forms and regulations that are necessary to effectuate
the intent of the Legislature in carrying out this chapter. These forms and regulations and any order,
permit, decision, demand, or requirement issued by the commissioner shall be in writing and adopted
pursuant to the Administrative Procedure Act
(Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
11282
The commissioner may investigate the actions or qualifications of any person or persons holding or
claiming to hold a public report under this chapter.
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11283
(a) Whenever the commissioner determines from available evidence that a person has done any of the
following, the commissioner may order the person to desist and refrain from those acts and omissions
or from the further sale or lease of interests in the time-share plan until the condition has been
corrected:
(1) The person has violated or caused the violation of any provision of this chapter or the regulations
pertaining thereto.
(2) The person has violated or caused a violation of Section 17537, 17537.1, 17537.2, or 17539.1, in
advertising or promoting the sale of time-share interests.
(3) The person has failed to fulfill representations or assurances with respect to the time-share plan or
the time-share offering upon which the department relied in issuing a public report.
(4) The person has failed to inform the department of material changes that have occurred in the time-
share or time-share offering that have caused the public report to be misleading or inaccurate or which
would have caused the department to deny a public report if the conditions had existed at the time of
issuance.
(b) Upon receipt of such an order, the person or persons to whom the order is directed shall immediately
discontinue activities in accordance with the terms of the order.
(c) Any person to whom the order is directed may, within 30 days after service thereof upon him or her,
file with the commissioner a written request for hearing to contest the order. The commissioner shall,
after receipt of a request for hearing, assign the matter to the Office of Administrative Hearings to
conduct a hearing for findings of fact and determinations of the issues set forth in the order. If the
hearing is not commenced within 15 days after receipt of the request for hearing, or on the date to
which continued with the agreement of the person requesting the hearing, or if the decision of the
commissioner is not rendered within 30 days after completion of the hearing, the order shall be deemed
to be vacated.
(d) Service and proof of service of an order issued by the commissioner pursuant to this section may be
made in a manner and upon those persons as prescribed for the service of summons in Article 3
(commencing with Section 415.10), Article 4
(commencing with Section 416.10), and Article 5
(commencing with Section 417.10) of Chapter 4 of Title 5 of Part 2 of the Code of Civil Procedure.
11284
Notwithstanding any other provisions of this chapter or of the Administrative Procedure Act
(Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the
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commissioner may negotiate agreements with registrants and applicants resulting in disciplinary
consent orders. The consent order may provide for any form of discipline provided for in this chapter.
The consent order shall provide that it is not entered into as a result of any coercion by the
commissioner. The consent order shall be accepted by signature or rejected by the commissioner in a
timely manner.
11285
An action for damages or for injunctive or declaratory relief for a violation of this chapter may be
brought by any time-share interest owner or association against the developer, seller, or marketer
of time-share interests, an escrow agent, or the managing entity. Relief under this section does not
exclude other remedies provided by law.
11286
(a) It shall be unlawful for any person to make, issue, publish, deliver, or transfer as true and genuine
any public report that is forged, altered, false, or counterfeit, knowing it to be forged, altered, false, or
counterfeit or to cause to be made or participate in the making, issuance, delivery, transfer, or
publication of a public report with knowledge that it is forged, altered, false, or counterfeit.
(b) Any person who violates subdivision
(a) is guilty of a public offense punishable by a fine not exceeding ten thousand dollars
($10,000), by imprisonment in the state prison, by imprisonment in the county jail not exceeding one
year, or by both the fine and imprisonment.
(c) The penalty provided by this section is not an exclusive penalty, and does not affect any other penalty,
relief, or remedy provided by law.
11287
Any person who violates Section 11226, 11227, 11234, 11244, 11245, or 11283, is guilty of a public
offense punishable by a fine not to exceed ten thousand dollars
($10,000), by imprisonment in the state prison or in a county jail not exceeding one year, or by both the
fine and imprisonment.
11288
This chapter shall take effect on July 1, 2005.
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October 6, 2022, Planning Commission Item 2 Comments
These comments on a Newport Beach Planning Commission agenda item are submitted by:
Jim Mosher ( jimmosher@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229).
Item No. 2. CODE UPDATE RELATED TO FRACTIONAL
HOMEOWNERSHIP (PA2022-0202)
At the September 27, 2022, special meeting of the City Council referenced in the present staff report
I presented reasons to believe our existing municipal code already prohibits fractional
homeownership as highlighted by the bullet points below, and in more detail on the attached pages
of comments submitted to that meeting.
While revisions to add clarity to our present code would be welcome, I continue to believe Pacaso-
type home ownership is already banned and this is as much a code enforcement issue as a code
revision one.
_______________________________________________________________________________
Newport Beach’s Fractional Homeownership Highlights (9/27/2022)
In 1982, Newport Beach banned the “development” of a time-share “project” anywhere in the
City, finding it to be a detrimental form of land use.
o “Time-share project” very broadly defined.
o Included conversion of existing residential dwelling units into time-shared use.
In 1996, the City Council relaxed the ban to allow larger-scale time-share ventures in
commercially-zoned districts, subject to special permitting restrictions.
o Did not remove prohibition on “conversion of existing residential dwelling units into time-
share units.”
Subsequent reorganizations of the Zoning Code consolidating seemingly conflicting definitions of
“development” and “project” relevant to other zoning provisions were never intended to alter the
1982/1996 time-share regulations.
Conclusion: The Pacaso-type model of ownership was banned in 1982 and remains banned.
________________________________________________________________________________
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After I made similar comments orally, City Attorney Harp said he could not agree that our existing
ordinances banned timeshares in residential districts (see video at 26:50).
His two reasons, both of which I believe are erroneous, were:
1. The 1996 revisions “switched” the definition from applicable to single family homes to
“dwelling units” (plural), and the intention was to regulate only 100-unit or larger
projects. Mr. Harp seems unaware of our Municipal Code’s general Rules of Construction
(NMBC Subsec. 1.08.110.C) that “The singular number includes the plural; and the plural,
the singular.” In any event, it is more than a bit far-fetched to believe that in allowing
regulated larger-scale timeshare developments in commercial districts it intended to de-
regulate them everywhere else.
2. “Conversion” could not mean the purchase of an LLC because my interpretation
would turn all homes owned by trusts or LLC’s into prohibited timeshares. This second
contention seems equally absurd, for the 1982 ordinance prohibits only timeshare uses, that
is, where the purchaser acquires a right to occupy the property for only a limited part of the
year on a recurring basis. I would guess very few trusts or LLC’s contain such a provision,
and if they do, they are indeed in violation of the current code.
Since there was no opportunity to rebut these comments, the Council proceeded on the assumption
the Pacaso model is not currently banned, and Council member O’Neill suggested staff consider
proposing something modeled after the ordinance recently adopted in the City of St. Helena – hence
the present special meeting of the Planning Commission to consider revising the code.
It might be noted that St. Helena went through a similar experience, with one City Attorney saying
their existing ordinance (ironically dating back to 1982, the same year as the broad timeshare
prohibition in Newport Beach) was ineffective against the Pacaso model, and indeed that no
regulation of it was possible. And then a new City Attorney saying that although revisions were
desirable, the Pacaso model was already prohibited by the existing code (see description in the
2021 federal case, lost by Pacaso, of Pacaso v. City of St. Helena).
In any event, the revised and restated code was reported to the St. Helena Planning Commission on
March 1, 2022, and presented to their City Council as Item 11.1 for a March 22 1st reading, and as
Item 8.3 at an April 12 2nd reading.
Throughout, the revised St. Helena code is cited as “reaffirming” their existing code. And although
the new ordinance was supposed to repeal the old section that had been held to already prohibit
Pacaso-style homeownership, their codifier (the same as Newport Beach’s) seems to have missed
that, so the old St. Helena municipal code Section 17.112.130 (which also bans “a time-share
project”) can still be viewed online.
I think it is important to keep this distinction – that Newport Beach is reaffirming a long
existing prohibition, not considering adopting a new one – so that the ownership model does
not proliferate while the revisions wend their way toward enactment.
(the following pages, like the bullet points above, are copied from the comments I submitted to the
City Council on September 27)
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Newport Beach’s Fractional Homeownership Regulation History
In 1982, a former City Council adopted Ordinance No. 82-14 prohibiting the
“development” of time-share “projects” anywhere in Newport Beach.
o It banned any kind of arrangement in which a purchaser obtained an exclusive right to
occupy a living space for limited, recurring intervals of time.
o Despite the use of the words “project” and “development,” both the statement of intent
and the substance of Ord. No. 82-14 made clear the prohibition was on a type of land use
and not confined to new construction.
o It explicitly prohibited the conversion of any existing residential or hotel/motel units in the
City to a time-shared model, including Pacaso-like shared ownership.1
In 1996, a later City Council relaxed the ban to allow, subject to special permitting restrictions,
larger-scale timeshare ventures in commercially-zoned districts (Ordinances No. 96-7 and 96-
18), including allowing the conversion of some existing hotel/motel units to a time-share model.
However, in allowing limited permitting of hotel-type timeshares, there was no change in:
o The 1982 definition of “time-share.”
o 1982’s blanket prohibition on the “conversion of existing residential dwelling units into
time-share units.”
Subsequent well-intentioned comprehensive restatements and reorganizations of the City’s
Zoning Code in 1997 and 2010 caused the code adopted in 1982 and 1996 to become
increasingly fragmented and difficult to follow, but never with any stated intent to change its
meaning.
In the City’s current Zoning Code the essentials of Ordinance No 82-14 remain intact:
o 1982’s definition of “Time share project” remains as originally written, but moved to Sec.
20.70.020.V under “Visitor Accommodations (Land Use) – 7.”
o 1982’s prohibition on converting existing residential units of any kind to a time-shared
model continues in Sec. 20.48.220.A.2.
o 1996’s allowance of a time-shared land use in (and only in) certain commercially-zoned
districts where hotel/motel land use would be allowed remains in Tables 2-4 and 2-5 of
Sec. 20.20.020 (under “Visitor Accommodations, Nonresidential”) and in Tables 2-8 and
2-9 of Sec. 20.22.020 (under “Visitor Accommodations”).
None of the revisions, rearrangements of code, or addition of definitions of “project” or
“development” relevant to other sections of Title 20 provide any evidence of any intent by any
Council to rescind the 1982 prohibition on conversion of residences to timeshares.
Conclusion: The Pacaso-type model of ownership was banned in 1982 and remains
banned in non-commercial districts.
1 Subsec. 20.76.015.B of Ord. No. 82-14 made it “unlawful to sell any right of occupancy in a time-share
estate.” Subsec. 20.76.015.C could be read as contradicting this, but appears to be an attempt at a
grandfathering clause for time share estates existing at the time of enactment. In any event, Subsec.
20.76.015.C clearly prohibits conversion of existing dwellings to any form of timeshared arrangement,
including “time-share estates” -- which is what Pacaso and others seem to be doing.
Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received Code Update Related to Fractional Homeownership (PA2022-0202)
September 27, 2022, City Council Special Meeting Comments
The following comments on the item on a Newport Beach City Council special agenda are submitted by:
Jim Mosher ( jimmosher@yahoo.com ), 2210 Private Road, Newport Beach 92660 (949-548-6229)
Item 1. Resolution No. 2022-61: Initiation of Zoning Code and Local
Coastal Program Amendments Related to Fractional Homeownership
(PA2022-0202)
I do not understand why this rather normal-appearing business matter is the subject of a “special
meeting” at 4:00 p.m., rather than an item on the same day’s regular agenda. If the intent is to give it
greater visibility, scheduling it at a work day afternoon hour would seem to me to give it less visibility,
rather than more.
As to the substance of the matter, at the November 16, 2021, study session (as Item SS3), my
impression was staff informed the public that the Pacaso fractional ownership model did not fit the
City’s definition of “time share” and for purposes of regulation could not be distinguished from the
56% of single-family properties owned by LLC’s, Trusts and other forms of multiple ownership.
But at the September 13, 2022, study session (as Item SS2), after receiving the Sagecrest
Fractional Homeownership Report, that conclusion seems to have changed, and it is now believed
that that regulations can distinguish ownership models in which an owner’s right to occupancy of a
dwelling is limited in time, and such forms of ownership constitute a distinguishable land use, but not
one currently regulated in Newport Beach, prompting the present agenda item.
As a non-attorney, I agree with Carmen Rawson’s comments at that study session, to the effect that
the Newport Beach Municipal Code already prohibits the Pacaso ownership model.
I believe the reason for the disagreement arises from sloppy amendments to a code that has long
been intended to prohibit this. In particular, as Carmen pointed out “fractional ownership” is
specifically included in the definition of “Time share project” in NBMC Sec. 21.70 of our Coastal
Implementation Plan, and while not in the parallel definition of NBMC Sec. 20.70 of the Zoning
Code, the later does include any form of ownership that limits time of occupancy.
In rejecting this interpretation in 2021, and again at the Council’s last meeting, staff emphasized the
separate definition of the word “development” which appears in the definition of “Time share project”
and, in their view, makes the current prohibition of fractional ownership inapplicable to changes of
ownership of existing properties.
But one of the many defects of our City’s system of codes is that it provides no means (such as
capitalization or a different type face) to distinguish when a common word is being used in some
limited, specifically defined sense.
For the following reasons, I believe that, and the current definition of “project,” is a misapplication of
new definitions added after the fact and never intended to alter the longstanding definition of “Time
share project.”
Based on the City’s archives, Newport Beach first addressed the issue of residential timeshares in
1981, prompted by a proposal for a 20-unit residential timeshare project at 3336 Via Lido on what
were then lots used for low-rise, waterfront office buildings at the south end of the present Lido
Village commercial area. The application went to the Planning Commission on November 5, 1981
Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received Code Update Related to Fractional Homeownership (PA2022-0202)
(see page 1 of the minutes) and was denied on December 10, 1981 (see page 2 of the minutes). An
appeal of the denial was to be heard by the Council on January 11, 1982 (see page 8 of the
minutes), but tabled pending development of a timeshare ordinance. An ordinance prohibiting all
timeshares was introduced at the July 12, 1982, meeting (see page 4 of the minutes) and adopted
as Ordinance No. 82-14 on July 26, 1982 . Based on the findings in the new ordinance, the appeal
was heard and denied on August 23, 1982 (see page 1 of the minutes).
The ordinance added what was then labeled Chapter 20.76 to the Municipal Code. The preamble
indicates it was intended not only to prohibit construction of new timeshare projects, but also
conversion of existing dwellings into “time share projects,” and the body specifically prohibits the
conversion of an existing single family residence, condominium or multi-family units to “time-share
use.”
Ordinance No. 82-14 is the origin of the words “project” and “development” that appear in relation to
timeshares in the City’s current code. And as confirmed by the City’s collection of Historic Zoning
Codes, “project” and “development” were also not assigned specialized definitions elsewhere in the
Title 20 of 1982. So, especially since they were adopted without specific definitions in Ordinance No.
82-14, the context makes clear they were intended to have broad meaning, not the highly technical,
specialized ones our staff now tries to assign to them.
Fourteen years later, on January 22, 1996, a new Council relaxed the total ban on timeshare
ownership in Newport Beach by adopting Resolution No. 96-9, which initiated amendments to allow
timeshares in commercial districts (note that unlike at the present meeting, in 1996 “initiating” code
amendments seems to have meant introducing a very specific language proposal for the Planning
Commission to consider). This led to Ordinance No. 96-7, another Resolution No. 96-29, and some
final tweaks with Ordinance No. 96-18.
The timeshare code adopted in 1996 survived as NBMC Chapter 20.84 in the 1997 recodification of
the Zoning provisions, in which “development” continued undefined, but “project” was defined
elsewhere in the code as “Any proposal for new or changed use, or for new construction, alterations,
or enlargement of any structure, that is subject to the provisions of this code.”
Even if that definition of “project” was intended to modify the earlier definition of “time-share project,”
which seems unlikely, it would seem broad enough to me to include a change in ownership model as
a “changed use.”
The next and most recent recodification of the Zoning Code in 2010 introduced, for the first time, a
definition of “development” and a new definition of “project” that would both, for the first time, seem
to exclude a change of ownership model. And those are the definitions that now seem to trouble
staff. But there is no evidence either new definition was intended to amend the meaning of the 1982
time-share ordinance as refined in 1996.
On the contrary staff seems to have been unaware of the conflict they were creating, for the City’s
2010 Comprehensive Zoning Code Update Summary of Change document, which guided Council
approval of the 2010 amendments, says (on page 13 of the PDF):
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In my view, our staff is chasing red herrings when it attempts to attach meanings to the words
“project” and “development” that were never intended when they were enacted in association with
the definition of “time-share project” in 1982.
The 1982 ordinance was explicitly enacted to prevent the conversion of homes to time-share use
through ownership, lease or any other arrangement – which would certainly include the Pacaso
model.
The 1996 amendments allowed timeshares, but only in commercial districts as does the current
code.
The 2010 Comprehensive Zoning Code Update sloppily added definitions elsewhere in Title 20 that
seem to contradict the broad intent of the same words in Time-Share chapter. But the Summary of
Changes clearly states the new code was adopted with no change intended other than an update to
“operational plans.”
As Carmen pointed out at the last Council meeting, Title 21, added in 2017, explicitly identifies
fractional ownership as a form of timeshare in the Coastal Zone, and Title 21, like Title 20, allows
timeshare uses only in a subset of the commercial districts where hotels and motels are allowed.
In summary, I believe it has been the clear intent of the Newport Beach Municipal Code to prohibit
time-shared home ownership since 1982.
Planning Commission Special Meeting - October 6, 2022 Item No. 2a - Additional Materials Received Code Update Related to Fractional Homeownership (PA2022-0202)
From:Gary Cruz
To:Planning Commissioners
Subject:Fractional Ownership
Date:October 05, 2022 6:06:20 PM
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the
content is safe.
Dear Planning Commissioners,
I just learned that the commission will be holding a meeting to discuss Fractional Ownership
in Newport Beach. Unfortunately I am not available to attend but I want to express myconcerns. Please excuse any grammatical errors or mistakes. I am composing this on my
phone.
We have already seen a growth from 3 to 13 properties since 2021 in fractional ownership. Iunderstand there are 5 more properties on the market. The growth is staggering and it needs to
be put under control before it is too late. This is reminiscent of short term rentals which werepermitted to grow to an unmanageable level.
Neither short term rentals nor fractional ownerships have a place in a residential (R1 or R2)
community. They play havoc with a sense of community that is a trademark of a residentialneighborhood.
These are businesses, not residences.
What happened to zoning?They are driving up prices making home ownership impossible for any but the super
rich.
I know there are litigation concerns but what is right is worth defending.
Why can’t a moratorium be placed on new sales? Find some cities to partner with, get legal
advice but most importantly don’t let companies like Pacaso push Newport Beach aroundbecause they have deep pockets.
This is not an issue solved by code enforcement. This is an issue solved by regulations.
Sincerely,
Gary Cruz
Newport Beach
Planning Commission Special Meeting - October 6, 2022 Item No. 2b - Additional Materials Received After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
From:Scott McFetters
To:Planning Commissioners
Cc:citycouncil@newportbeachgov.org
Subject:No On Fractional Ownership
Date:October 06, 2022 7:52:17 AM
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Dear Planning Commioners,
Fractional ownership could have a worse effect than short term rentals in residential neighborhoods. They will havethe same negative quality of life impact without any code enforcement even with regulations.
How would you like 8 owners plus whoever they let use it move in and out of the house next door to possiblymultiple times a week for their vacations. Meanwhile you have to get up the next morning for work, your kids haveto go to school and you are kept up all night because they are on vacation. They can also make early morning noisethat also wakes you up. If you have a dog they constantly bark at the cons disruption. What happened to the conceptof having real neighbors that actually live there in your neighborhood?
Why have zoning if we don’t protect our residential neighborhoods? The lack of integrity needs to stop.
The planning commission completely struck out on the short term rental issue over the years and even on its lastvote. Coastal Commission noted that STR’s and now fractional ownership is negatively impacting the coastalpopulation and housing stock, affordability along with other issues.
Do the right thing and atop fractional ownership in Newport Beach or at a minimum put them commercial areas.
The property rights claim does not work. Why should a business in a residential neighborhood have more propertyrights than a resident in a residential neighborhood?
Newport Beach residential neighborhoods are not like New York City or Chicago’s. Are restaurants next as long asit has an studio to sleep in?
Scott McFetters
Planning Commission Special Meeting - October 6, 2022 Item No. 2b - Additional Materials Received After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
From:Scott McFetters
To:Planning Commissioners
Cc:Dept - City Council
Subject:No On Fractional Ownership
Date:October 06, 2022 9:14:52 AM
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the content
is safe.
Dear Planning Commissioners,
Fractional ownership could have a worse effect than short term rentals in residential neighborhoods. They will havethe same negative quality of life impact without any code enforcement even with regulations.
How would you like 8 owners plus whoever they let use it move in and out of the house next door to possiblymultiple times a week for their vacations. Meanwhile you have to get up the next morning for work, your kids haveto go to school and you are kept up all night because they are on vacation. They can also make early morning noisethat also wakes you up. If you have a dog they constantly bark at the cons disruption. What happened to the conceptof having real neighbors that actually live there in your neighborhood?
Why have zoning if we don’t protect our residential neighborhoods? The lack of integrity needs to stop.
The planning commission completely struck out on the short term rental issue over the years and even on its lastvote. Coastal Commission noted that STR’s and now fractional ownership is negatively impacting the coastalpopulation and housing stock, affordability along with other issues.
Do the right thing and atop fractional ownership in Newport Beach or at a minimum put them commercial areas.
The property rights claim does not work. Why should a business in a residential neighborhood have more propertyrights than a resident in a residential neighborhood?
Newport Beach residential neighborhoods are not like New York City or Chicago’s. Are restaurants next as long asit has an studio to sleep in?
Scott McFetters
Planning Commission Special Meeting - October 6, 2022 Item No. 2b - Additional Materials Received After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Code Update Related to Fractional Homeownership
Planning Commission Study Session
October 6, 2022
Seimone Jurjis, CDD Director
Jaime Murillo, AICP, Principal Planner
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Discussion Outline
•What is Fractional Homeownership
•Pros and Cons
•Current Regulations
•City Council Background and Direction
•Research Findings
•Options and Direction
Community Development Department 2
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Community Development Department 3
What is Fractional
Homeownership?
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Fractional Ownership of
Personal Property: What is it?
Community Development Department 4
Not a new idea
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Fractional Ownership of
Real Estate
•Partial ownership of property:
•Common with commercial properties
•Emerging with single-family residential
•Vacation property (2nd or 3rd homes)
•Fractions offered for sale online
Community Development Department 5
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Companies Selling
Fractional Ownership
Community Development Department 6
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
How it Works
•Property is purchased under a Limited Liability
Corporation (LLC)
•Shares of the property are sold:
•1/8 ownership or greater
•Operating Agreement is used to manage the
property
Community Development Department 7
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Operations
•Co-owners agree on usage (days, week)
•1/8 share = 45 days (not consecutive)
•typically less than 30 consecutive day stays
•managed through calender
•Owners pay share of property costs:
•maintenance, management, HOA, cleaning, tax,
utilities, insurance, and reserve funds costs
•Short-term lodging or renting is not allowed
•Co-owners can sell their interest
Community Development Department 8
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Community Development Department 9
Pros and Cons
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
•Function like short term rentals –non-resident vacation behaviors
•Commercialization of neighborhoods
•Impacts housing affordability –increased vacation homes and reduced housing stock
Complaints/Concerns
Community Development Department 10
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
•Less vacancies of second home
•Better property maintenance
•Increased spending in community
•Alleviate pressure of median-priced homes
Claimed Benefits
Community Development Department 11
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Community Development Department 12
How Does City
Regulate?
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
City Regulation
Community Development Department
•City can regulate Land Use but not Ownership
•City regulates what is adopted in the Newport
Beach Municipal Code
•56% of single-family properties in City are
owned under an LLC or Trust
13
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Municipal Code Review
Community Development Department
•Single-Family Dwelling Use –House Owned by LLC
Allowed – Can’t Regulate Based on Ownership
•Short Term Lodging Allowed by Permit, Except in R-1
•Fractional Ownership doesn’t fit definition
•Rented or leased for a period of less than 30 days (these
are owned)
•Time Share Project–Prohibited, except in
commercial and mixed-use zones
•Fractional Ownership doesn’t meet definition
14
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
“Time Share” Defined
Community Development Department 15
NBMC §21.70.020
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
“Development” Defined
Community Development Department 16
•Ownership, including multiple owners is not
development
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Municipal Code’s
Time Share Requirements
Community Development Department 17
•Commercial visitor accommodations are not
residential uses
•Visitor accommodations
•Conversion of dwellings prohibited
•Minimum 100 timeshares or less with 300-unit resort hotel complex
•Substantial amenities required
•(e.g. golf courses, tennis courts, swimming pools, etc.)
•Sales, operating, management, and contingency plans required
•Use Permit and Development Agreement Required
Adapted from NBMC §20.48.220
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Community Development Department 18
City Council
Background and
Direction
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
City Council Background
•November 16, 2021, Study Session
•4 known homes
•Directed staff to study what other cities are doing and report back
•September 13, 2022-City Council Study Session
•Sagecrest Planning+Environmental Report
•11 known homes
•Directed staff to return with proposed action items
19Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
City Council Direction
•September 27, 2022 –Council Meeting
•Initiated Zoning Code and Local Coastal Program Amendment
•Did not pursue moratorium
•Directed staff to work expeditiously with Planning
Commission
20Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Community Development Department 21
Research
Findings
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Report Findings
•13 Cities -Consider Fractional Ownership a form of timeshare
•Carlsbad, Carmel by the Sea, Hermosa Beach, Monterey, Village of North Haven, Pacific Grove, Palm Desert, Palm Springs, Park City, South Lake Tahoe, Sonoma, St. Helena, Truckee
•7 Cities -Do not regulate
•Encinitas, Vail, Fort Lauderdale, Indian Wells, Santa Barbara, Santa Cruz, Napa
•4 Cities -Revised definition of timeshare
•Palm Desert, Truckee, St. Helena, Sonoma
22Community Development Department
22 Cities Surveyed
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Report Findings
•4 Cities –Issued Cease and Desist Letters
•Carmel by the Sea, Monterey County, Palm Springs, South Lake Tahoe
•3 Cities –Working on code update to timeshare
•Hermosa Beach, Pacific Grove, Park City
•1 City -Current moratorium to study
•Beverley Hills (expiring July 2023)
•1 City -Active litigation
•St. Helena
23Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
12 Known Properties in City
24Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Short Term Lodging in City
25Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Case Studies - St. Helena, CA
•Classifies fractional housing as timeshare
•Updated code
•Broaden timeshare definition
•Right of occupancy < Full year
•Limits timeshares to commercial zones
•Bolsters enforcement authority
•Modeled after short-term rental ordinance
26Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Case Studies - St. Helena, CA
•Current litigation -Ownership group and Pacaso filed suit against City
•Plaintiff’s Claim
•City ordinance invalid (pending)
•Enforcement violates plaintiff’s due process –14th Amendment (pending)
•City is selectively and discriminatorily enforcing regulations (pending)
•Enforcement exceeds City’s authority (pending)
•City interfering with economic advantage (dismissed)
27Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Case Studies –Palm Springs, CA
•Classified as timeshare
•Permitted in zones which permit hotels
•Require approval of a CUP
•Cease-and-Desist Order
•Proceeding with code enforcement actions on existing unpermitted units
28Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Case Studies- Park City, UT
•Updating code to allow and regulate
•Tentative City Council hearing –October 6, 2022
•Creating new definition -Single-Family Dwelling Fractional Ownership/Use
•Property owned by LC, LLC, or corporation
•Owner occupancy right < 30 days at a time
•Unrelated co-owners
•Advanced reservations via electronic systems
•Management subscription fee
29Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Case Studies- Park City, UT 30Community Development Department
Case Studies –
Park City, UT
Locations Allowed
•Commercial Zoning Districts
•Residential Development -
Medium Density
•Same zones where
Timeshares and Private
Residential Clubs allowed
Prohibited Locations
•Historic, Single-Family, and
Estate Zoning Districts
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Case Studies- Park City, UT
•Require approval of a CUP
•Require management plan
•Responsible party –return call within 20 minutes and within one hour drive of property
•Snow removal for access and parking
•Maintain property
•Noise and occupancy control
•Prohibit nightly rentals, on-street parking, commercial activities, and signs
•Business license
31Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Community Development Department 32
Options and
Direction
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
1) Definitions –Option A
•Amend Timeshare Project Definition
•Eliminate “development” criteria (St. Helena)
•Clarify fractional use includes plan facilitated, offered, or organized by a third-party manager (Hermosa Beach)
•Exclude arrangements whereby multiple property
parties join in directly purchasing full ownership of
a unit and thereafter agree upon arrangements for
its use (Palm Desert)
•Considered an accommodation and would effectively prohibit in residential zones
33Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
1) Definitions –Option B
•Create Fractional Ownership Land Use
•Create a new and separate fractional ownership use definition
•Owner occupancy right < 30 days at a time
•Establish specific regulations/standards
•Considered a form of residential use and allow in all
zones that allow residential uses
34Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
2) Review Process Options
a)Use Permit (Public Hearing)
•Conditional Use Permit (CUP):Planning Commission
•Minor Use Permit (MUP): Zoning Administrator
OR
b)Zoning Clearance (No Hearing)
•Planning staff reviews and issues approval letter
35Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
3) Parking Requirements
•Parking shall conform with current standards
(size and number)
•Parking shall be free of obstructions and
available for use
36Community Development Department
4) Noise Restrictions
•Prohibition of amplified sound outside or
audible at PL from 10 pm to 10 am
•Compliance with City noise ordinance
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
5) Separation Standards
•R-1 Zones: 500 feet separation between other
fractionals (areas where STL prohibited)
•Other Residential Zones –No separation
37Community Development Department
6) Trash Management
•Property manager responsible for ensuring containers put out/in on appropriate days
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
7) Management Plan
•Require submission of operating
agreement/management plan to City
•Contact person to address issues
38Community Development Department
8) Prohibit Subletting
•Prohibit subletting of unit for rentals, including short-term lodging
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
9) Good Neighbor Policy
•Owner responsibilities and acknowledgment
of potential enforcement/fines
•Contact person
•Parking rules
•Street sweeping
•Trash collection
•City noise restrictions
39Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
10) Owner Acknowledgments
•Sign acknowledgement by each owner
submitted to the City
•Understanding of parking rules, street
sweeping schedule, trash collection, and noise restrictions
•Understanding of Good Neighbor Policy
•Prohibition against subletting
•Enforcement and fines
40Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
11) Grandfathering Provisions
•Difficult to retroactively regulate existing
uses or those in process
•Allow to remain as legal nonconforming uses
41Community Development Department
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
42
Questions and Discussion
Seimone Jurjis, CDD Director
sjurjis@newportbeachca.gov
Jaime Murillo, AICP, Principal Planner
jmurillo@newportbeachca.gov
Planning Commission Study Session
October 6, 2022
Planning Commission Special Meeting - October 6, 2022 Item No. 2c - Additional Materials Presented by Staff Code Update Related to Fractional Homeownership (PA2022-0202)
Newport Beach
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Co-ownership: An age-old practice
Small groups of friends and family members
commonly share ownership of a second home.
●Property record data suggests that co-
ownership is common in Newport Beach○As of 2021, 41% (5,951) of homes were non owner-occupied and
owned in an LLC or trust, which
easily enable multiple owner
arrangements●In reflection of this practice, the Real
Estate Standards Organization in October 2021 announced it will add “co-ownership”
as a dedicated property sub-type to its
data standards
Source: ATTOM data
Owner-occupied
Non owner-occupied and owned in LLC or trust
Other non owner-occupied
4,604
8,834
5,951
Newport Beach property ownership
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Pacaso takes 2 to 8 buyers and puts them in 1 ho
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Meet Pacaso
For generations, groups of families and
friends have been co-owning second homes.
Pacaso is modernizing the process and
bringing together buyers.
With Pacaso, between two and eight families:
●Together co-own and control 100% of a luxury home (~2-4x local median value) in a property-specific LLC. ●Employ Pacaso as a full-service property manager to reduce the hassle of second home ownership.
Pacaso retains no ownership in the home, acting solely as a property manager after sale.
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Co-ownership, not Timeshare
●There are no pre-set limitations on a
homeowners ability to use the home. ●⅛ownership does not translate to ⅛
use.●Owners may use the home the same
as any second home owner.
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Who are Pacaso Owners?
Unlike vacation renters, co-owners make a large long-
term investment and return to their home year-round,
just like any other second home owner.
Pacaso owners:●Support local businesses during the shoulder
seasons.●Have children in the area or are considering
retiring in the region
All families:●Pay property taxes●Put at least 30% cash down●Clear credit and criminal background checks
“Pacaso is so different from a short -term rental of somebody else's house. It’s
ownership, with significant capital outlay, so there’s just a different mindset and
duty of care. We’re looking forward to being part of the neighborhood.”
- Susan and Jason
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Neighbors, not Short -term Renters
All ownersaresubjectto locallawand,in addition,agree
to Pacaso’sCodeof Conduct,whichoutlinepoliciessuch
as:
●No rental of the property●No large events or parties●Quiet hours:9pm - 7am●No commercial use of the home●Street parking discouraged
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Fully-managed Experience
AsPropertyManager,Pacasotakescareofthedetails
sothatownerscanenjoytheir secondhomewithout
thehassle.
Pacasosupports owners with local companies
providing:●Cleaning●Landscaping●Interior design●Home &Pool maintenance●Easy &equitable scheduling using the Pacaso
app●Home policies and enforcement
“All the things that Pacaso does are the things that I don’t want to do. I
don't want to worry about upkeep —I want to spend time with my sons,
my daughters, my wife.”
-Nkem and Angela
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Pacaso vs. Other Models
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Pacaso vs. Timeshare vs. Nightly Rental
PACASO HOME RESORT TIMESHARE NIGHTLY RENTAL
PROPERTY TYPE Single-family residence Hotel/Condo Single-family residence, Condo,
Apartment
TRUE OWNERSHIP Yes, real property No, right-to-use time No, short term occupancy
USAGE Ongoing access Fixed week(s)Nightly
RESALE
APPROACH
Market pricing; sell on your
terms
Set pricing; sell with resort None, renters do not own the
property
NIGHTLY RENTAL Prohibited Allowed Allowed
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Pacaso vs. Traditional Second Homes
Better Utilization
The average second home is used
just 11% of the year compared to the
average Pacaso home which is
occupied nearly 90% of the year.
Higher Price Point
The average Pacaso home costs 6x
more than the average second home
and 7x more than the average
primary home.
More Spending & Tax Revenue
Year-round home use means Pacaso
homes result in nearly 10xmore
spending at local businesses
compared to the average second
home. The owners also contribute
more to state and local tax revenue.
Source: EBP Economic Research
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Pacaso vs. Airbnb
More enforcement
Violations of Pacaso’s owner policies
may result in monetary penalties.
Limited to owners and guests
The only people who may use the
home are owners and a limited
number of their guests. Owners
cannot use other Pacasos other than
their own.
No revolving door
Pacaso homes are owned by an average
of 6 familieswho come back over and
over again, just like any other second
home owners. It’s not a revolving door
of 30 new groupson average every
year like you find with short term
rentals.
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Facts vs Fiction
The majority of public comments have stated the following:
●Pacaso owners are wonderful people●Home Management Teams are responsive to the
communities needs●Pacaso works with the city to swiftly address code
enforcement violations that have been filed
We understand that bad companies and one-off bad actors could
arise. Pacaso is committed to working with the city to build a
framework to protect the community's character.
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
neighbors@pacaso.com
Have questions about a Pacaso in your neighborhood? We have a dedicated team available to address neighbor
questions or concerns. Email us at neighbors@pacaso.com
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
Gabe Dima-Smith,
Public Affairs Manager
909.342.3144
gsmith@pacaso.com
Planning Commission Special Meeting - October 6, 2022 Item No. 2d - Additional Materials Presented at Meetign by Pacaso Code Update Related to Fractional Homeownership (PA2022-0202)
From:Kathe Morgan
To:Planning Commissioners
Subject:Fractional ownership staff reports/ordinances - St. Helena, Sonoma, Beverly Hills
Date:October 08, 2022 8:07:54 PM
Attachments:St.HelenaOrdinan.pdf
SonomaStaffRpt.pdf
SonomaSummary.pdf
BHFracRept.pdf
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the content
is safe.
Honorable Planning Commissioners:It was evident by Thursday evening’s meeting that you all have been handed a fairly challenging project. I suspectthat many residents have already researched the below documents which in majority are included in the websitewww.stoppacasonow.com. - so hopefully these will provide reference sources for your consideration. This websiteappears to be a ‘clearing house’ for all cities currently dealing with fractional ownership. And these attached reportsappear to be prepared by either City Attorney or Staff’s offices of each respective city -
My intention as a resident of Newport Beach is solely to be of assistance - as you will be facing a groundswell ofinvested homeowners. Respectfully, Kathe Morgan/Villa Point resident
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
PLANNING COMMISSION REPORT
Planning Commission Meeting of March 1, 2022
SUBJECT: Ordinance Adding Chapter 17.138 "Time Share Uses"and Sections
17.138.060 to Title 17, Zoning, of the St. Helena Municipal Code, and Deleting Section
17.112.130 of the St. Helena Municipal Code.
PREPARED BY: Ethan Walsh, City Attorney
REVIEWED BY: Maya DeRosa, Planning & Building Director
APPROVED BY: Maya DeRosa, Planning & Building Director
APPLICATION FILED:
LOCATION OF PROPERTY: Citywide
APN: n/a
GENERAL PLAN/ZONING: n/a
APPLICANT: n/a PHONE: n/a
BACKGROUND
Over the past two years, there has been significant discussion in the community regarding
Section 17.112.130 of the City’s Zoning Code, which prohibits 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 in the City (the “Time Share Ordinance”). The City
Council discussed the Time Share Ordinance at its July 14, 2020 meeting in response to
concerns raised regarding a real estate listing for a fractional or partial ownership interest
in a residential home in the City. The prior City Attorney discussed this issue with the City,
focusing on the question of the extent to which the City Council could regulate an
ownership structure through the City’s zoning authority, and noted the challenges of doing
so. At the conclusion of the Council’s discussion of this issue, Council directed the City
Attorney and staff to continue to research its options to address the concerns raised by
members of the community in response to the listing of the home at issue.
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In the months following the July 2020 Council meeting, the company that had been
marketing that original home, now known as Pacaso, began marketing other homes in
the City, and the City received additional complaints from members of the community.
Based on new information that was available to the City, primarily through Pacaso’s
marketing materials, the City Attorney’s office concluded that the properties being
marketed by Pacaso were not just fractional or partial ownership structures, but were also
being marketed to be used as a time share project that would be prohibited under the
City’s ordinance, and informed Pacaso of that conclusion. Pacaso disagreed with the City
Attorney’s conclusion, and initiated a lawsuit in an effort to compel the City to retract its
conclusion. That litigation is ongoing.
When reviewing the Time Share Ordinance in this context, the City Attorney’s office found
that the substance of the Time Share Ordinance has not been updated since its adoption
in 1982. The City Attorney’s office concluded that the Time Share Ordinance would
benefit from an update to refine the definitions to more directly address the impacts of
time-share uses, to clarify the means used by the City to enforce the restrictions on time
share uses, and to clarify how time share uses are treated in non-residential districts. City
staff initially delayed initiating any changes to the Time Share Ordinance while the
litigation was ongoing. However, due to the continued marketing of time share uses within
the City, staff has decided to move forward with recommending the proposed updates to
the City’s ordinance.
PROJECT DESCRIPTION
N/A
ANALYSIS
The Analysis section of the Staff Report is organized as follows: First, the section provides
a brief explanation for the City’s conclusion that the homes that have been marketed by
Pacaso constitute time share projects. While the City’s conclusion does not directly affect
the changes to the Zoning Code set forth in the proposed ordinance, it is helpful to
understand that the Time Share Ordinance, both in its original form and as proposed to
be amended, is intended to protect against the impacts that these homes and similar uses
could have on the City’s housing supply and the character of the City’s residential districts.
Second, this section discusses the legal basis for the City’s Time Share Ordinance, the
reasons why the City prohibited time share uses in residential properties, and why those
reasons continue to apply today. Third, this section outlines the changes made in the
proposed ordinance and the reasons for the proposed changes.
A.Current Time Share Ordinance and Application to Pacaso Homes
Section 17.112.130 of the Zoning Code prohibits the creation of a time-share project as
a means of ownership of any single-family, two-family or multiple family dwelling or
apartment house within the City. A time-share project is defined in that section as any
real property that is subject to a time-share program. A time-share program is in turn
defined in part as an arrangement whereby the use, occupancy or possession of the
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property circulates among purchasers according to a fixed or floating time schedule on a
periodic basis for a specific period of time during any given year.
Pacaso provides a significant amount of information on its website regarding the manner
in which its homes are used by the purchasers of a Pacaso home. According to Pacaso’s
website, the single family residences marketed by Pacaso are held by a property-specific
limited liability company (“LLC”), and each co-owner purchases a 1/8 share in the LLC.
(Pacaso.com/learn) Each 1/8 share entitles the co-owner to 44 stay nights within any 365
day window. Stays can be from 2 to 14 nights in duration for each 1/8 share. Back-to-
back stays are not permitted. (Pacaso.com/faq/scheduling) Stays are booked on an app,
with specific rules governing the number of “special dates” that each co-owner can book,
and the number of stays that each owner can book during “peak seasons.” (Id.) Each
owner can book the residence to use themselves, or may allow guests to use the
residence, whether or not the co-owner is present. (Id.) Between each stay, Pacaso
conducts a thorough inspection and cleaning. (“5 reasons Pacaso is better than a
timeshare.” Pacaso.com/blog/better-than-resort-timeshare)
The Pacaso model grants each 1/8 owner the right to use the property for a specific period
of time (44 days in a year) in increments of 2-14 days. The use, occupancy and
possession of the property circulates among the co-owners according to a floating time
schedule that gives each co-owner exclusive rights to the property for a specific period of
time each year. This use structure fits squarely in the City’s definition of a time-share
program, and the properties operated by Pacaso in this manner would therefore be time-
share projects under the existing Time Share Ordinance.
B.Reasons for the Time Share Ordinance
1. The City’s General Plan
The City of St. Helena has long been defined by its rural, small town quality and
agricultural character. In adopting the St. Helena General Plan Update 2040, the City
noted that the defining, unifying goal of all the elements of the 1993 General Plan was:
To protect the rural, small town quality and agricultural character of St. Helena. It is the
General Plan’s intent that the preservation of this small town character be the unifying
philosophy that overlays all other stated goals and policies.(General Plan 2040, p. 1-2.)
While the 2040 General Plan acknowledges that this is no longer the sole, overriding
focus of the General Plan, retaining the small town character of St. Helena remains a
primary focus of the City’s land use planning. (Id.)
A key component of retaining the City’s small town character is maintaining a balance
between the economic benefits that arise from visitors who come to St. Helena for its
wineries, restaurants and historic downtown, and maintaining its authentic small town
quality of life for the City’s residents. This theme is consistent throughout the City’s
General Plan, and maintaining this balance is key to the City’s long term viability. The
General Plan notes in its Introduction that “[t]he community stands out in the Valley for its
unique, historic character and its ability to attract visitors while also supporting the needs
of its resident population.” (General Plan p. 1-8.) The City has set goals to maintain that
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balance, striving to achieve an economy that “will meet the basic needs of residents, while
balancing the benefits and impacts of visitors and provide better economic opportunities.
(General Plan 1-15.) The City further seeks to “promote sustainable tourism practices that
allow the City to enjoy the economic benefits of visitors to the region while maintaining
the authentic small-town quality of life.” (General Plan p. 3-9.)
St. Helena is a renowned tourist destination, bringing visitors from throughout the world
to its wineries, restaurants and downtown, but it is also a functioning City and community,
with residents who contribute to its social fabric. Like most communities throughout
California, one of the key means that the City utilizes to maintain this balance is through
its Zoning Ordinance. The City has commercial districts, like the Service Commercial
district and the Central Business district, that provide for uses that serve both visitors and
the local community, such as restaurants, retail shops and winery tasting rooms, among
others, along with lodging where those visitors can stay. (St. Helena Municipal Code
§§17.48.030, 17.52.030.) The City also has residential districts that provide housing for
those who live in the community, at varying densities in order to provide a diversity of
housing types.
2.Use of Zoning to Preserve Residential Areas
The use of zoning to preserve the character of the residential districts of a City has been
common for over a century. In the seminal case of Euclid v. Ambler the United State
Supreme Court upheld the validity of comprehensive zoning that would set aside
residential districts “from which business and trade of every sort, including hotels and
apartment houses, are excluded.” (Euclid v. Ambler Co. 272 U.S. 365, 390.) The U.S.
Supreme Court upheld the Village of Euclid’s zoning ordinance in that instance, noting
that the inclusion of non-residential uses in residential districts may have an increasingly
deleterious impact on the residential area “until, finally, the residential character of the
neighborhood and its desirability as a place of detached residences are utterly destroyed.”
(Id. at 394.)
The California Court of Appeals followed Euclid and subsequent cases in upholding the
City of Carmel-by-the-Sea’s zoning restriction on short-term rentals. (Ewing v. City of
Carmel-By-The-Sea (1991) 234 Cal.App.3d 1579.) In that case, the Court noted that the
City’s chief purpose in adopting the short-term rental restriction was “to provide an
appropriately zoned land area within the City for permanently single-family residential
uses and structures and to enhance and maintain the residential character of the City.”
(Id. at 1579.) In upholding Carmel’s short-term rental restriction, the Court found that
short-term rentals “undoubtedly affect the essential character of a neighborhood and the
stability of a community. Short-term tenants have little interest in public agencies or in the
welfare of the citizenry. They do not participate in local government, coach little league,
or join the hospital guild. They do not lead a scout troop, volunteer at the library, or keep
an eye on an elderly neighbor. Literally, they are here today and gone tomorrow—without
engaging in the sort of activities that weld and strengthen a community.” (Id. at 1591.)
3.Impacts of Time Share Uses on Residential Districts
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Like Carmel, the City of St. Helena strives to maintain the character of its residential areas
in the face of intense demand for accommodations to serve visitors to St. Helena. The
Time Share Ordinance is one of the means that the City has in place to ensure that it is
able to maintain its existing and limited housing stock for use in long term residency, and
to maintain the character of its residential zoning districts. When the City originally
adopted the Time Share Ordinance in 1982, the City Council made specific findings based
on the impact it foresaw if time share uses were to locate in the residential areas of the
City. Those findings were as follows:
1.There is a critical shortage of affordable housing in the city for long-term
occupancies (more than six months annually), and the availability of additional
residential dwelling units is substantially restricted by the growth management
system.
2.The conversion of residential dwelling units within the city to time-sharing projects
eliminates residential dwelling units otherwise available for long-term occupancies
(more than six months annually) in the city.
3.Time-sharing projects have the same character as commercial hotels, motels and
other transient occupancy uses due to their transient nature and to the multiple short-
term (less than six months annually) occupancies by those participating in time-
sharing projects.
4.Such commercial or quasi-commercial like use is inappropriate in residential areas
due to the increased traffic generation and multiple occupancies disturbing the peace
and quiet of residential neighborhoods.
5.The city council finds and determines that this section is necessary to protect the
public health, safety and welfare of the citizens of the city.
As discussed in more detail below, these findings continue to hold true in St. Helena, and
continue to support the City’s decision to restrict time-share uses in residential districts.
i.Housing Shortages and Impacts of Time-Share Uses on Existing
Housing Stock
In adopting the current Time Share Ordinance, the City Council found that there was a
critical shortage of affordable housing in the City for long-term occupancies. That
continues to be the case, and is undoubtedly worse than was the case at the time the
Time Share Ordinance was originally adopted. The most recent census data lists the
median value of owner occupied homes in St. Helena at $1,112,100 for the period of
2015-2019, while the Zillow Home Value Index estimates medial home values in St.
Helena to be approximately $1,870,000 as of February 2022.
(www.census.gov/quickfacts/sthelenacitycalifornia; zillow.com/home-values/.) In
contrast, the median household income in St. Helena from 2015-2019 was $90,031, and
the median income for a four person household in Napa County for 2021 is approximately
$109,200. (www.census.gov/quickfacts/sthelenacitycalifornia; www.hcd.ca.gov/grant-
funding/income-limits/state-and-federal-income-limits/docs/income-limits-2021.pdf.)
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At the time of adoption of the City’s Housing Element in 2015, the income necessary to
purchase a median priced single family home was nearly $200,000 per year, and prices
have risen dramatically since then. (City of St. Helena Housing Element Update 2015¬23,
p. 3.) The cost of homes currently in St. Helena are well in excess of what median income
residents of St. Helena can afford, as well as median income residents of Napa County
generally. Further, as Erika Sklar observed in the St. Helena Housing Update Report that
she prepared for the City in April 2018, “St. Helena has more local jobs than people in the
labor force, demanding large numbers of commuters to fill local jobs. Workers commute
daily into St. Helena, many because there is no local housing that is affordable at the
incomes that they make. 36% of St. Helena households cannot afford market rents while
70% of St. Helena households cannot afford to purchase a home. Paramedics and
preschool teachers cannot afford St. Helena’s market rents. Teachers, registered nurses,
winery and hospitality managers and non-profit directors cannot afford homeownership in
St. Helena.” (St. Helena Housing Update Report, p. 7 (April 2018).)
The City has made and continues to make efforts to address the need for affordable
housing in the City, including providing assistance for the Brenkle Court, Turley Flats and
963 Pope Street projects. The City has also ensured that new non-residential
development will assist the City in providing adequate affordable housing, as evidenced
by the significant contributions to affordable housing made by the Farmstead Lodging
project through its development agreement with the City. These efforts, however, have
highlighted the challenges of providing housing at all income levels, with the most
significant challenge being a limited supply of existing housing stock in the City, and a
limited supply of available land for new housing. Given the housing shortage already in
existence, losing additional housing stock will only make this problem worse.
The findings in the original Time Share Ordinance also note that the conversion of homes
to time sharing projects would eliminate residential dwelling units that would otherwise be
available for long term residential use. This continues to be true, as a home that is used
for time share purposes will no longer be available for households to use as their long
term residence. This threat to the City’s existing housing stock is not insignificant. The
publicity regarding Pacaso’s rise as a company speaks to a pent up demand for homes
that could be converted to time share use, reducing available housing stock for long term
use. Pacaso’s co-founder has indicated that “[t]here are tens of millions of families that
aspire to own second homes but are unable to, due to reasons of cost.” (Just Five Months
Old, Zillow Co-founder’s Pacaso Claims It’s Already A Unicorn” Noah Kirsch, March 24,
2021 (www.forbes.com/sites/noahkirsch/2021/03/24/just-five-months-old-zillow-
cofounders-pacaso-claims-its-alread-a-unicorn/.) In discussing Pacaso’s model, Dan
Wenhold of the venture capital firm Fifth Wall said “[t]hey were taking a previously illiquid
asset, which was a timeshare, and making it affordable for the masses, also making it
attainable for folks who wanted to own a second home but previously weren’t able to.”
(“Pacaso, the Proptech Startup Founds by Zillow Alums, Raises $125M Series C” Sophia
Kunthara (September 14, 2021) (news.crunchbase.com/news/proptech-startup-pacaso-
raises-125m-series-c.) Creating a new market for these prospective buyers who
otherwise would not buy second homes unquestionably increases demand for these
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homes by creating an incentive for timeshare companies to buy up residences to meet
this market demand. Creating more demand, and reducing supply, will further ratchet up
housing costs, exacerbating the already significant housing shortage in the City.
ii.Impacts to Character of the City’s Residential Districts
The City Council additionally found as part of the adoption of the original Time Share
Ordinance that time-sharing projects have the same character as commercial hotels,
motels and other transient occupancy uses due to their transient nature and to the multiple
short-term occupancies by those participating in time-sharing projects. The Council
concluded that this commercial or quasi-commercial like use is inappropriate in residential
areas due to the increased traffic generation and multiple occupancies disturbing the
peace and quiet of residential neighborhoods. This continues to be the case, as the nature
of time share uses of residential property is different than the typical long term residential
uses for which the residential districts of the City are intended.
The complaints that have been made by some local residents regarding the Pacaso
homes are illustrative of the distinctions between time share uses and long term
residential uses. A sampling of the email complaints received by the City are included in
Attachment No. 3 to this Staff Report. The complaints received center on concerns over
more intense traffic and parking issues, outdoor parties and conversations going late into
the evening, sometimes as late as 2 A.M. One neighbor complained of outdoor lighting
shining into her daughter’s room at night. They complained of traffic and inadequate
parking for the visitors to these homes. Further, neighbors have noted that with each
turnover from one stay to another, cleaning and landscaping crews come to clean the unit
and prepare it for the next user. While this level of maintenance is appropriate for a
commercial vacation property, it impacts the residential character of the surrounding area
by adding parking and noise burdens in the neighborhood. Living next door to a home
where the residents turnover every 2-14 days, and professional cleaning and landscaping
crews come to the property between each visit is much more akin to living by a
commercial lodging project than a residential home. This is not at all surprising, given
that these time share homes are used by people who are on vacation. While long term
residents may have an occasional party at their home, the time share model means that
these residences are constantly being used by people who are on vacation, hosting
parties or celebrating special occasions. These activities by their nature are more intense
than typical residential use of property.
The intensity of this use is a significant reason that these uses can change the character
of a residential neighborhood. Long term residents, whether owners or renters, will
occasionally have guests, and will occasionally have parties, but these time-share homes
are used exclusively by people who are coming to the City on a short term basis for
vacation or leisure. People will naturally stay out later, entertain more and gather in larger
numbers while on vacation. That is the reason that these uses are more appropriate in
non-residential areas that are intended to cater to the City’s visitors and tourists. Time
share uses can change the character of a residential neighborhood by having it serve not
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only as a residential area but also a visitor lodging area, and subjecting it to the impacts
that come with that more intense land use.
In their marketing materials, Pacaso cites this intensity of use as a benefit, indicating that
having these units filled with visitors seven days a week will benefit the local economy,
since these visitors will patronize local businesses. (pacaso.com/communities) However,
as noted above, the City strives through its General Plan to achieve a balance between
benefits to the local economy and maintaining the character of the City. The City seeks
to achieve this balance by promoting “sustainable tourist practices that allow the City to
enjoy the economic benefits of visitors to the region while maintaining the authentic small-
town quality of life, (General Plan p. 3-9) and striving to achieve a local economy that “will
meet the basic needs of residents, while balancing the benefits and impacts of visitors.”
(General Plan p. 1-15.) Bringing more visitors into residential neighborhoods to improve
the local economy does not help to achieve that balance. It instead tips the scales in favor
of the local economy, at the expense of the residential character of these neighborhoods.
The nature of the timeshare use itself can impact the residential character of the City’s
residential districts because it will ensure that the time share users can only use their
property for a limited amount of time each year. In the case of Pacaso owners, each stay
is limited to 2-14 days. As discussed above, in the Ewing v. City of Carmel-by-the-Sea
case, the California Court of Appeal found that short term rentals would affect the
essential character of a neighborhood and the stability of a community. The Court noted
that “[s]hort term rentals have little interest in public agencies or in the welfare of the
citizenry. They do not participate in local government, coach little league, or join the
hospital guild. They do not lead a Scout troop, volunteer at the library, or keep an eye on
an elderly neighbor. Literally they are here today and gone tomorrow—without engaging
in the sort of activities that weld and strengthen a community.”
This same problem is present with time-share uses. Each co-owner is in the unit on a
short-term basis, and without the time to participate in the types of activities or build the
relationships that create the fabric of a community. At the April 28, 2021 council meeting
several Pacaso co-owners spoke of their experiences in St. Helena. All of them spoke of
their affection for the community and the traditions they had established, but these were
centered on attending local events and visiting shops, restaurants and wineries. These
types of transactional activities are all beneficial to the City’s local economy and are what
the City hopes to see from visitors to the City, but it is not the type of community
involvement described in the Ewing case that binds and strengthens a residential
community. Given the City’s desire to strike a balance between the demands of the City’s
visitor and tourist economy, and retaining its small town character and quality of life, the
City has an interest in maintaining housing stock in its residential districts for long-term
residents who will engage in the community in the manner described by the Court in
Ewing, to the betterment of the entire community.
C.Proposed Amendments to the Time Share Ordinance
The proposed Ordinance would make certain changes to the City’s Existing Time Share
Ordinance, as described below.
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1.Findings and Establishment of New Chapter
The proposed Ordinance includes detailed recitals and findings describing the policy
bases for the City’s regulation of time share uses. The findings are consistent with the
findings made as part of the original Time Share Ordinance, but more detail has been
added. The policy bases for the proposed Ordinance are discussed in the sections above,
and further discussion is not necessary here.
The proposed Ordinance also relocates the restrictions on time share uses to its own
chapter at Chapter 17.138. The Time Share Ordinance is currently located in Chapter
17.112, General Site Design and Development Standards. City staff believes that with the
added level of detail in the Proposed Ordinance, these provisions merit being located in
a separate chapter, and has changed the location of the Timeshare Ordinance
accordingly.
2.Definitions
The Proposed Ordinance amends the definitions that are used to define time share uses,
with the new definitions set forth in Section 17.138.020. The new definitions are modeled
on the definitions utilized by the state to regulate time-shares in the Vacation Ownership
and Time-Share Act of 2004 (Bus. & Prof. Code §§11210¬11288), but are modified
somewhat to better apply in the land use regulation context.
The new ordinance includes a number of definitions that work in concert to define a time-
share use. The ordinance defines a “time-share use” as the use of one or more
accommodations, or any part thereof, as part of a time-share property pursuant to a time-
share plan. An “accommodation” is defined in this Chapter to include a range of residential
units that could potentially be used for time-share purposes. The types of residential units
that can be accommodations are listed at the beginning of Section 17.138.020 in the
proposed ordinance. A “time-share plan” is defined in the ordinance, and generally
includes any arrangement, plan, scheme or similar device whereby a purchase receives
the right to exclusive use of the accommodation, whether through the granting of
ownership rights, possessory rights or otherwise, for a period of time less than a full year
during any given year. A “time-share property”, in turn is defined as one or more
accommodations that are subject to the same time-share plan together with any property
rights that are appurtenant to the accommodations. A “time-share instrument”, is the
document or documents that create or govern the operation of the time-share plan.
Therefore a time-share use is the use of a residential property that fits within the definition
of an “accommodation” under the ordinance, pursuant to a ”time-share plan”, which grants
each owner of the time-share property exclusive use of the property for a certain period
of time each year, but not the full year.
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It is important to note that not all properties with multiple owners or owned by business
entities (such as LLCs) would constitute a time-share use under these definitions. The
definitions focus on the manner in which the accommodation is used, not how it is owned.
A time-share plan allows each owner exclusive use of the property for a specific period
of time. This manner of use prevents the property from being used for long term residency,
and leads to the continual cycling of visitors through the property and the more intense,
constant vacation oriented use that the ordinance seeks to limit in residential districts of
the City.
A property that is owned by a group of friends or extended family members, whether
through a separate business entity or otherwise, will not necessarily mandate that only
one owner will be able to use the property at a time. The more formal arrangement found
in time-share uses increases the intensity of use, in that each individual time-share owner
cycles through the property, whereas families or friends are more likely to use the property
together or in groups leading to less transition in the residential neighborhood. The more
formal relationship, use of professional property managers and rights to exclusive use
found in time¬share uses contributes to the commercial character of the property, with
added traffic due to the more frequent turnover of visitors and more frequent cleaning and
inspection between each user, which is common for a commercial vacation property, but
not for a home owned by family or friends.
3.Enforcement
The new ordinance additionally adopts a new enforcement structure for the City time-
share restrictions, modeled on the City’s short-term rental ordinance. The ordinance
prohibits both the use of accommodations for time-share use, and the advertisement of
accommodations for time-share uses. This will better allow the City to prevent time-share
uses in residential neighborhoods before they occur. The proposed Ordinance also
outlines the process that will be used to enforce this new Chapter, again based on the
City’s existing short-term rental regulations. This approach has proved to be effective in
enforcing the City’s short-term rental regulations, and will help the City to take a more
preventative approach to enforcing its time-share regulations as well.
4.Time Share Uses in Service Commercial and Central Business Districts
Finally, while the City’s existing Time Share Ordinance did prohibit time-share projects
within certain types of residential dwelling units within the City, it does not make
distinctions based on the various zoning districts of the City. Given that the primary
concerns and impacts of this use arise from the high intensity use of property that
negatively impacts the residential character of residential districts within the City, this use
may not have the same impacts in commercial districts where visitors can be closer to
the amenities in the City that cater to visitors. The proposed new ordinance would allow
time-share uses in the Service Commercial and Central Business Districts as conditional
uses, provided that such time-share uses would be limited to accommodations in upper
floors in conjunction with a mixed use project, would be required to provide at least one
parking space for accommodations of two or fewer bedrooms, and at least two parking
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spaces for accommodations of three or more bedrooms, and would be subject to such
other conditions imposed by the City has part of the conditional use permit process. As
part of the application for a time-share use, the applicant would have to provide specific
information including a management plan and specific information on the
accommodations and any ancillary uses. The City would then review the application
process in accordance with its normal process for review of conditional uses. This would
allow the City to address potential impacts associated with this use, similar to the
approach that the City uses with hotels and other lodging accommodations in these
districts.
CEQA DETERMINATION
The proposed ordinance is not subject to CEQA because the adoption of this ordinance
is not a “project” pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title 14 of the
California Code of Regulations. Specifically, this ordinance only affirms and clarifies
existing regulations regarding timeshare uses within the City and merely authorizes
administrative and implementation activities which will not result in a direct or reasonably
foreseeable indirect physical change in the environment.
Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance is
exempt from the requirements of CEQA because it can be seen with certainty that the
provisions contained herein would not have the potential for causing a significant effect
on the environment.
STAFF RECOMMENDATION
For the reasons described above, staff recommends that the Planning Commission Adopt
the Resolution Recommending that the City Council adopt an Ordinance Adding Chapter
17.138 “Time Share Uses” and Sections 17.138.010-17.138.060 to Title 17, Zoning, of
the St. Helena Municipal Code and Deleting Section 17.112.130 of the St. Helena
Municipal Code.
ATTACHMENTS
PC2022- 001 Timeshare Resolution 3-1-2022-c1
St. Helena Time Share Ordinance-c1
Examples of complaints received regarding timeshare properties-c1
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CITY OF ST. HELENA PLANNING COMMISSION
RESOLUTION NO. PC2022-____
A RESOLUTION OF THE PLANNING COMMISSION OF
THE CITY OF ST. HELENA, CALIFORNIA,
RECOMMENDING THAT THE CITY COUNCIL ADOPT AN
ORDINANCE ADDING CHAPTER 17.138 “TIME SHARE
USES” AND SECTIONS 17.138.101-17.138.060 TO TITLE
17, ZONING, OF THE ST. HELENA MUNICIPAL CODE
AND DELETING SECTION 17.112.130 OF THE ST.
HELENA MUNICIPAL CODE
Recitals
WHEREAS, the City of St. Helena is an popular tourist destination, known for its
scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street
and small town agricultural character; and
WHEREAS, preserving the rural, small town quality and agricultural character of the
City of St. Helena has been a focal point of the City’s land use planning for decades, and
remains a primary focus in the City’s 2040 General Plan; and
WHEREAS, the City of St. Helena stands out in the Napa Valley for its ability to
attract visitors while also supporting the needs of its resident population. Maintaining the
balance between the quality of life for residents and those who work in the City and the
visitors who help to sustain the City’s tourist economy is key to maintaining a sustainable
community and a stable economy; and
WHEREAS, the City values and welcomes all visitors to the City and recognizes
their contributions to the City’s economy, but finds that in order to maintain the City’s
long term viability as a community where people not only come to visit, but also live,
work and contribute to the long term betterment of the community through participation
in the City’s schools, local community groups, civic government and local serving
businesses, the City must maintain a balance between residential land uses and visitor
serving uses; and
WHEREAS, the City’s existing housing stock is significantly impacted, with demand
outweighing supply, resulting in extremely high housing prices as detailed in the
accompanying staff report. A limited supply of suitable vacant land, exorbitantly high land
costs, and limitations in the City’s existing infrastructure, among other factors, have limited
the construction of additional housing in the City of St. Helena; and
WHEREAS, according to the U.S. Census Bureau, the current median household
income in the City of St. Helena is $90,031, while the estimated value of owner-occupied
housing units from 2015-2019 was approximately $1,112,100, with current real estate
listings suggesting that prices are increasing significantly, meaning that homes in the City
are not affordable to the median household in the City; and
WHEREAS, as noted in the St. Helena Housing Update Report prepared for the
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
City in April 2018, “St. Helena has more local jobs than people in the labor force,
demanding large numbers of commuters to fill local jobs. Workers commute daily into St.
Helena, many because there is no local housing that is affordable at the incomes that
they make. 36% of St. Helena households cannot afford market rents while 70% of St.
Helena households cannot afford to purchase a home. Paramedics and preschool
teachers cannot afford St. Helena’s market rents. Teachers, registered nurses, winery
and hospitality managers and nonprofit directors cannot afford homeownership in St.
Helena”; and
WHEREAS, the City has made significant efforts to address the need for housing at
lower income levels, of which recent examples include providing assistance to local
nonprofit Our Town St. Helena for the Brenkle Court development, a mutual self-help
housing development providing homeownership opportunities to eight low income working
families, as well as the acquisition of a home located at 963 Pope Street using a charitable
sale strategy. The property at 963 Pope Street is being developed with an additional four
units to provide a total of five new affordable rental units in the City; and
WHEREAS, further, in connection with the recently approved Farmstead lodging
project, the City negotiated with the developer to contribute One Million Dollars toward the
purchase of property to be used for the development of not less than twenty units of
housing that will be affordable to low and very low income households, and an additional
Two Million Two Hundred Thousand Dollars to be used more generally toward the
development of affordable housing in the City; and
WHEREAS, the City additionally provided substantial financial assistance to the
recently completed Turley Flats Affordable Housing development, which provides eight
units of rental affordable housing in a three story building located at 1105 Pope Street; and
WHEREAS, these efforts have helped to address the City’s need for affordable
housing, but have also highlighted the challenge of providing sufficient housing to meet
demand, particularly at more affordable levels, due to the significant costs of acquiring
housing or land for the development of housing in the City and the limited supply of such
land; and
WHEREAS, the conversion of existing residential units to uses other than long-term
residential use will further reduce the City’s existing long-term housing supply, causing
further imbalance between the demand for housing in the City and the existing supply, not
only altering the character of the City’s residential neighborhoods, but also presenting
further challenges to the City’s efforts to provide affordable housing within the community;
and
WHEREAS, the City additionally has, for many years, worked to preserve its
existing housing stock for long term residential use, both to maintain the character of its
residential neighborhoods and prevent residential districts from becoming visitor and tourist
serving districts, and to ensure that it would not be converted to uses other than long-term
residential uses; and
WHEREAS, to this end, in 1982 the City adopted Ordinance No. 82-07, which
prohibited the creation of time-share projects as a means of ownership of any single-
family, two-family or multiple-family dwelling or any apartment house within the City. This
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
restriction was imposed because the conversion of residential dwelling units to time-
sharing projects would eliminate residential dwelling units that would otherwise be
available for long-term occupancies, and were inappropriate in residential areas because
those uses have the same character as commercial hotels, motels and other transient
occupancy uses, and would result in increased traffic generation and multiple occupancies
disturbing the peace and quiet of residential neighborhoods; and
WHEREAS, the City has historically not received complaints about time-sharing
uses in residential neighborhoods. Commencing in 2020, however, the City began
receiving complaints regarding single family homes in the City that were being sold and/or
marketed as “fractional ownership” or “co-ownership” homes, wherein each buyer may
acquire a one-eighth interest in a limited liability company that will own the home. Under
the structure pursuant to which these dwelling units are marketed and sold, each owner
gets a one-eighth share along with the right to use the home for one-eighth of each year
indefinitely. During each owner’s usage period, that owner has exclusive use of the entire
house. All rentals are prohibited; only owners and their guests are permitted to use the
house. Each owner pays regular assessments to fund the operating costs of the home and
maintenance reserves; and
WHEREAS, this arrangement, which provides that each purchaser is entitled to
exclusive use of the property for a fixed number of days each year, is a “time-share plan”
as defined in Business and Professions Code section 11212, and a “time share program”
as defined in Section 17.112.130 of the City’s Municipal Code; and
WHEREAS, the City has received numerous complaints regarding these properties,
including parking impacts from large numbers of people staying at these properties;
excessive noise late into the evening due to frequent outdoor parties; traffic due to frequent
visitor turnover; traffic, noise and parking concerns due to frequent visits from cleaning,
landscape maintenance and pool cleaning services that come to the properties in between
each stay to prepare the home for the next guest; and an inability to maintain lines of
communication to set community expectations with the users of the unit, as visitors only
frequent the homes for short term stays of 2 to 14 days; and
WHEREAS, the complaints received by the City are reflective of the reasons that
the City prohibited time-share projects within residential areas of the City. The time-share
uses provide a short-term, high impact vacation oriented use of the property, where those
that buy into the time-share use the home for entertaining and short term stays while
visiting restaurants, wineries and other tourist oriented locations in St. Helena and the
surrounding Napa Valley; and
WHEREAS, this high impact use, combined with the frequent turnover and
commercial management of these properties is not consistent with the residential districts
in which they are located. It is commercial in nature, in that these time-share uses are
structured as a short-term, tourist oriented, visitor serving use of the subject properties.
The use of these properties as time-shares adds excessive noise and traffic to residential
districts by using these properties for high impact tourist oriented uses more appropriately
located in commercial districts of the City; and
WHEREAS, expanded use of residential properties for time-share uses will further
reduce the availability of housing stock for long-term residential use, and create a new
demand for time-share uses of residential properties; and
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
WHEREAS, this encroachment of tourist oriented, visitor serving uses in residential
neighborhoods will not only compromise the residential character of these areas, but will
also further increase the costs for housing in the City, undermining the City’s efforts to
provide a balance of housing for all income levels in the City; and
WHEREAS, the City’s authority to enact zoning ordinances is based on the powers
accorded cities and counties under the State constitution to make and enforce police
regulations. This police power grants the City broad authority to regulate the development
and use of real property within its jurisdiction to promote the public welfare; and
WHEREAS, pursuant to and in accordance with this authority, the City desires to
reaffirm its restrictions on time-share uses in residential areas, and to update the language
of the Zoning Code to provide consistency with the terminology used to define time-share
uses in State law. Further, the City desires to provide greater clarity as to the zoning
districts in which time-share uses are permitted as conditional uses, and the standards
pursuant to which they will be reviewed in those zoning districts; and
WHEREAS, the City gave public notice of the public hearing for the proposed
ordinance by publishing in the Napa Valley Register; and
WHEREAS, on March 1, 2022, the Planning Commission held a duly-noticed
public hearing and considered the staff report, recommendations by staff, and public
testimony concerning the proposed ordinance.
Resolution
NOW THEREFORE, THE PLANNING COMMISSION OF THE CITY OF ST.
HELENA DOES RESOLVE, DETERMINE, FIND AND ORDER AS FOLLOWS:
Section 1. This ordinance was assessed in accordance with the authority and
criteria contained in the California Environmental Quality Act (CEQA), the State CEQA
Guidelines (the Guidelines), and the environmental regulations of the City. The City
Council hereby finds that this ordinance is not subject to CEQA because the adoption of
this ordinance is not a “project” pursuant to Sections 15060(c)(2) and 15060(c)(3) of Title
14 of the California Code of Regulations. Specifically, this ordinance only affirms and
clarifies existing regulations regarding timeshare uses within the City and merely
authorizes administrative and implementation activities which will not result in a direct or
reasonably foreseeable indirect physical change in the environment.
Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this ordinance
is exempt from the requirements of CEQA because it can be seen with certainty that the
provisions contained herein would not have the potential for causing a significant effect on
the environment.
Section 2. Based on the entire record before the Planning Commission, and all
written and oral evidence presented, the Planning Commission hereby finds that the
proposed ordinance is consistent with the City's adopted General Plan and does not
conflict with any of the General Plan's goals or policies.
Section 3. The Planning Commission hereby recommends that the City Council
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
adopt the attached proposed ordinance entitled: “ADDING CHAPTER 17.138,TIME
SHARE USES AND SECTIONS 17.138.101-17.138.060 TO TITLE 17, ZONING, OF
THE ST. HELENA MUNICIPAL CODE AND DELETING SECTION 17.112.130 OF THE
ST. HELENA MUNICIPAL CODE.”
I HEREBY CERTIFY that the foregoing recommendation to the City Council was
duly and regularly approved by the Planning Commission of the City of St. Helena
at a regular meeting of said Planning Commission held on March 1, 2022, by the
following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
APPROVED:ATTEST:
John Ponte Maya DeRosa, AICP
Planning Commission, Chair Planning and Building Director
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
CITY OF ST. HELENA
ORDINANCE NO.
ADDING CHAPTER 17.138 “TIME SHARE USES” AND SECTIONS 17.138.010 –
17.138.060 TO TITLE 17, ZONING, OF THE ST. HELENA MUNICIPAL CODE, AND
DELETING SECTION 17.112.130 OF THE ST. HELENA MUNICIPAL CODE
WHEREAS, the City of St. Helena is a popular tourist destination, known for its
scenic Napa Valley location, exceptional wineries and restaurants, historic Main Street
and small town agricultural character; and
WHEREAS, preserving the rural, small town quality and agricultural character of
the City of St. Helena has been a focal point of the City’s land use planning for decades,
and remains a primary focus in the City’s 2040 General Plan; and
WHEREAS, the City of St. Helena stands out in the Napa Valley for its ability to
attract visitors while also supporting the needs of its resident population. Maintaining
the balance between the quality of life for residents and those who work in the City and
the visitors who help to sustain the City’s tourist economy is key to maintaining a
sustainable community and a stable economy; and
WHEREAS, the City values and welcomes all visitors to the City and recognizes
their contributions to the City’s economy, but finds that in order to maintain the City’s
long term viability as a community where people not only come to visit, but also live,
work and contribute to the long term betterment of the community through participation
in the City’s schools, local community groups, civic government and local serving
businesses, the City must maintain a balance between residential land uses and visitor
serving uses; and
WHEREAS, the City’s existing housing stock is significantly impacted, with
demand outweighing supply, resulting in extremely high housing prices as detailed in
the accompanying staff report. A limited supply of suitable vacant land, exorbitantly
high land costs, and limitations in the City’s existing infrastructure, among other factors,
have limited the construction of additional housing in the City of St. Helena; and
WHEREAS, according to the U.S. Census Bureau, the current median household
income in the City of St. Helena is $90,031, while the estimated value of owner-
occupied housing units from 2015-2019 was approximately $1,112,100, with current
real estate listings suggesting that prices are increasing significantly, meaning that
homes in the City are not affordable to the median household in the City; and
WHEREAS, as noted in the St. Helena Housing Update Report prepared for the
City in April 2018, “St. Helena has more local jobs than people in the labor force,
demanding large numbers of commuters to fill local jobs. Workers commute daily into
St. Helena, many because there is no local housing that is affordable at the incomes
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
that they make. 36% of St. Helena households cannot afford market rents while 70% of
St. Helena households cannot afford to purchase a home. Paramedics and preschool
teachers cannot afford St. Helena’s market rents. Teachers, registered nurses, winery
and hospitality managers and nonprofit directors cannot afford homeownership in St.
Helena”; and
WHEREAS, the City has made significant efforts to address the need for housing
at lower income levels, of which recent examples include providing assistance to local
nonprofit Our Town St. Helena for the Brenkle Court development, a mutual self-help
housing development providing homeownership opportunities to eight low income
working families, as well as the acquisition of a home located at 963 Pope Street using
a charitable sale strategy. The property at 963 Pope Street is being developed with an
additional four units to provide a total of five new affordable rental units in the City; and
WHEREAS, further, in connection with the recently approved Farmstead lodging
project, the City negotiated with the developer to contribute One Million Dollars toward
the purchase of property to be used for the development of not less than twenty units of
housing that will be affordable to low and very low income households, and an
additional Two Million Two Hundred Thousand Dollars to be used more generally
toward the development of affordable housing in the City; and
WHEREAS, the City additionally provided substantial financial assistance to the
recently completed Turley Flats Affordable Housing development, which provides eight
units of rental affordable housing in a three story building located at 1105 Pope Street;
and
WHEREAS, these efforts have helped to address the City’s need for affordable
housing, but have also highlighted the challenge of providing sufficient housing to meet
demand, particularly at more affordable levels, due to the significant costs of acquiring
housing or land for the development of housing in the City and the limited supply of
such land; and
WHEREAS, the conversion of existing residential units to uses other than long-
term residential use will further reduce the City’s existing long-term housing supply,
causing further imbalance between the demand for housing in the City and the existing
supply, not only altering the character of the City’s residential neighborhoods, but also
presenting further challenges to the City’s efforts to provide affordable housing within
the community; and
WHEREAS, the City additionally has, for many years, worked to preserve its
existing housing stock for long term residential use, both to maintain the character of its
residential neighborhoods and prevent residential districts from becoming visitor and
tourist serving districts, and to ensure that it would not be converted to uses other than
long-term residential uses; and
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
WHEREAS, to this end, in 1982 the City adopted Ordinance No. 82-07, which
prohibited the creation of time-share projects as a means of ownership of any single-
family, two-family or multiple-family dwelling or any apartment house within the City.
This restriction was imposed because the conversion of residential dwelling units to
time-sharing projects would eliminate residential dwelling units that would otherwise be
available for long-term occupancies, and were inappropriate in residential areas
because those uses have the same character as commercial hotels, motels and other
transient occupancy uses, and would result in increased traffic generation and multiple
occupancies disturbing the peace and quiet of residential neighborhoods; and
WHEREAS, the City has historically not received complaints about time-sharing
uses in residential neighborhoods. Commencing in 2020, however, the City began
receiving complaints regarding single family homes in the City that were being sold
and/or marketed as “fractional ownership” or “co-ownership” homes, wherein each
buyer may acquire a one-eighth interest in a limited liability company that will own the
home. Under the structure pursuant to which these dwelling units are marketed and
sold, each owner gets a one-eighth share along with the right to use the home for one-
eighth of each year indefinitely. During each owner’s usage period, that owner has
exclusive use of the entire house. All rentals are prohibited; only owners and their
guests are permitted to use the house. Each owner pays regular assessments to fund
the operating costs of the home and maintenance reserves; and
WHEREAS, this arrangement, which provides that each purchaser is entitled to
exclusive use of the property for a fixed number of days each year, is a “time-share
plan” as defined in Business and Professions Code section 11212, and a “time share
program” as defined in Section 17.112.130 of the City’s Municipal Code; and
WHEREAS, the City has received numerous complaints regarding these
properties, including parking impacts from large numbers of people staying at these
properties; excessive noise late into the evening due to frequent outdoor parties; traffic
due to frequent visitor turnover; traffic, noise and parking concerns due to frequent visits
from cleaning, landscape maintenance and pool cleaning services that come to the
properties in between each stay to prepare the home for the next guest; and an inability
to maintain lines of communication to set community expectations with the users of the
unit, as visitors only frequent the homes for short term stays of 2 to 14 days; and
WHEREAS, the complaints received by the City are reflective of the reasons that
the City prohibited time-share projects within residential areas of the City. The time-
share uses provide a short-term, high impact vacation oriented use of the property,
where those that buy into the time-share use the home for entertaining and short term
stays while visiting restaurants, wineries and other tourist oriented locations in St.
Helena and the surrounding Napa Valley; and
WHEREAS, this high impact use, combined with the frequent turnover and
commercial management of these properties is not consistent with the residential
districts in which they are located. It is commercial in nature, in that these time-share
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
uses are structured as a short-term, tourist oriented, visitor serving use of the subject
properties. The use of these properties as time-shares adds excessive noise and traffic
to residential districts by using these properties for high impact tourist oriented uses
more appropriately located in commercial districts of the City; and
WHEREAS, expanded use of residential properties for time-share uses will
further reduce the availability of housing stock for long-term residential use, and create
a new demand for time-share uses of residential properties; and
WHEREAS, this encroachment of tourist oriented, visitor serving uses in
residential neighborhoods will not only compromise the residential character of these
areas, but will also further increase the costs for housing in the City, undermining the
City’s efforts to provide a balance of housing for all income levels in the City; and
WHEREAS, the City’s authority to enact zoning ordinances is based on the
powers accorded cities and counties under the State constitution to make and enforce
police regulations. This police power grants the City broad authority to regulate the
development and use of real property within its jurisdiction to promote the public
welfare; and
WHEREAS, pursuant to and in accordance with this authority, the City Council
desires to reaffirm its restrictions on time-share uses in residential areas, and to update
the language of the Zoning Code to provide consistency with the terminology used to
define time-share uses in State law. Further, the City desires to provide greater clarity
as to the zoning districts in which time-share uses are permitted as conditional uses,
and the standards pursuant to which they will be reviewed in those zoning districts; and
WHEREAS, the Planning Commission of the City of St. Helena held a duly
noticed public hearing on March 1, 2021, as required by law to consider all the
information presented by staff, and public testimony presented in writing and at the
meeting; and
WHEREAS, on ___________ 2021, the Planning Commission of the City of St.
Helena recommended that the City Council adopt this Ordinance amending the
Municipal Code as described herein; and
WHEREAS, on __________, 2021, the City Council held a duly noticed public
hearing, accepting testimony from the public, and discussed the proposed amendments
and staff’s recommended approval of this Ordinance; and
WHEREAS, the proposed zoning amendments are consistent with the General
Plan goals, policies and implementation programs as the Ordinance will continue to
preserve the agricultural, small town character of the City of St. Helena; will preserve
the City’s residential districts for residential uses; and will help to preserve the City’s
existing housing stock for long term residential uses, to avoid further exacerbating the
existing impacts on the City’s housing supply; and
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Now, therefore, the City Council of the City of St. Helena does hereby ordain as
follows:
SECTION 1: The above recitals are hereby incorporated as though set forth in this
section.
SECTION 2: Chapter 17.138 and sections 17.138.010 – 17.138.060 are hereby added
to Title 17 of the St. Helena Municipal Code, to read as follows:
“Chapter 17.138
TIME-SHARE USES
17.138.010 Purpose and Findings
17.138.020 Definitions
17.138.030 Time-share Uses Restricted to Service Commercial (SC) District
17.138.040 Application Process and Development Standards
17.138.050 Violations, Enforcement and Civil Penalties
17.138.010 Purpose and Findings
A. There is a critical shortage of permanent, long-term housing in the City of St.
Helena.
B. A limited supply of suitable vacant land, land values, and market demand for land
for other uses, including but not limited to use of property for vineyards, have limited the
construction of additional housing in the City of St. Helena.
C. St. Helena is a popular tourist destination known for its scenic Napa Valley
location, exceptional wineries and restaurants, historic Main Street and small town
agricultural character.
D. The City of St. Helena stands out in the Napa Valley for its ability to attract
visitors while also supporting the needs of its resident population. Maintaining the
balance between the quality of life for residents and those who work in the City and the
visitors who help to sustain the City’s tourist economy is key to maintaining a
sustainable community and a stable economy.
E. Time-share uses are not an appropriate land use in the City’s residential districts
due to the multiple occupancy of time-share properties, the short-term, tourist oriented
use of such property and commercial management of time-share facilities, all of which
create increased traffic generation, excessive noise, disruption to residential
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
communities through commercial-level maintenance of the time-share facilities, and
therefore are appropriately confined to commercial zoning districts.
F. Conversion of permanent housing to time-share facilities removes existing
housing units from the City’s existing stock and exacerbates an already severe housing
shortage.
G. It is therefore in the public interest to prohibit conversions of existing housing
units into time-share facilities, as to do so eliminates needed housing stock by diverting
those units to a tourist-oriented, commercial use.
17.138.020 Definitions
For purposes of this Chapter, the following words and phrases shall have the meaning
respectively ascribed to them by this Section:
“Accommodation” means any dwelling unit, apartment, condominium or cooperative
unit, hotel or motel room, or other structure constructed for residential use and
occupancy, including but not limited to a single family dwelling, or unit within a two
family dwelling, three family dwelling, multiple family dwelling, or townhouse dwelling as
defined in Section 17.04.160.
“Building” shall have the meaning ascribed to it by Section 17.04.160.
“Dwelling unit” shall have the meaning ascribed to it by Section 17.04.160.
“Managing entity” means the person who undertakes the duties, responsibilities and
obligations of the management of a time-share plan.
“Person” means a natural person, corporation, limited liability company, partnership,
joint venture, association, estate, trust, or other legal entity, or any combination thereof.
“Time-share instrument” means one or more documents, by whatever name
denominated, creating or governing the operation of a time-share plan and includes the
declaration dedicating accommodations to the time-share plan.
“Time-share interest” means the right to exclusively occupy a time-share property for a
period of time on a recurring basis pursuant to a time-share plan, regardless of whether
or not such right is coupled with a property interest in the time-share property or a
specified portion thereof.
“Time-share plan” means any arrangement, plan, scheme, or similar device, whether by
membership agreement, bylaws, shareholder agreement, partnership agreement, sale,
lease, deed, license, right to use agreement, or by any other means, whereby a
purchaser, in exchange for consideration, receives the right to exclusive use of an
accommodation or accommodations, whether through the granting of ownership rights,
possessory rights or otherwise, for a period of time less than a full year during any given
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
year, on a recurring basis for more than one year, but not necessarily for consecutive
years.
“Time-share property” means one or more accommodations subject to the same time-
share plan, together with any other property or rights to property appurtenant to those
accommodations.
“Time-share use” means the use of one or more accommodations or any part thereof,
as a time-share property pursuant to a time-share plan.
17.138.030 Time-share Uses Restricted to Service Commercial (SC) and Central
Business (CB) Districts
Time-share uses are conditional uses within the City’s Service Commercial (SC) District
and Central Business (CB) District, subject to approval of a conditional use permit
applied for and approved in conformance with this Chapter. Time-share uses are not
permitted in all other Zoning Districts in the City.
17.138.040 Application Process and Development Standards
A. Application Process. Approval of a conditional use permit for time-share uses in
the Service Commercial District or Central Business District shall be required in
accordance with the requirements of Chapter 17.168. In addition to the application
requirements contained in Chapter 17.168, an application for a time-share use shall be
accompanied by the following documents which shall be subject to the approval of the
planning director:
1. Management Plan. A management plan shall describe the methods
employed by the applicant to guarantee the future adequacy, stability, and continuity of
a satisfactory level of management and maintenance of the time share use.
2. Application Requirements. In addition to any application requirements
established by this section and any other applicable requirements of this code, the
following information shall be submitted as part of any application to develop or
establish a time-share use:
a. Typical floor plans for each accommodation.
b. The phasing of the construction of the accommodations on the time-
share property, if applicable.
c. A description of any ancillary uses which are proposed in conjunction
with the time share use.
d. A description of the method of management of the time share use and
indication of the management entity for the time-share property.
e. Any restrictions on the use or occupancy of the accommodations.
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
f. Any other information or documentation the applicant, city staff or
commission deems reasonably necessary to the consideration of the time-share
use, including any required environmental documents.
B. Development Standards and Operational Requirements. Notwithstanding any
other provision of this chapter, the following conditions must be met by any time-share
use in any conditionally permitted zone. Additional requirements may be attached to a
conditional use permit or development agreement if found to be necessary to assure
that the time-share use meets the intent of this chapter:
1. Time-share uses developed in the Service Commercial District or Central
Business District shall be limited to accommodations in upper floors in conjunction with
a mixed-use project.
2. No existing residential use in the Service Commercial or Central Business
District shall be converted to a time-share use.
3. Development Standards. The time-share use shall comply with all
development standards for the zone in which it is located.
4. Parking. Parking shall be provided as follows:
a. For accommodations of two or fewer bedrooms, one parking space
shall be provided for each accommodation.
b. For accommodations of three or more bedrooms, two parking
spaces shall be provided for each accommodation.
5. Modification or Waiver of Standards. The planning commission may modify
or waive one or more of the regulations contained in this section if it determines that
strict compliance is not necessary to achieve the purpose and intent of this section.
17.138.060 Violations, Enforcement and Civil Penalties
A. Any responsible person, including but not limited to an owner of a time-share
interest, management entity, agent, or broker who uses, or allows the use of, or
advertises or causes to be printed, published, advertised or disseminated in any way
and through any medium, the availability for sale or use of an accommodation in
violation of this chapter is guilty of a misdemeanor for each day in which such
accommodation is used, allowed to be used, or advertised for sale or use in violation of
this chapter. Such violation shall be punishable pursuant to Chapter 1.20.
B. Time-share use, and/or advertisement for time-share use, of an accommodation in
violation of this chapter is a threat to public health, safety or welfare and is thus
declared to be unlawful and a public nuisance. Any such nuisance may be abated
and/or restored by the enforcement official and also may be abated pursuant to
Chapter 1.12, except that the civil penalty for a violation shall be one thousand dollars
($1,000.00). Each day the violation occurs shall constitute a separate offense.
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
C. Any responsible person who violates this chapter shall be liable and responsible for
a civil penalty of one thousand dollars ($1,000.00) per violation per day such violation
occurs. The city may recover such civil penalty by either civil action or administrative
citation. Such penalty shall be in addition to all other costs incurred by the city, including
without limitation the city’s staff time, investigation expenses and attorney’s fees.
1. Where the city proceeds by civil action, the court shall have discretion to
reduce the civil penalty based upon evidence presented by the responsible person that
such a reduction is warranted by mitigating factors including, without limitation, lack of
culpability and/or inability to pay. Provided, however, that in exercising its discretion the
court should consider the purpose of this chapter to prevent and deter violations and
whether the reduction of civil penalties will frustrate that purpose by resulting in the
responsible person’s enrichment or profit as a result of the violation of this chapter. In
any such civil action the city also may abate and/or enjoin any violation of this chapter.
2. Where the city proceeds by administrative citation, the city shall provide the
responsible person notice of the right to request an administrative hearing to challenge
the citation and penalty, and the time for requesting that hearing.
a. The responsible person shall have the right to request the
administrative hearing within forty-five (45) days of the issuance of the
administrative citation and imposition of the civil penalty. To request such a
hearing, the responsible person shall notify the city clerk in writing within forty-
five (45) days of the issuance of the citation. The appeal notification shall include
all specific facts, circumstances and arguments upon which the appeal is based.
b. The city manager is hereby authorized to designate a hearing officer
to hear such appeal. The city hearing officer shall conduct a hearing on the
appeal within ninety (90) days of the request for the hearing unless one of the
parties requests a continuance for good cause. The hearing officer shall only
consider those facts, circumstances or arguments that the property owner or
responsible person has presented in the appeal notification.
c. The hearing officer shall render a decision in writing within thirty (30)
days of the conclusion of the hearing. The hearing officer shall have discretion to
reduce the civil penalty based upon evidence presented by the property owner or
responsible person that such a reduction is warranted by mitigating factors
including, without limitation, lack of culpability and/or inability to pay. Provided,
however, that in exercising its discretion the hearing officer should consider the
purpose of this chapter to prevent and deter violations and whether the reduction
of civil penalties will frustrate that purpose by resulting in the property owner’s or
responsible person’s enrichment or profit as a result of the violation of this
chapter.
d. Any aggrieved party to the hearing officer’s decision on the
administrative appeal may obtain review of the decision by filing a petition for writ
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
of mandate with the Napa County superior court in accordance with the timelines
and provisions set forth in Government Code Section 53069.4.
e. If, following an administrative hearing, appeal, or other final
determination, the owner of the property is determined to be the responsible
person for the civil penalty imposed by this section, such penalty, if unpaid within
forty-five (45) days of the notice of the final determination, shall become a lien to
be recorded against the property on which the violation occurred pursuant to
Chapter 1.12. Such costs shall be collected in the same manner as county taxes,
and thereafter the property upon which they are a lien shall be sold in the same
manner as property now is sold for delinquent taxes.
D. Any violation of this chapter may also be abated and/or restored by the
enforcement official and also may be abated pursuant to Chapter 1.12, except that the
civil penalty under Chapter 1.12 for a violation shall be one thousand dollars
($1,000.00).
E. Each day the violation of this chapter occurs shall constitute a separate offense.
F. The remedies under this chapter are cumulative and in addition to any and all other
remedies available at law and equity.”
SECTION 3: Deletion of Section 17.112.130
Section 17.112.130 is hereby deleted in its entirety.
SECTION 4: CEQA
This ordinance was assessed in accordance with the authority and criteria
contained in the California Environmental Quality Act (CEQA), the State CEQA
Guidelines (the Guidelines), and the environmental regulations of the City. The City
Council hereby finds that this ordinance is not subject to CEQA because the adoption of
this ordinance is not a “project” pursuant to Sections 15060(c)(2) and 15060(c)(3) of
Title 14 of the California Code of Regulations.
Moreover, under Section 15061(b)(3) of the State CEQA Guidelines, this
ordinance is exempt from the requirements of CEQA because it can be seen with
certainty that the provisions contained herein would not have the potential for causing a
significant effect on the environment.
SECTION 5: Effective Date
This ordinance shall take effect 30 days after its final adoption, and a summary of
this ordinance shall be published once with the names of the members of the Council
voting for and against the ordinance in the St. Helena Star, a newspaper of general
circulation published in the City of St. Helena.
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
THE FOREGOING ORDINANCE was introduced at a regular meeting of the St. Helena
City Council on the day of , 2021, and was adopted at a regular
meeting of the St. Helena City Council on the day of , 2021, by the
following vote:
Mayor Ellsworth:_____
Vice Mayor Dohring:_____
Councilmember Chouteau: _____
Councilmember Hardy: _____
Councilmember Hall:_____
APPROVED:
___________________________________
Geoff Ellsworth, Mayor
ATTEST:
CITY OF ST. HELENA
___________________________________
Cindy Tzafopoulos, City Clerk
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
From:Mari Jansdotter <mjansdotter@yahoo.com>
To:Anna Chouteau
Sent:6/8/2021 7:25:45 AM
Subject:Re:[External]1242 Madrona pictures Re:Pacaso
Thank you,Anna,for your kind reply.
I'm sorry you all have to go through this lawsuit by Pacaso and hope the judge find in your favor.
I have a follow—upquestion.Do you know who I should address it to?
The Pacas house building on Kearney across the street from us has installed lights under the roo?ine that are
on all night and installed in such a Way they shine straight into our house,especially my daughter's bedroom.
Are there any ordinances that I could refer to that help me ask them to please cover /redirect those lights or at
least turn them off after 10 pm‘?
Thank you!
Best
Mari
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Sent from Yahoo Mail on Android
On Tue,Jun 8,2021 at 7:12 AM,Anna Chouteau
<AChouteau@cityofsthelena.org>wrote:
Hi Mari,
Thank you for your email.I forwarded your email to City staff about the speci?c permitting questions.
Our planning director is out of the of?ce this week.
We are defending ourselves in the lawsuit.Our City Attorney ?led an anti-SLAPP motion that is now
public information and the hearing will be coming up this summer.
All my best,
Anna
Sent from my iPad
On Jun 7,2021,at 6:01 PM,Mari Jansdotter <mjansdotter@yahoo.com>wrote:
To clarify,do they have permit allowing the new structure going up at l242 Madrona?
The rendering from original sales listing shows a trellis (see attached)but a structure looking like a liVe—on
unit close to (and taller than)the Oak neighbour‘fence is being built.See pictures from today
<202l0607_l75202jpg>
<202lO607_l752l9jpg>
Sent from Yahoo Mail on Android
On Mon,Jun 7,2021 at 5:38 PM,Mari Jansdotter
<mjansdotter@yahoo.com>wrote:
Thank you for doing all you can to stop Pacasof
I am not o.k.with Pacaso’s Violation of city ordinance and I support the city‘s legal ?ght.
In addition to signing the petition and putting a No Pacaso sign outside my home,what else can we on
the community do to help,please?
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
I ?nally afforded my dream home after moving several times the last 10 years,only to a year later have
4!of these Pacaso ‘time share’like vacation LLC/commercially owned houses popping up in my
neighborhood.
I'm devastated -this is supposed to be a residential areal!
I am very worried about my family's safe &peaceful living situation,now that I'll be impacted by 4 of
these houses (one across the street)—each with 8 groups of owners and/or their guests circulating in
and out all year round.
Many Pacaso have 4 bedroomsthat easily accommodate 8+people,and pool in the backyards with
outdoor areas for gatherings/parties.
It's a huge difference having your neighbor throwing an occasional party versus non—stop having a new
group of people next door visiting for thier token time of vacation /partying.
Pacaso houses also come with increased parking problems as these properties tend not have
garages or driveways (often transformed into addl bedroom).
Specifically would you mind looking into building code the one at 1242 Madrona /Oak?
Looks like they're adding a guest house with vary narrow set back from the oak side neighbor.
is that an approved building?Maybe they're getting around that by making it a partial garage?
Add to that,the 4 Pacaso houses are all in close proximity of RLS with kids wa1king/biking to and
from school.
What are the safety concerns that this is imposing with new people circulating in and out all year round
and increased car traffic?Worst case scenario there will be a liability situation that will put a stop to
Pacaso.
Please,please stop Pacaso before we even get close to that.
Respectfully,
Mari Jansdotter
Sent from Yahoo Mail on Android
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
PACASO =PARTY HOUSES!
Debbie Polverino 5/11/2021
To the members of the City Council.In the recent Napa Register article,Austin Allison agrees that
short term rentals are a problem,that commercial Timeshares are a problem-that’s not what Pacaso
is he said.Yet,Pacaso listed the Valley View Street “Pool House”as a 1/8 Timeshare Ownership
property.After the city was notified by several concerned citizens and myself regarding “timeshares”
listed for sale in residential zoned areas,Pacaso changed its online marketing from “1/8 Timeshare
Ownership to 1/8 Shared Ownership.Owners who purchase still share the property in available time
slots just like a timeshare.
Living next door to a Pacaso home has been living next door to a full-time party house!The constant
music with speakers blaring,loud conversations until 2 am and later,noise violations along with
excessive vehicles parked on the street or in front of our homes.The additional noise of gardeners
blowing dirt and leaves into our yard,Pool service,catering trucks,housekeeping scheduled more
frequently.Open houses are held with statements made with,“this is a great place for pool parties
and entertaining,it’s a perfect place to bring friends and extended family.”
This home on Valley View Street was a weekend getaway home for the previous owners who had
loud weekend parties.It was a constant nightmare and all the homes nearby complained.Now the
property has been split up to 8 owners.The Saint Helena P.D.has already been to this home at least
3 times for noise violations after 10pm.There must be a way to stop these repeated violations and
offenders.
Pacaso’s has written policies for its owners on their website that they must adhere to.No parking on
the street,no parties,no noise after 9pm to 7am,no dogs over 80 pounds.Policies have been
broken several times already from each group including the Pacaso’s owners.
According to Mr.Allison,Saint Helena is running a dishonest campaign against Pacaso.Pacaso
claims discrimination of outside ownership which is not the case.As we all know we welcome all
people the opportunity to live in our quiet small town.Pacaso selling an 1,100 square foot home
which is smallest of any home on our street for $1.7M is dishonest in my opinion.This is what he
says is affordable housing for second home buyers who are paying in full,plus maintenance fees?
When commercial companies buy a dozen homes in Napa Valley and plans additional purchases to
be split up to 8 shares it is not committed to the community or our quiet neighborhoods.Zoning is in
place for a reason.Commercial companies operating in full time residential streets should adhere to
the rules that are in place and only buy up in areas where other vacation homes are abundant and
not a disruption.
What happens should we decide to sell our home?How will people feel about buying next door to a
home owned by 8 owners who don’t know each other and all come at different time slots for as little
as 2 days at a time?We will have to disclose this information.This put a negative mark on our
property.This is something I want you to think about!Say NO to Pacaso!Thank you.
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
From:Amy Caldarola <amyca|@comcast.net>
To:Paul Dohring
CC:Anna Chouteau;Lester Hardy;Eric Hall
Sent:5/23/2021 1:04:24 PM
Subject:[External]Picaso
Dear Council Members,
This is Amy Caldarola here.I am very concerned about Picaso buying property in our
residential neighborhoods under the guise of democratizing home ownership.This is not
affordable housing.Picaso properties are time-shares and short-term rentals which
violate municipal code provisions.The presence of these properties in residential
neighborhoods is inappropriate and will degrade the quality of life.It has already done
so with Picaso’s property on Valley View;those neighbors are suffering with loud noise,
music,and parties that go on to after midnight;even calling the police does not seem
to stop them.I support the city in doing everything possible to defeat them.I also
support a counter law suit against them if it makes legal sense.With that said,we are
fighting for the soul of our community and this needs to be a number one priority.
Picaso is in Napa,Sonoma,Healdsburg,and probably will move into Calistoga and
Yountville.This is a fight worth fighting.It might be helpful for the affected
counties and municipalities to join their resources together to oppose them.Please
outline for me what the city is doing and what the plan is.
Thank you.I really appreciate you taking the time to keep me informed on this very
important and pressing issue.We must act now!
Sincerely,
Amy Caldarola
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
May 11,2021
Good evening City Council members.My name is Clare Barr and l live in
St.Helena.Tonight l would like to speak about the Pacaso Vacation
Share homes.
l listened carefully to the public comments of Pacaso Share owners
made at our last City Council meeting.They sounded sincere in their
desire to be a part of the St.Helena community.The problem is they
have bought into a business model that will make that nearly
impossible.
To be a part of a real community means forming bonds with neighbors.
How can that come about with a home next door that has possibly
dozens of strangers coming and going,with visits no longer than 14
days at a time,a few times a year?And with the likelihood of visits
gifted by other share owners,and a cleaning crew who appears before
each arrival,the number swells.With the result that a Pacaso share
owner,is viewed by their neighbors as only one in a sea of unfamiliar
faces.
And though the intentions of some of the share buyers might be good,
can we say the same for all 7 of the remaining shareowners?One of
whom might gift a weekend to his brother for a blowout bachelor
party?Or as was the case in Napa,a single shareowner who conducted
retreats in which close to a dozen visitors would come and go within
one stay.That particular shareowner was charging her guests,which is
a complication on an entirely different level.
Pacaso would have us believe that their sharebuyers are families who
simply want a quiet,lovely getaway.But in actuality,a Pacaso home is
built for partying.Their own website says of one offering ”This home
takes entertaining to new heights”.And yet another listing says that a
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
particular home ”has been completely re—imagined to accommodate
families,friends,and large groups”.Another listing offers "year round
fun and adventure”.
Now,none of us resent the visitor who wants to have fun.Indeed,our
beautiful valley is an ideal place for celebration.And we all do that on
occasion.But when you realize that every single visitor owning a Pacaso
share has been wooed with the promise of “fun and adventure”within
a house ”built for entertaining”,then you have the possibility of major
partying with each and every visitor,all crammed into stays that last
from 2-14 days.This is transient occupancy in our residential
neighborhoods that cannot possibly be regulated under the Pacaso
system.
There is a reason why we have ordinances in place that designate
where tourists and visitors can stay.it allows us to appreciate our
visitors,giving them the space and accommodations in which to party
and celebrate,while we ourselves can conduct our daily lives in the
sanctuary of our residential neighborhoods.Which in turn,are places
where we know our neighbors so well that we trust them with our keys,
our pets,and even our children.With whom we share joy and
sometimes sorrow,and whom are quick to lend a hand in times of
crisis.
And if we have learned anything in the last few years,it is that the
ability to know and rely on our neighbors is the very thing that sustains
our community through thick and thin.A vacation home with a parade
of visitors coming and going,does not belong in our residential
neighborhoods.Please Say No to Pacaso.
Clare Barr
St.Helena
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
From:Beth Gray <bgray14@gmail.com>
To:Geoff Ellsworth
Sent:5/22/2021 3:01:13 PM
Subject:[External]Pacaso
Dear Mr.Mayor,
I am writing to express my strong opposition against the in?ltration of Pacaso and their timeshare strategy in
the city of Saint Helena.As a full-time resident here in the city (and as your neighbor),I find it atrocious that
the city has not been able to stop the in?ltration of this community destroying business model.This business
will do nothing but destroy our community.As an example,I witnessed the dumping of water from the pool
into the creekbed from a home purchased by Pacaso right on the corner of Sy1vaner/Reisling as they began to
redevelop the home and expect to list it as fractional ownership.Illegal dumping of the pool water with
disregard to any of the environmentalconsequences demonstratestheir utter lack of care about the
community.Similarly,hearing from the neighbors who live next to a Pacaso home on Valley View,I can only
shake my head and sympathize with the poor neighbors having to deal with multiple cars showing up and
loud music being played at all hours.
One of the reasons I moved from San Francisco to Saint Helena was to enjoy the quiet sounds of nature,the
beautiful outdoors —not to listen to vacationers who only want to party for the two weeks that they have their
time in the home.Please protect our city from these timeshares.
I understand the city is being sued.I hope that we can collectively put the necessary resources behind this
lawsuit to stop Pacaso from any more timeshares in St.Helena.
Respectfully,
Beth Gray
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
City of Sonoma
Agenda Item Summary
Meeting: City Council - 19 Jan 2022
Department
Planning and Community Services
Staff Contact David A. Storer, AICP, Director, David J.
Ruderman, Assistant City Attorney
Agenda Item Title
Discuss, Consider, and Take Possible Action on Introduction and Adoption of an Urgency
Ordinance Amending the Sonoma Municipal Code to Add Section 19.50.140 – Timeshares –
and Finding the Ordinance exempt from the California Environmental Quality Act (CEQA)
under the general rule pursuant to Guidelines Section 15061(b)(3) because CEQA only
applies to projects that have the potential for causing a significant effect on the environment
and the Ordinance does not involve a commitment to any specific project that may result in a
potentially significant physical effect on the environment.
Summary
Currently, the Municipal Code does not contain any regulation governing the use of properties
as time-shares, meaning that, as a non-enumerated use, time-shares currently are prohibited
throughout the City. However, due to the rise in fractional home ownership, there may be
ambiguity regarding whether fractional home ownership uses constitutes a prohibited time-
share or an allowed residential use. The urgency ordinance is intended to define time-shares
broad enough to encompass fractional home ownership and ensure that their essentially
commercial use is confined to those parts of the City that are planned for commercial uses.
This will avoid losing valuable land zoned for residential purposes from being usurped by
fractional home ownership and time-share uses. The proposed urgency ordinance thus
continues the prohibition on time-shares in all residential zones and as the residential
component of a Commercial or Mixed Use development. The following findings can be made
by the City Council to support the adoption of the Urgency Ordinance:
1. A severe housing crisis exists in the state with the demand for housing outpacing the
supply;
2. The City of Sonoma is particularly experiencing a housing emergency due to its
relative isolation, limited housing supply, and desirable location;
3. Time-share uses threaten to reduce the housing supply in the City by turning long-
term housing in the City into vacation rentals and reducing the affordable housing
stock in the City;
4. Time-shares increase traffic and noise impacts and have the same character as
commercial hotels, motels, and other transient occupancy uses due to their transient
nature making them inappropriate for residential zones;
5. California Government Code Sections 36934 and 36937 authorizes the City of
Sonoma to adopt an urgency ordinance by a four-fifths vote (4/5ths) necessary to
protect the public peace, health, or safety;
6. An urgency ordinance adopted pursuant to Government Code Sections 36934 and
36937 is warranted on an urgency basis to allow regulations to govern how time-share
are regulated. Without such ordinance, the issues raised above pose a significant
threat to the public peace, health and safety.
The attached Urgency Ordinance will add Section 19.50.140 – Timeshares into Title 19 and
will be effective upon adoption. The attached Urgency Ordinance was presented to the
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Planning Commission on January 13th, 2022, for comment and direction to staff, which will be
reported to the City Council at the meeting.
It is anticipated that the Planning Commission will review a regular ordinance at its meeting
on February 10th, 2022, that will be later introduced to the City Council on February 23rd,
2022, and adopted by the City Council on March 2, 2022 to supersede the Urgency
Ordinance; however the Urgency Ordinance would be in effect until a regular ordinance
becomes effective.
The attached Urgency Ordinance creates provisions for allowing timeshares with the approval
of a Use Permit as part of the commercial component in a Commercial zoning district as
defined in Section 19.10.020(B) or as a part of the commercial component in a Mixed Use
zoning district as defined in Section 19.10.020(C).
Recommended Council Action
Introduce and adopt an Urgency Ordinance entitled “AN URGENCY ORDINANCE OF THE
CITY COUNCIL OF THE CITY OF SONOMA ADDING TITLE 19, SECTION 19.50.140 (TIME-
SHARES) TO THE CITY OF SONOMA MUNICIPAL CODE.”
Note: A 4/5 vote of the City Council is required to adopt an urgency ordinance and it takes
effect immediately
Alternative Actions
1. Take no action
2. Direct staff to amend urgency ordinance to only allow time-shares in commercial
zones, but not as part of the residential component (i.e., also prohibiting them as part
of the commercial component in MX)
3. Direct staff to amend urgency ordinance to prohibit time-shares in all zones in the City.
Financial Impact
None, other than the time necessary for staff to prepare this report and the accompanying
urgency ordinance.
Environmental Review Status
Environmental Impact Report
Negative Declaration
Exempt
Not Applicable
Approved/Certified
No Action Required
Action Requested
Attachments
Urgency Ordinance No. XX-2022
Alignment with Council Goals:
Not Applicable
Compliance with Climate Action 2020 Target Goals:
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
CC:
n/a
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
272104.2
City of Sonoma
DRAFT ORDINANCE #_____ -2022
AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SONOMA ADDING
TITLE 19, SECTION 19.50.140 (TIME-SHARES) TO THE CITY OF SONOMA MUNICIPAL
CODE
WHEREAS, the City has recently become aware of time-share companies operating in the
City; and
WHEREAS, this Ordinance is adopted as an urgency ordinance pursuant to Government
Code Sections 36934 and 36937. The facts constituting the urgency are as follows:
a) A severe housing crisis exists in the state with the demand for housing outpacing
the supply;
b) The City of Sonoma is particularly experiencing a housing emergency due to its
relative isolation, limited housing supply, and desirable location;
c) Time-share uses threaten to reduce the housing supply in the City by turning long-
term housing in the City into vacation rentals and reducing the affordable housing
stock in the City;
d) Time-shares increase traffic and noise impacts and have the same character as
commercial hotels, motels, and other transient occupancy uses due to their
transient nature making them inappropriate for residential zones;
e) California Government Code Sections 36934 and 36937 authorizes the City of
Sonoma to adopt an urgency ordinance by a four-fifths vote (4/5ths) vote where
necessary to protect the public peace, health, or safety;
f) An urgency ordinance adopted pursuant to Government Code Sections 36934 and
36937 is warranted on an urgency basis to allow regulations to govern how time-
share are regulated. Without such ordinance, the issues raised above pose a
significant threat to the public peace, health and safety.
WHEREAS, the City Council find and determines that the immediate preservation of the
public health, safety, and welfare requires that this Ordinance be enacted as an urgency ordinance
pursuant to Government Code Section 36934 and 36937, and such that Ordinance take effect
immediately upon adoption – therefore, this Ordinance is necessary for the immediate
preservation of the public peace, health, safety and welfare and its urgency is hereby declared.
WHEREAS, the City Council desires to amend the City’s municipal code to address the
impact that time-shares are having on the City’s housing supply.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SONOMA DOES ORDAIN
AS FOLLOWS:
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
272104.2
SECTION 1. RECITALS.
The above set forth recitals and findings are true and correct and incorporated herein by
reference, as if set forth herein in full.
SECTION 2. URGENCY ORDINANCE.
The urgency ordinance is necessary for the immediate preservation of the public peace, health,
and safety because the operation of time-share companies in the City threatens to reduce the
supply of affordable and market-rate housing in the City, increase site development conflicts and
incompatibilities related to public safety, visual, privacy, and aesthetic impacts which would
negatively impact the public welfare and the unique quality and character of the City of Sonoma.
SECTION 3. MUNICIPAL CODE AMENDMENTS.
Section 19.50.140 of the Sonoma Municipal Code is added to read as follows:
19.50.140 Time-Shares.
This section sets forth requirements for the establishment and operation of time-share uses.
A. Definitions.
1. “Accommodation” means any dwelling unit, multifamily dwelling, apartment,
condominium or cooperative unit, cabin, lodge, hotel or motel room, or other private or
commercial structure containing toilet facilities therein that is designed and available,
pursuant to applicable law, for use and occupancy as a residence by one or more
individuals.
2. “Owner” means owner of a time-share interest.
3. “Person” means a natural person, corporation, limited liability company,
partnership, joint venture, association, estate, trust, or other legal entity, or any
combination thereof.
4. “Time-share instrument” means one or more documents, by whatever name
denominated, creating or governing the operation of a time-share plan and includes the
declaration dedicating accommodations to the time-share plan.
5. “Time-share interest” means and includes either of the following:
a. The right to exclusively occupy a time-share property for a period of time on
a recurring basis pursuant to a time-share plan, coupled with a freehold estate
or an estate for years with a future interest in a time-share property or a
specified portion thereof.
b. The right to exclusively occupy a time-share property for a period of time on
a recurring basis pursuant to a time-share plan, which right is neither coupled
with a freehold interest, nor coupled with an estate for years with a future
interest, in a time-share property or a specified portion thereof.
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
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6. “Time-share plan” means any arrangement, plan, scheme, or similar device,
whether by membership agreement, sale, lease, deed, license, right to use agreement,
or by any other means, whereby a purchaser, in exchange for consideration, receives
the right to exclusive use of an accommodation or accommodations, whether through
the granting of ownership rights, possessory rights or otherwise, for a period of time
less than a full year during any given year, on a recurring basis for more than one year,
but not necessarily for consecutive years.
7. “Time-share property” means one or more accommodations subject to the same
time-share instrument, together with any other property or rights to property
appurtenant to those accommodations.
8. “Time-share use” means the use of one or more accommodations or any part
thereof, as a time-share property pursuant to a time-share plan.
B. Permitted zones. A time-share use shall only be permitted as part of the commercial
component in a Commercial Zoning District, as defined by SMC § 19.10.020(B), or as part of
the commercial component in a Mixed Use Zoning District, as defined by SMC § 19.10.020(C).
C. Use Permit Required. The establishment and operation of a time-share use shall require
the approval of a conditional use permit in compliance with SMC § 19.54.040.
D. Violations, Enforcement and Civil Penalties
1. Any responsible person, including but not limited to an owner of a time-share
interest, management entity, agent, or broker who uses, or allows the use of, or
advertises or causes to be printed, published, advertised or disseminated in any way
and through any medium, the availability for sale or use of an accommodation in
violation of this section is guilty of a misdemeanor for each day in which such
accommodation is used, allowed to be used, or advertised for sale or use in violation of
this chapter. Such violation shall be punishable pursuant to Chapter 1.12 (General
Penalty).
2. Any responsible person, including by not limited to an owner of a time-share
interest, management entity, agent, or broker who uses, or allows the use of, or
advertises or causes to be printed, published advertised or disseminated in any way
and through any medium, the availability for sale or use of an accommodation in
violation of this section is subject to administrative fines and/or penalties as set forth in
Chapter 1.28 (Administrative Citations).
3. Time-share use, and/or advertisement for time-share use, of an accommodation in
violation of this section is a threat to public health, safety or welfare and is thus
declared to be unlawful and a public nuisance and may be abated pursuant to Chapter
1.12 (General Penalty), Chapter 1.30 (Administrative Notice and Order Proceedings),
Chapter 9.56 (Noise), and any other relevant provision of this code as it may be
amended from time to time.
4. Each day a violation of this chapter occurs shall constitute a separate offense.
5. The remedies under this section are cumulative and in addition to any and all other
remedies available at law and equity.
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SECTION 4. CEQA.
This Ordinance has been assessed in accordance with the authority and criteria contained in the
California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental
regulations of the city. City Planning Staff has determined that the adoption and implementation of
the Ordinance is exempt from further environmental review under the general rule in California
Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) that CEQA only applies to
projects that have the potential for causing a significant effect on the environment. As a text
amendment and addition without any physical project being approved, it can be seen with certainty
that there is no possibility that the Ordinance will have a significant effect on the environment. The
proposed Ordinance is therefore exempt from the provisions of CEQA because it does not involve
a commitment to any specific project that may result in a potentially significant physical impact on
the environment. The City Council concurs in these findings and adopts them as its own. The City
Council, therefore, directs that a Notice of Exemption be filed with the County Clerk of the County
of Sonoma in accordance with CEQA Guidelines.
SECTION 5. SEVERABILITY.
If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance for
any reason is held to be invalid or unconstitutional by the decision of any court of competent
jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance.
The City Council hereby declares that it would have adopted this Ordinance, and each section,
subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that
any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions
thereof be declared invalid or unconstitutional.
SECTION 6. EFFECTIVE DATE.
This Ordinance is an urgency ordinance enacted under California Government Sections 36934
and 36937, subdivision (b). The urgency ordinance is effective upon adoption by a 4/5 vote of the
Sonoma City Council, and shall take effect immediately upon its adoption.
SECTION 7. PUBLICATION.
This ordinance shall be published in accordance with the provisions of Government Code Section
36933(c)(1).
SECTION 8. THIS ORDINANCE PREVAILS WHERE THERE IS CONFLICT.
To the extent that this Ordinance conflicts with any other provision in the Sonoma Municipal Code
or city ordinance (urgency or otherwise), policy or regulation, this Ordinance will control.
APPROVED:
________________________________
Jack Ding, Mayor
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
272104.2
ATTEST:
_________________________
Rebekah Barr, MMC, City Clerk
* * * * *
I HEREBY CERTIFY the foregoing ordinance was duly adopted at a Regular Meeting of the City
Council of the City of Sonoma held on the ______, 2022 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
_________________________
Rebekah Barr, MMC, City Clerk
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
575 ADMINISTRATION
DRIVE, ROOM 102A
SANTA ROSA, CA 95403
COUNTY OF SONOMA
SUMMARY REPORT
Agenda Date: 11/16/2021
To: Board of Supervisors
Department or Agency Name(s): County Administrator and Permit Sonoma
Staff Name and Phone Number: Tennis Wick x1925
Vote Requirement: Informational Only
Supervisorial District(s): N/A
Title:
Update on the Litigation Pacaso Inc. v. City of St. Helena and Discussion of Land Use Impacts Associated with
Temporary Usage By Non-Primary Owners of Fractionally Owned Homes
Recommended Action:
Receive an update on Pacaso Inc. v. City of St. Helena and hear public concerns regarding impacts to
neighborhoods arising from temporary uses of fractionally owned residences by non-primary owners,
including residences professionally managed by corporations such as Pacaso, and others, but excluding
vacation rental uses.
Executive Summary:
Staff is recommending the Board of Supervisors gather information about impacts caused by temporary uses
of residences held through fractional ownership by non-primary owners. Community members have
expressed concern to staff about how these uses of residences impact neighborhoods. This public forum will
provide the Board of Supervisors an opportunity to hear comments from the public on this topic and give
direction to staff. The focus of this forum is not on vacation rental uses.
Discussion:
Temporary Uses of Residences
This Board item focuses on non-primary owners’ short-term uses of residences in Sonoma County’s
unincorporated area, other than vacation rental uses. Under the zoning ordinance, a primary owner is the
property owner who resides in the property for a majority of the year, and does not have another primary
residence. Vacation rentals outside of the coastal zone are regulated by the County’s Vacation Rental
Ordinance, which aims to regulate the impacts of vacation rental use. Thus, this forum is focused on gathering
information about the impacts of other types of non-primary owners’ short-term uses.
In some scenarios, outside companies might facilitate the acquisition of a residence and/or
professionally manage it and its use. Pacaso is a recent, well-publicized example of a company that facilitates
the sale and temporary use of residences, and their management by professional companies for non-primary
owners and others. Pacaso’s website is www.pacaso.com and an article from NPR on Pacaso is attached.
(Attachment 1.)
Staff’s understanding is that Pacaso currently operates in the following regions in California: Lake
Tahoe, Napa-Sonoma, Santa Barbara, Southern California beaches, Palm Springs, and San Diego. Pacaso also
Page 1 of 4
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Agenda Date: 11/16/2021
operates out-of-state in Scottsdale Arizona; Park City, Utah; Aspen and other cities in Colorado and Florida
commonly considered vacation destinations. To Staff’s knowledge, Pacaso has facilitated the purchase of and
management for about 10 homes in the Napa-Sonoma area. According to news reports, the company has
received $75 million in equity financing, and is rapidly expanding.
Beyond Pacaso, there are other companies that facilitate the purchase, use, and management of
vacation or second homes, on a fractional, timeshare, or other basis, including companies operating in
California, Florida, and Hawaii. Not every residence owned by an LLC or legal entity may be professionally
managed, used for temporary stays, or used in a way that creates impacts. This public forum seeks
information from the public on the nature of impacts created by temporary uses of residences that these
types of companies specialize in, without regard to which entity or entities are involved.
Although the exact number is unknown at this moment, there are residences in the County owned by
LLCs or trusts. Some of these properties are utilized as sources of income and used as short-term or long-term
rentals. Those used as short-term rentals often utilize outside property management companies to provide
services such as coordination of repairs, addressing neighbor complaints, paying utility bills, etc. But other
short-term rentals are self-managed completely by the LLC managers or trustees. Outside of the coastal zone,
the County regulates transient use related to the short-term rental of vacation homes through its Vacation
Rental Ordinance. Where there are residences used for temporary stays or other uses by non-primary owners,
but not renters, this forum seeks public input on possible impacts of those multiple uses as well. In short,
there are various ways, beyond traditional vacation rentals, that temporary stays occur in residences that may
create impacts similar to vacation rental uses. This forum seeks to understand those impacts.
St. Helena Litigation
The City of St. Helena commenced an enforcement action against Pacaso alleging violations of the
city’s timeshare ordinance. In response, Pacaso sued St. Helena in federal court. Pacaso’s lawsuit alleges that
St. Helena’s application of its timeshare ordinance is unlawful because the ordinance is unconstitutionally
vague, timeshares and fractional-ownership models are distinct so the ordinance cannot apply to Pacaso, St.
Helena engaged in unconstitutional selective enforcement because it has not applied the ordinance to other
co-ownership models like Limited Liability Companies, and the ordinance attempts to regulate land ownership,
and not land use, because any impacts of fractional-ownership on communities can be regulated through
other means such as noise ordinances.
Pacaso has displayed aggressive litigation tactics. Pacaso filed a motion to strike all of the affirmative
defenses raised in St. Helena’s answer and subsequently filed a motion to strike part of St. Helena’s amended
answer. The end result of these motions to strike was to require St. Helena to file amended answers,
something that could be achieved through a more collegial approach of voluntarily meeting and conferring
with opposing counsel. In addition, St. Helena had to file an anti-SLAPP (strategic litigation against public
participation) motion due to Pacaso’s lawsuit being based in part on a memorandum prepared by the city. This
memorandum informed realtors that the issue of whether the sale of fractional interests in residential
properties and short-term rentals was being reviewed by the city council after receiving concerns from
constituents about these transactions potentially violating city ordinances. Despite Pacaso’s opposition, the
judge found in the city’s favor and agreed that the fifth claim in Pacaos’ lawsuit was improper and should be
stricken.
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Agenda Date: 11/16/2021
The litigation is currently in the discovery phase and trial is scheduled for July 11, 2022. Discovery is a
very time consuming and expensive process that can result in tens, if not hundreds, of thousands of dollars in
expenses. Trial preparation also requires significant resources. Thus, if St. Helena does not prevail in defending
against the lawsuit, Sonoma County staff estimates that the City’s attorney’s fees may amount to $300,000 -
$400,000. Further, if Pacaso prevails on a constitutional argument, the judge may order the city of St. Helena
to reimburse Pacaso for its attorney’s fees, which could amount to $800,000 - $1,000,000. In the end, St.
Helena may end up spending about $1 - 1.5 million as a result of the litigation if Pacaso prevails. Staff has not
confirmed these estimates with the City.
Courtesy Notices and Responses
Code enforcement in the County is complaint driven. If complaints are received about a potential
violation of the County Code, Permit Sonoma either sends a code enforcement inspector to the subject parcel
to investigate the conditions and discuss with the property owner/tenant how to remedy violations, if they
exist, or sends a courtesy notice that discusses the possible violations and invites the property owner to
contact Permit Sonoma to further discuss the issues.
After receiving complaints related to the short-term use of properties, Permit Sonoma staff sent
Courtesy Notices to Pacaso providing notice that complaints had been received of potential violations of the
County’s Zoning Code on the properties located at 2252 West Dry Creek Road, Healdsburg, CA, 6165 West Dry
Creek Road, Healdsburg, CA, and 1405 Old Winery Court, Sonoma, CA. These notices are attached.
(Attachments 2-A, 2-B, 2-C.)
Pacaso responded to each Courtesy Notice alleging that the property identified in the Courtesy Notice
is used as a single family residence as permitted by the Zoning Code, the terms of the LLC’s operating
agreement forbid the rental of the property, only one household may use the property at a time, and Pacaso
provides scheduling and property management services. These responses are attached. (Attachment 3.)
Staff did not provide a reply. The County is exploring the impacts caused by the uses of such
properties, as well as legal and other options for next steps.
Other Jurisdictions
Other than St. Helena, Staff is not aware of other jurisdictions who have held public forums to discuss
non-primary owner temporary use of professionally managed residential dwellings. Staff is not aware of any
jurisdiction that has issued a notice of violation or commenced litigation against Pacaso. St. Helena did not
commence a code enforcement action against Pacaso, but nevertheless was sued by Pacaso. Some
jurisdictions may be waiting for the outcome of the St. Helena litigation for direction.
Strategic Plan:
N/A
Prior Board Actions:
N/A
Page 3 of 4
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Agenda Date: 11/16/2021
FISCAL SUMMARY
Expenditures FY 21-22
Adopted
FY22-23
Projected
FY 23-24
Projected
Budgeted Expenses
Additional Appropriation Requested
Total Expenditures
Funding Sources
General Fund/WA GF
State/Federal
Fees/Other
Use of Fund Balance
Contingencies
Total Sources
Narrative Explanation of Fiscal Impacts:
N/A
Staffing Impacts:
Position Title (Payroll Classification) Monthly Salary Range
(A-I Step)
Additions
(Number)
Deletions
(Number)
Narrative Explanation of Staffing Impacts (If Required):
N/A
Attachments:
Attachment 1: NPR Article
Attachment 2-A: Code Enforcement Courtesy for Notice 2252 West Dry Creek Road, Healdsburg
Attachment 2-B: Code Enforcement Courtesy for 1405 Old Winery Court, Sonoma
Attachment 2-C: Code Enforcement Courtesy for 6165 West Dry Creek Road, Healdsburg
Attachment 3: Response to Code Enforcement Courtesy Notices
Related Items “On File” with the Clerk of the Board:
N/A
Page 4 of 4
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
AGENDA REPORT
Meeting Date: July 15, 2021
Item Number:
To: Honorable Mayor & City Council
From: Ryan Gohlich, AICP, Director of Community Development
Chloe Chen, Associate Planner
Subject: AN INTERIM ORDINANCE OF THE CITY OF BEVERLY HILLS
ESTABLISHING A MORATORIUM ON FRACTIONAL OWNERSHIP
OF RESIDENTIAL AND COMMERCIAL PROPERTY, DECLARING
THE URGENCY THEREOF AND MAKING A DETERMINATION OF
EXEMPTION UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY
ACT (CEQA)
Attachments: 1.Draft Interim Urgency Ordinance Prohibiting Fractional
Ownership
RECOMMENDATION
Staff recommends the City Council make a motion to read the interim urgency ordinance
(Attachment 1) by title only, waive further reading, and adopt the interim urgency
ordinance, including the findings set forth in Government Code §65858, by at least a 4/5
vote, and find the ordinance exempt from the California Environmental Quality Act
(CEQA).
FISCAL IMPACT
It is not currently known whether allowing fractional ownership would have a positive
impact on the City’s revenue, as any revenue impacts would be determined by the
applicable ownership model and taxation structure. However, prohibiting fractional
ownership would not have an adverse impact on the City’s revenue as it would maintain
the status quo from a tax base perspective. Accordingly, there does not appear to be a
fiscal impact associated with the adoption of an urgency ordinance to prohibit fractional
ownership.
INTRODUCTION
At its special meeting on June 24, 2021, the City Council discussed the topic of fractional
ownership in relation to a proposed development project in the City. Mayor Wunderlich
requested that staff prepare an agenda item to more broadly discuss fractional
E-3
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Meeting Date: July 15, 2021
Page 2 of 4
ownership, and more recently has requested that an Interim Urgency Ordinance be
considered to prevent fractional ownership of properties in the City.
Fractional ownership is an emerging trend in which shares of ownership rights to a
property are sold to multiple buyers, thus allowing each buyer an ownership interest and
rights to use said property for a certain period of time. Although this model effectively
operates similarly to a timeshare model, it typically conveys actual ownership rights
instead of a right for use of the property for a certain period of time only, and also divides
a property into fewer fractions than a typical timeshare might. In some existing fractional
ownership models, properties are bought and held under entities such as limited liability
companies (LLC’s), and the operating agreement for the entity conveys a fraction of
ownership of the property through the sale of interest shares to a member of the entity.
The California Department of Real Estate (DRE) regulates the sale of timeshare
interests in dwelling units, which are typically sold as timeshare estate interests or
timeshare use interests. Timeshare estate interests are a “right of occupancy in a
timeshare property coupled with an estate in real property”, which is typically transferred
via grant deed1. Timeshare use interests are those “based on a purchase agreement
between the seller and the purchaser in which the purchaser does not receive a deed to
an interest”, and does not receive a title of real property2. Pursuant to The Time Share
Act, DRE requires public reports for both of the aforementioned timeshare interests if the
purchase offer involves 11 or more timeshare interests with terms of at least four years
in a timeshare plan.
In a typical fractional ownership scheme, the fraction of ownership may directly correlate
to the amount of time the owner is permitted to use and/or occupy the dwelling unit,
whereas in a typical timeshare scheme, the customer typically buys only the rights to
use the property for a set period of time. Additionally, recent trends indicate that
fractional ownership schemes are being applied to single-family residences, while
traditional timeshare schemes are more commonly applied to hotel and condominium
properties.
At its July 15, 2021 study session meeting, the draft interim urgency ordinance
prohibiting fractional ownership was presented to the City Council for review and
discussion.
DISCUSSION
Fractional ownership and timeshare models operate in more or less the same way, with
members or owners using a property or portion of a property for a period of time that is
typically less than one year at a time, and typically for vacation purposes. However, one
important difference is that fractional ownership schemes are emerging more often in
established single- and multi-family neighborhoods, which may create adverse impacts
to residents of established neighborhoods that would otherwise not experience impacts
from transient uses. Since fractional ownership agreements provide rights to utilize a
property for a period of time that is shorter than a typical rental agreement, the property
effectively operates as a short-term rental.
The Beverly Hills Municipal Code (BHMC) currently prohibits “transient residential uses”
in both the single-family3 and multi-family4 residential zones. In the single-family
1 ‘FAQ: Timeshares”. California Department of Real Estate. <https://www.dre.ca.gov/files/pdf/faqs/FAQ_Timeshares.pdf> 2 Ibid. 3 For the single-family residential prohibitions, see BHMC §10-3-302, -401, -409, -501, -601, -701, -801, -901, -1001, and -
1101.
4 For the multi-family residential prohibitions, see BHMC §10-3-1201, -1231, -1301, -1401, -1502, and -1533.
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Meeting Date: July 15, 2021
Page 3 of 4
residential zones, a transient residential use is defined as: “a rental or lease of a single-
family residence or accessory dwelling unit for a period of less than six (6) months”, and
in the multi-family residential zones, it is defined as: “a rental or lease of a multi-family
dwelling unit for a period of less than thirty (30) days”. The current zoning regulations
serve to effectively prohibit the use of both single-family and multi-family residential
properties for rental through a third party vacation rental platform since the minimum
rental periods are longer than those usually desired for a vacation rental. However, the
current regulations do not directly prohibit the fractional ownership model from operating
in either the residential or commercial zones, as the short-term users of the property are
technically owners of those properties.
The operation of a fractional ownership vacation home in the single-family or multi-family
residential zones could result in adverse impacts to long-term residents in the
surrounding neighborhood because the properties would operate as a vacation rental
home. Given that vacations typically last for short periods of time, these properties
would likely experience high turnover rates of occupants, and result in impacts related to
their operation such as noise, loss of privacy, loss of community buy-in, and decline in
property values. Additionally, the City and the greater Los Angeles metro region are
experiencing a housing crisis, in which a lack of affordable housing is available. The
purchase of a single-family or multi-family unit for the purpose of private vacation or
other short term uses would further exacerbate this crisis, as it removes available
housing units from the market for long-term residents to utilize. Finally, fractional
ownership of residential or commercial property, can adversely impact future
development, redevelopment, safety, and proper maintenance of the property as a result
of the complexities associated with the incongruent and changing objectives, intents,
and goals of multiple owners. Recently, in other areas of California, several companies
have started to advertise fractional ownership shares of vacation dwellings. These
companies facilitate the sale of the fractions of ownership, and manage the shared use
of the property. Therefore, the potential proliferation of fractional ownership operations
presents an immediate threat to the public health, safety, or welfare of the City, and an
interim urgency ordinance may be appropriate to prevent these adverse impacts.
The draft interim ordinance defines fractional ownership as “shared ownership of a
property, entitlement to ownership rights of a property, entitlement to use of a property,
or possession of a property through: a) direct ownership of a property, b) indirect
ownership of a property through a membership, stake, interest, share, association, or
similar device in the owner of the property or a subsidiary or parent of the owner of the
property, or c) a membership, stake, interest, share, association, or similar device in an
entity, group, association or similar device which by virtue of such membership, stake,
interest, share, association or similar device grants entitlement to ownership rights or the
use or possession of a property”. The ordinance prohibits fractional ownership models
from operating in the City if the fractional ownership includes “any arrangement,
schedule, plan, scheme, or similar device, whether by agreement, sale, lease, deed,
license, right to use agreement, or by any other means, whereby an owner of the
property or a fraction thereof, receives ownership rights in, or the right to use, the
property for a period of time less than a full year”, with the exception of those approved
through a specific plan. Thus, the ordinance language prohibits fractional ownership that
correlates to a time-based occupancy agreement.
ENVIRONMENTAL REVIEW
The draft interim urgency ordinance has been assessed in accordance with the authority
and criteria contained in the California Environmental Quality Act (CEQA, Public
Resources Code Sections 21000 et seq.), the State CEQA Guidelines (California Code
of Regulations, Title 14, Sections 15000 et seq.), and the environmental regulations of
the City. The adoption and implementation of the interim urgency ordinance represents
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Meeting Date: July 15, 2021
Page 4 of 4
minor alterations in land use limitations and do not result in any changes in land use or
density, and the ordinance does not authorize construction. In fact, the ordinance
imposes greater restrictions on certain properties in order to protect the public health,
safety and general welfare because the ordinance will impose a temporary moratorium
on certain fractional ownership in the City in order to protect the public health, safety and
general welfare, and will thereby serve to avoid potentially significant adverse
environmental impacts during the term of the moratorium. It can therefore be seen with
certainty that there is no possibility that the proposed amendments may have a
significant effect on the environment. Accordingly, the City Council will consider the staff
recommendation to find the interim urgency ordinance exempt from the environmental
review requirements of CEQA pursuant to Sections 15305 as a minor change to land
use regulations and 15061(b)(3), of the California Code of Regulations because it can be
seen with certainty that there is no possibility that the activity in question would have a
significant effect on the environment.
Ryan Gohlich, AICP,
Director of Community Development
Approved By
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Attachment 1
Draft Interim Urgency Ordinance
Prohibiting Fractional Ownership
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
B0785-0001\2552952v4.doc
ORDINANCE NO. 21-O-________
AN INTERIM ORDINANCE OF THE CITY OF BEVERLY HILLS
ESTABLISHING A MORATORIUM ON FRACTIONAL
OWNERSHIP OF RESIDENTIAL AND COMMERCIAL
PROPERTY, DECLARING THE URGENCY THEREOF AND
MAKING A DETERMINATION OF EXEMPTION UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)
THE CITY COUNCIL OF THE CITY OF BEVERLY HILLS HEREBY ORDAINS AS
FOLLOWS:
Section 1. Legislative Findings.
A. California is experiencing a housing supply crunch. Existing housing in this
state, especially in its largest cities, has become very expensive. California needs an estimated
180,000 additional homes annually to keep up with population growth, and the Governor has
called for 3.5 million new homes to be built by 2025.
B. Fractional ownership of residential property for use or possession of the property
for a period of less than a full year, akin to a vacation time-sharing property model, reduces the
availability of residential property for long-term occupancies in the City. Thus, creating the need
for more housing. Moreover, the use of fractional ownership can be detrimental to the City and
its residents because such multiple occupancies disturb the stability of residential neighborhoods.
C. Fractional ownership of residential or commercial property, can adversely impact
future development, redevelopment, safety, and proper maintenance of the property as a result of
the complexities associated with the incongruent and changing objectives, intents, and goals of
multiple owners.
D. The City Council believes that unregulated fractional ownership of residential or
commercial properties with time-based occupancy restrictions would unduly impact the City.
The City Council therefore believes there is a current and immediate threat to the public health,
safety and welfare that is presented by such ownership models, and that a moratorium is
necessary to study the regulation of fractional ownership.
E. The City Council finds that the time provided by the moratorium will allow for a
comprehensive analysis of residential and commercial property ownership models, including
fractional ownership, with time-based occupancy restrictions. During the moratorium, the City
will be able to analyze potential impacts on public health and safety related to time-based
occupancy restrictions; and impacts on the public welfare due to the removal of full-time housing
units from the market and replacing them with vacation or part-time units, the inference with the
stability of residential neighborhoods and the impact on the maintenance and redevelopment of
properties. The City Council finds that these analyses will help the City Council determine how
to best prevent impacts to the public health, safety and welfare. The City Council further finds
that the moratorium will allow time to achieve a reasonable level of assurance that there will not
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
-2-
B0785-0001\2552952v4.doc
be serious negative impacts to the overall community and ensure a positive and mutually
acceptable set of outcomes for the City’s residents, business community, and property owners.
F. Based on the foregoing, the City Council finds that if the City fails to enact this
moratorium, fractional ownership of properties with time-based occupancy restrictions may be
allowed under outdated zoning regulations that do not address the unique impacts of such
ownership models. Therefore, a current and immediate threat to the public safety, health and
welfare exists.
Section 2. Authority.
Pursuant to Government Code Section 65858, the City Council may adopt, as an urgency
measure, an interim ordinance that prohibits any uses that may be in conflict with a contemplated
zoning proposal that the City Council is considering, studying, or intends to study within a
reasonable period of time.
Section 3. Urgency Findings.
The City Council finds and determines that there is an immediate threat to the public
health, safety, or welfare, and that fractional ownership of residential and commercial properties
with time-based occupancy restrictions constitute a threat to the public health, safety or welfare.
As described in Section 1, the staff report accompanying this Interim Urgency Ordinance, and
other evidence in the record, such fractional ownership in the City could threaten the health,
safety and welfare of the community through negative impacts that include, but are not limited
to, removing full-time housing units from the market and replacing them with vacation or part-
time units, interference with the stability of residential neighborhoods and interference with the
maintenance and redevelopment of properties. To preserve the public health, safety, and
welfare, the City Council finds that it is necessary that this Interim Urgency Ordinance take
effect immediately pursuant to Government Code Sections 65858 to prevent such harm.
Section 4. Moratorium Established.
Based on the facts and findings set forth in Sections 1 through 3 of this Interim Urgency
Ordinance, and notwithstanding any other ordinance or provision of the Beverly Hills Municipal
Code, the City of Beverly Hill hereby establishes the following moratorium:
A. Definitions. For the purposes of this moratorium, the following phrase has the
meaning given herein.
1. “Fractional Ownership” shall mean shared ownership of a property,
entitlement to ownership rights of a property, entitlement to use of a property,
or possession of a property through any of the following means:
a. Direct ownership of a property;
b. Indirect ownership of a property through a membership, stake, interest,
share, association, or similar device in the owner of the property or a
subsidiary or parent of the owner of the property; or
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
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c. A membership, stake, interest, share, association, or similar device in
an entity, group, association or similar device which by virtue of such
membership, stake, interest, share, association or similar device grants
entitlement to ownership rights or the use or possession of a property.
B. Time-Based Occupancy Restrictions. Unless approved by a specific plan,
fractional ownership of any property in the City shall be prohibited if such ownership includes
any arrangement, schedule, plan, scheme, or similar device, whether by agreement, sale, lease,
deed, license, right to use agreement, or by any other means, whereby an owner of the property
or a fraction thereof, receives ownership rights in, or the right to use, the property for a period of
time less than a full year.
Section 5. Enforcement.
The provisions of this Interim Urgency Ordinance shall be enforceable pursuant to the
general enforcement provisions in Title 1 of the Beverly Hills Municipal Code.
Section 6. CEQA Findings.
The City Council hereby finds that it can be seen with certainty that there is no possibility
that the adoption of this Ordinance may have a significant effect on the environment. This
Ordinance does not authorize construction and, in fact, imposes greater restrictions on certain
properties in order to protect the public health, safety and general welfare because the Ordinance
will impose a temporary moratorium on certain fractional ownership in the City in order to
protect the public health, safety and general welfare, and will thereby serve to avoid potentially
significant adverse environmental impacts during the term of the moratorium. In addition, the
Ordinance consists of minor alterations in land use limitations and do not result in any changes in
land use or density. It is therefore not subject to the California Environmental Quality Act review
pursuant to Title 14, Chapter 3, Sections 15305 and 15061(b)(3) of the California Code of
Regulations.
Section 7. Severability.
If any section, subsection, subdivision, paragraph, sentence, clause, phrase, or portion of
this Ordinance or its application to any person, place, or circumstances, is for any reason held to
be invalid or unenforceable by the final decision of any court of competent jurisdiction, such
invalidity or unenforceability shall not affect the validity or enforceability of the remaining
sections, subsections, subdivisions, paragraphs, sentences, clauses, phrases, or portions of this
Ordinance, or its application to any other person, place, or circumstance. The City Council
hereby declares that it would have adopted each section, subsection, subdivision, paragraph,
sentence, clause, phrase, or portion hereof, irrespective of the fact that any one or more sections,
subsections, subdivisions, paragraphs, sentences, clauses or phrases hereof be declared invalid or
unenforceable.
Section 8. Effective Date; Approval and Extension of Ordinance.
This Ordinance, being an Interim Ordinance adopted as an urgency measure for the
immediate protection of the public safety, health, and general welfare, containing a declaration of
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
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the facts constituting the urgency, and passed by a minimum four-fifths (4/5) vote of the City
Council, shall take effect immediately upon its adoption and shall continue in effect for a period
of not longer than forty-five (45) days. After notice pursuant to Government Code Section 65090
and a public hearing, the City Council may extend the effectiveness of this Urgency Ordinance as
provided in Government Code Section 65858.
Section 9. Publication.
The City Clerk shall certify to the passage and adoption of this Ordinance and shall cause
its publication in accordance with applicable law.
Adopted:
Effective:
ROBERT WUNDERLICH
Mayor of the City of Beverly Hills,
California
ATTEST:
(SEAL)
HUMA AHMED
City Clerk
APPROVED AS TO FORM: APPROVED AS TO CONTENT:
LAURENCE S. WIENER GEORGE CHAVEZ
City Attorney City Manager
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
City of Sonoma
ORDINANCE #_____ - 2022
AN URGENCY ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF SONOMA ADDING TITLE 19, SECTION 19.50.140
(TIME-SHARES) TO THE CITY OF SONOMA MUNICIPAL CODE
WHEREAS, time share and fractional interest uses have been and currently are
prohibited as uses not specifically enumerated in the Sonoma development code; and
WHEREAS, the City has recently become aware of time-share companies or fractional
interest companies wishing to operate in the City; and
WHEREAS, this Ordinance is adopted as an urgency ordinance pursuant to Government
Code Sections 36934 and 36937. The facts constituting the urgency are as follows:
a) A severe housing crisis exists in the state with the demand for housing outpacing
the supply;
b) The City of Sonoma is particularly experiencing a housing emergency due to its
relative isolation, limited housing supply, and desirable location;
c) Time-share or fractional interest uses threaten to reduce the housing supply in
the City by turning long-term housing in the City into vacation rentals and
reducing the affordable housing stock in the City;
d) Time-share and fractional interest uses increase traffic and noise impacts and
have the same character as commercial hotels, motels, and other transient
occupancy uses due to their transient nature making them inappropriate for
residential zones;
e) The development of time-share or fractional interest uses in Commercial and
Mixed Use zones (which also have a “residential component” requirement) will
reduce the City’s ability to collect valuable property tax, sales tax, or Transient
Occupancy Tax;
f) By allowing time-share or fractional interest uses in the City, market pressure will
incentivize property owners to convert their existing commercial, hotel or
residential uses, thereby reducing revenue to the City in the form of commercial
property taxes, sales tax, Transient Occupancy Tax, and valuable existing
housing stock;
g) Allowing time-share or fractional interest uses in the Commercial and Mixed Use
zones reduces the availability of suitable lands to provide housing units to meet
the City’s Regional Housing Needs Allocation for the 5th and 6th Cycles;
h) By allowing times-share or fractional interest uses in the City, developers of those
uses will seek to convert underutilized commercial uses (in Commercial and
Mixed Use zones), thereby reducing the City’s ability to identify those sites as
potential Housing Opportunity sites in the development of the City’s 6th Cycle
Housing Element;
i) California Government Code Sections 36934 and 36937 authorizes the City of
Sonoma to adopt an urgency ordinance by a four-fifths vote (4/5ths) vote where
necessary to protect the public peace, health, or safety; and
j) An urgency ordinance adopted pursuant to Government Code Sections 36934
and 36937 is warranted on an urgency basis to allow regulations to govern how
time-share and fractional interest uses are regulated. Without such ordinance,
the issues raised above pose a significant threat to the public peace, health and
safety.
WHEREAS, the City Council find and determines that the immediate preservation of the
public health, safety, and welfare requires that this Ordinance be enacted as an urgency
ordinance pursuant to Government Code Section 36934 and 36937, and such that Ordinance
take effect immediately upon adoption – therefore, this Ordinance is necessary for the
immediate preservation of the public peace, health, safety and welfare and its urgency is hereby
declared.
WHEREAS, the City Council desires to amend the City’s municipal code to address the
impact that time-share and fractional interest uses are having or would have on the City’s
housing supply.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SONOMA DOES ORDAIN
AS FOLLOWS:
SECTION 1. RECITALS.
The above set forth recitals and findings are true and correct and incorporated herein by
reference, as if set forth herein in full.
SECTION 2. URGENCY ORDINANCE.
The urgency ordinance is necessary for the immediate preservation of the public peace, health,
and safety because the operation of time-share companies in the City threatens to reduce the
supply of affordable and market-rate housing in the City, increase site development conflicts and
incompatibilities related to public safety, visual, privacy, and aesthetic impacts which would
negatively impact the public welfare and the unique quality and character of the City of Sonoma.
SECTION 3. MUNICIPAL CODE AMENDMENTS.
Section 19.50.140 of the Sonoma Municipal Code is added to read as follows:
19.50.140 Time-Shares.
This section sets forth requirements for the establishment and operation of time-share uses.
A. Definitions.
1. “Accommodation” means any dwelling unit, multifamily dwelling, apartment,
condominium or cooperative unit, cabin, lodge, hotel or motel room, or other private
or commercial structure containing toilet facilities therein that is designed and
available, pursuant to applicable law, for use and occupancy as a residence by one
or more individuals.
2. “Owner” means owner of a time-share interest.
3. “Person” means a natural person, corporation, limited liability company,
partnership, joint venture, association, estate, trust, or other legal entity, or any
combination thereof.
4. “Time-share instrument” means one or more documents, by whatever name
denominated, creating or governing the operation of a time-share plan and includes
the declaration dedicating accommodations to the time-share plan.
5. “Time-share interest” means and includes either of the following:
a. The right to exclusively occupy a time-share property for a period of time
on a recurring basis pursuant to a time-share plan, coupled with a freehold
estate or an estate for years with a future interest in a time-share property or a
specified portion thereof.
b. The right to exclusively occupy a time-share property for a period of time
on a recurring basis pursuant to a time-share plan, which right is neither
coupled with a freehold interest, nor coupled with an estate for years with a
future interest, in a time-share property or a specified portion thereof.
6. “Time-share plan” means any arrangement, plan, scheme, or similar device,
whether by membership agreement, sale, lease, deed, license, right to use
agreement, articles of organization or incorporation, operating agreement or bylaws,
or by any other means, whereby a purchaser, in exchange for consideration, receives
the right to exclusive use of an accommodation or accommodations, whether through
the granting of ownership rights, possessory rights or otherwise, for a period of time
less than a full year during any given year, on a recurring basis for more than one
year, but not necessarily for consecutive years.
7. “Time-share property” means one or more accommodations subject to the same
time-share instrument, together with any other property or rights to property
appurtenant to those accommodations.
8. “Time-share use” and “fractional interest use” means the use of one or more
accommodations or any part thereof, as a time-share property pursuant to a time-
share plan.
B. Permitted zones. None, Time share uses and fractional interest uses are prohibited
throughout the city of Sonoma
C. Violations, Enforcement and Civil Penalties
1. Any responsible person, including but not limited to an owner of a time-share
interest, management entity, agent, or broker who uses, or allows the use of, or
advertises or causes to be printed, published, advertised or disseminated in any way
and through any medium, the availability for sale or use of an accommodation in
violation of this section is guilty of a misdemeanor for each day in which such
accommodation is used, allowed to be used, or advertised for sale or use in violation
of this chapter. Such violation shall be punishable pursuant to Chapter 1.12 (General
Penalty).
2. Any responsible person, including by not limited to an owner of a time-share
interest, management entity, agent, or broker who uses, or allows the use of, or
advertises or causes to be printed, published advertised or disseminated in any way
and through any medium, the availability for sale or use of an accommodation in
violation of this section is subject to administrative fines and/or penalties as set forth
in Chapter 1.28 (Administrative Citations).
3. Time-share use, fractional interest use and/or advertisement for time-share use
and/or fractional ownership use, of an accommodation in violation of this section is a
threat to public health, safety or welfare and is thus declared to be unlawful and a
public nuisance and may be abated pursuant to Chapter 1.12 (General Penalty),
Chapter 1.30 (Administrative Notice and Order Proceedings), Chapter 9.56 (Noise),
and any other relevant provision of this code as it may be amended from time to time.
4. Each day a violation of this chapter occurs shall constitute a separate offense.
5. The remedies under this section are cumulative and in addition to any and all
other remedies available at law and equity.
SECTION 4. CEQA.
This Ordinance has been assessed in accordance with the authority and criteria contained in the
California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the
environmental regulations of the city. City Planning Staff has determined that the adoption and
implementation of the Ordinance is exempt from further environmental review under the general
rule in California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) that CEQA
only applies to projects that have the potential for causing a significant effect on the
environment. As a text amendment and addition without any physical project being approved, it
can be seen with certainty that there is no possibility that the Ordinance will have a significant
effect on the environment. The proposed Ordinance is therefore exempt from the provisions of
CEQA because it does not involve a commitment to any specific project that may result in a
potentially significant physical impact on the environment. The City Council concurs in these
findings and adopts them as its own. The City Council, therefore, directs that a Notice of
Exemption be filed with the County Clerk of the County of Sonoma in accordance with CEQA
Guidelines.
SECTION 5. SEVERABILITY.
If any section, subsection, subdivision, sentence, clause, phrase, or portion of this Ordinance for
any reason is held to be invalid or unconstitutional by the decision of any court of competent
jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance.
The City Council hereby declares that it would have adopted this Ordinance, and each section,
subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that
any one or more sections, subsections, subdivisions, sentences, clauses, phrases, or portions
thereof be declared invalid or unconstitutional.
SECTION 6. EFFECTIVE DATE.
This Ordinance is an urgency ordinance enacted under California Government Sections 36934
and 36937, subdivision (b). The urgency ordinance is effective upon adoption by a 4/5 vote of
the Sonoma City Council, and shall take effect immediately upon its adoption.
SECTION 7. PUBLICATION.
This ordinance shall be published in accordance with the provisions of Government Code
Section 36933(c)(1).
SECTION 8. THIS ORDINANCE PREVAILS WHERE THERE IS CONFLICT.
To the extent that this Ordinance conflicts with any other provision in the Sonoma Municipal
Code or city ordinance (urgency or otherwise), policy or regulation, this Ordinance will control.
APPROVED:
________________________________
Jack Ding, Mayor
ATTEST:
_________________________
Rebekah Barr, MMC, City Clerk
* * * * *
I HEREBY CERTIFY the foregoing ordinance was duly adopted at a Regular Meeting of the City
Council of the City of Sonoma held on the ______, 2022 by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
_________________________
Rebekah Barr, MMC, City Clerk
273619.3
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
From:Kathe Morgan
To:Planning Commissioners
Subject:Cease and desist letters - Carmel-by-the-Sea, Monterey County and Palm Springs
Date:October 09, 2022 10:16:30 AM
Attachments:CarmelCeas.pdf
MontereyCounty.pdf
PalmSpringsCease.pdf
[EXTERNAL EMAIL] DO NOT CLICK links or attachments unless you recognize the sender and know the
content is safe.
Honorable Planning Commissioners:
Attached are Cease and Desist letters sent to Pacaso from counsels representing Carmel-by-the-Sea, Monterey County and Palm Springs. All letters state violation of timesharemunicipal codes for each respective city versus attempts of code accommodations ormodifications for timeshare use. These letters were included amongst others on
www.stoppacasonow.com. There appears no public or current evidence of legal pushback byPacaso. Respectfully, Kathe Morgan/Villa Point resident
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
2310 East Ponderosa Drive - Suite 25
Camarillo, California 93010-4747
voice 805.987.3468 - fax 805.482.9834
www.bwslaw.com
Cell No.: 805.377.3565
bpierik@bwslaw.com
Los Angeles – Inland Empire – Marin County – Oakland – Orange County – Palm Desert – San Diego – San Francisco – Silicon Valley – Ventura County
April 7, 2022
VIA E-MAIL TO
PATRICK@PACASO.COM and
ELLEN@PACASO.COM
Patrick Abell
Senior Legal Counsel
Pacaso, Inc.
2021 Fillmore St. Suite 183
San Francisco, CA 94115
Ellen Haberle, Director
Government & Industry Relations
Pacaso, Inc.
2021 Fillmore St. Suite 183
San Francisco, CA 94115
Re: Request to Immediately Cease and Desist Unlawful Operations
Dear Mr. Abell and Ms. Haberle:
This law firm serves as City Attorney for the City of Carmel-by-the Sea, California
(“City”). In that capacity, we are writing to advise Pacaso Inc. (“Pacaso”) that Pacaso’s
current operations within the City are unlawful and must cease immediately. The City
has been made aware of at least one property sold by Pacaso within the City at Dolores
7 SW 13th, Carmel by-the-Sea, CA 93921. The sale of this property constitutes the sale
of a timeshare prohibited by the Carmel-by-the-Sea Municipal Code (“CMC”) Section
17.28.010.
City Prohibition on Timeshare Uses
CMC section 17.28.010 provides that “[t]imeshare projects, programs and occupancies
are prohibited uses within all of the zoning districts within the City.” Timeshare projects,
programs and occupancies are further defined in CMC Section 17.70.020:
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Patrick Abell
Ellen Haberle
Pacaso, Inc.
April 7, 2022
Page 2
A “time-share program” is “[a]ny arrangement for a project whereby the use,
occupancy, or possession of real property has been made subject to a time-
share estate, use, or occupancy, whereby such use, occupancy, or possession
circulates among purchasers of the time-share intervals according to a fixed or
floating time schedule on a periodic basis for a specific period of time during any
given year, but not necessarily for consecutive years.”
A “time share estate” is defined as “[a] right of occupancy in a time-share project
that is coupled with an estate in the real property.
A “time-share use” is “a license or contractual or membership right of occupancy
in a time-share project which is not coupled with an estate in the real property.”
A “time-share project” is “[a] project in which a purchaser receives the right in
perpetuity, for life, or for a term of years, to the recurrent, exclusive use or
occupancy of a lot, parcel, unit, or segment of real property, annually or on some
other periodic basis, for a period of time that has been or will be allotted for the
use or occupancy periods into which the project has been divided.
A “project” specifically includes “[a]ny proposal for a new or changed use.”
Pacaso’s Business Involves the Sale and Management of Prohibited Timeshare
Uses
Pacaso’s website indicates that its business model involves sales of property held by an
limited liability company in 1/8 ownership shares, with the associated right to exclusive
use of the subject property by the owner of the share, with Pacaso managing among
other things, the upkeep of the property and providing an app to arrange for periods of
exclusive use by the share owners. Pacaso’s website further states that each owner of
a 1/8 share is entitled to 6 “general stays,” booked at least 61 days in advance, which
may range between 2 to 14 nights, and unlimited “short notice stays” booked less than
60 days in advance. However, maximum stay length is limited to 14 nights regardless of
the method of booking. Owners of two shares have the option to book stays up to 28
nights.
Pacaso’s business model meets the City’s Ordinance’s definition of a prohibited
“timeshare program,” because the ownership of the property through the LLC is an
“arrangement for a project whereby the use, occupancy, or possession of real property
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Patrick Abell
Ellen Haberle
Pacaso, Inc.
April 7, 2022
Page 3
has been made subject to a time-share estate, use, or occupancy,” and rights to periods
of exclusive use are circulated among the owners of the shares, in specific intervals up
to 14 nights per 1/8 share, “according to a … floating schedule on a periodic basis for a
specific period of time during any given year.” Additionally, division of the property into
fractionalized ownership under Pacaso’s business model will create either a “time-share
estate” or “time-share use” — either the owners of the shares of the LLC hold a “right of
occupancy” and “an estate in the real property” which establishes a time-share estate,
or if the LLC is deemed the sole holder of the “estate in the real property,” then such
owners have a “time-share use” because they will hold a right to determine and
establish their rights of occupancy pursuant to their right to operate and control the LLC
under the terms of any membership or operating agreements.
We are aware that Pacaso has asserted to other jurisdictions that the properties that
they sell and manage are not timeshares, but rather “fractionalized
ownerships.” According to Pacaso, a Pacaso home is no different from any other single
family residence. However, this is simply not true. Regardless of what Pacaso wants to
calls its business model, the impact is the same — this type of commercially managed
short-term vacation use has the same impacts on surrounding residential areas as
short-term vacation rentals, which are generally prohibited by the City’s municipal
code. (See CMC Sections 17.08.040, 17.68.030; 17.28.040.) The frequent, rotating
occupancy of the owners is functionally akin to short-term rentals, and the City’s existing
regulations on timeshare uses are specifically intended to minimize the impacts created
by this type of use and occupancy of land. Similar prohibitions on short-term rotating
occupancies have already found lawful under Ewing v. City of Carmel-by-the-Sea
(1991) 234 Cal.App.3d 1579, which found that the City could lawfully prohibit short-term
rental of residential property for transient occupancy in residential neighborhoods as an
incompatible “commercial” use.
Finally, several significant policy reasons justify the City’s prohibition against
timeshares. The City’s prohibitions on timeshares were first adopted in 1988 in order to
preserve housing stock. The Housing Element of the City’s General Plan includes Goal
G3-2, which is to “[p]reserve existing residential units and encourage the development
of new multifamily housing in the Commercial and R-4 Districts.” Furthermore, Goal
G3-4 specifically requires that the City “[p]rotect the stability of residential
neighborhoods by promoting year-round occupancy and neighborhood
enhancement.” As part of this goal, the City has committed to “maintain and encourage
the expansion of permanent residential housing stock,” because the Housing Element
notes that “[a] substantial percentage of the City's housing stock lies vacant much of the
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Patrick Abell
Ellen Haberle
Pacaso, Inc.
April 7, 2022
Page 4
year as second homes occupied for weekends, vacations or on a seasonable basis”
which “has the effect of reducing the number of permanent, year-round residents in the
City.” To avoid depletion of residents and associated impacts on community, City
services, Goal G3-4 of the City’s Housing Element specifically requires the enforcement
of the prohibitions on short-term, transient rentals and timeshares in residential
dwellings.
In sum, conversion of any existing housing stock into timeshares or “fractionalized
ownerships” reduces the available supply of homes for occupation for full-time
residency, and therefore reduces the affordability of housing in the City, based on basic
laws of supply and demand.
Pacaso is Unlawfully Operating Without Required Business Licenses
Pursuant to CMC section 5.04.020, it is unlawful for any person employed by Pacaso to
commence or carry on any kind of business in the City without first procuring a business
license and pay the applicable business license tax. (CMC section 5.04.020.) Pacaso
does not possess a City business license, nor has it paid any business license tax to the
City. As a result, Pacaso’s operations within the City also are in conflict with the City’s
business license ordinance. However, we note that even if Pacaso obtains a business
license, the business may not operate in the manner described above due to the
prohibitions in the City’s Municipal Code regarding timeshares.
Request to Cease Unlawful Operation
In conclusion, Pacaso’s current operations within the City are unlawful and must cease
immediately. The City requests that Pacaso cease all advertising and sale of fractional
ownership of residential properties within the City. Failure to comply may result in
enforcement. Any violation of City zoning prohibitions is subject to administrative
citation and imposition of new fines for each day of unlawful operation pursuant to CMC
Chapter 18.04. Furthermore, any violation of CMC section 17.28.010 prohibiting
timeshare uses is a misdemeanor subject to criminal prosecution, punishable by a fine
not exceeding $1,000 and imprisonment for a term not exceeding a period of six
months. (CMC 1.16.010, 17.66.040.)
We are requesting your written response to this letter by April 21, 2022 which you may
submit to me via email to bpierik@bwslaw.com
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
Patrick Abell
Ellen Haberle
Pacaso, Inc.
April 7, 2022
Page 5
Thank you for your cooperation.
Sincerely,
Brian A. Pierik
City Attorney
City of Carmel-by-the Sea
BAP:SAR/jc
CAM #4855-3499-0355 v1
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
MONTEREY COUNTY
OFFICE OF THE COUNTY COUNSEL
168 WEST ALISAL STREET, 3RD FLOOR, SALINAS, CALIFORNIA 93901-2439
(831) 755-5045 FAX: (831) 755-5283
LESLIE J. GIRARD KELLY L. DONLON
COUNTY COUNSEL ASSISTANT COUNTY COUNSEL
June 24, 2022
Patrick Abell
Senior Legal Counsel
Pacaso, Inc.
2021 Fillmore St. Suite 183
San Francisco, CA 94115
patrick@pacaso.com
Ellen Haberle, Director
Government & Industry Relations
Pacaso, Inc.
2021 Fillmore St. Suite 183
San Francisco, CA 94115
ellen@pacaso.com
Sent via email
Re: Request to Immediately Cease and Desist Unlawful Operations
Dear Mr. Abell and Ms. Haberle,
I write to bring your attention to the requirements of the Monterey County Code1 with
regard to Pacaso’s operations. As detailed fully below, to the extent that Pacaso’s
advertisements or operations are occurring in zones within the unincorporated areas of Monterey
County (“County”) where timeshares are not allowed, Pacaso’s operations are unlawful and must
cease immediately. For Pacaso’s operations in zones where timeshares are allowed under the
Monterey County Code (“MCC”), Pacaso must apply for a Use Permit in the inland zone or
Coastal Development Permit in the coastal zone as applicable.
Under Chapters 20.06 and 21.06 of the MCC the following definitions are relevant to
Pacaso’s operations:
- “Timeshare Estate” is defined as “a right of occupancy in a timeshare project which is
coupled with an estate in the real property.”
- “Timeshare Use” is defined as “a license or contractual or membership right of
occupancy in a timeshare project which is not coupled with an estate in the real
property.”
- “Timeshare Project” is defined as “a development in which a purchaser receives the right
1 https://library.municode.com/ca/monterey_county/codes/code_of_ordinances
http://www2.co.monterey.ca.us/planning/docs/ordinances/Title20/20_toc.htm
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in perpetuity, for life, or for term of years, to the recurrent, exclusive use or occupancy of
a lot, parcel, unit or segment of real property, annually or on some other periodic basis,
for a period of time that has been or will be allotted from the use or occupancy periods
into which the project has been divided. The definition of time share project includes a
timeshare estate and a timeshare use.”
Pacaso’s website indicates that its business model involves sales of property held by
limited liability companies in 1/8 ownership shares, with the associated right to exclusive use of
the subject property by the owner of the share, with Pacaso managing among other things, the
upkeep of the property and providing an app to arrange for periods of exclusive use by the share
owners. Pacaso’s website further states that each owner of a 1/8 share is entitled to 6 “general
stays,” booked at least 61 days in advance, which may range between 2 to 14 nights, and
unlimited “short notice stays” booked less than 60 days in advance. However, maximum stay
length is limited to 14 nights regardless of the method of booking. Owners of two shares have
the option to book stays up to 28 nights.
Pacaso’s business model clearly meets Monterey County’s definitions of “Timeshare
Estate” and “Timeshare Project”, because Pacaso provides a right of occupancy which is coupled
with an estate in real property. Specifically, individuals have a right to occupy/use the real
property for a certain number of days per year, and they hold a fractional ownership interest in
the real property.
Sections 20.64.110 and 21.64.110 of the MCC state that Timeshare Projects are only
allowed in zones where a hotel, motel or similar visitor accommodation use would be permitted
and in such a case a Use Permit or a Coastal Development Permit is required. Specifically, these
zones include the following: High Density Residential, Mixed Use, Light Commercial, Heavy
Commercial, Visitor Serving, and Coastal General Commercial. As such, in order for Pacaso to
market and sell homes within these zoning districts, it first must apply with the County’s
Housing Community & Development department for a Use Permit or Coastal Development
Permit depending on the prospective home’s location.
We are aware that Pacaso has asserted to other jurisdictions that the properties that they
sell and manage are not timeshares, but rather “fractionalized ownerships.” According to
Pacaso, a Pacaso home is no different from any other single family residence. However, this is
simply not the case. Pacaso’s business model of selling and then commercially managing short-
term vacation use results in frequent, rotating occupancy, that has a dire impact on housing
supply and community integrity. As discussed above, the County’s existing timeshare
regulations are specifically intended to minimize the impacts created by this type of use and
occupancy of real property.
Monterey County is aware of certain homes advertised on Pacaso’s website that are
located in the Carmel Highlands and the Del Monte Forest. Both of these areas are zoned Low
Density Residential, Rural Density Residential or Medium Density Residential, and therefore
Timeshare Projects are not allowed per the MCC. The County respectfully requests that Pacaso
cease all advertising and sale of fractional ownership of residential properties within
incorporated zones where Timeshare Projects are not allowed. The County also requests, if
applicable, that Pacaso apply with Housing Community & Development for an appropriate land
use entitlement in zones where Timeshare Projects are permitted. Failure to comply with the
MCC may result in enforcement. Any violation of the MCC is subject to administrative citation
and imposition of new fines for each day of unlawful operation pursuant to Chapter 1.22 of
MCC. Furthermore, any violation of the MCC is a misdemeanor subject to criminal prosecution,
punishable by a fine not exceeding $1,000 and imprisonment for a term not exceeding a period
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
of six months pursuant to Chapter 1.20 of the MCC.
I appreciate your prompt attention to this matter. Please feel free to contact me with any
questions at donlonkl@co.monterey.ca.us or 831-755-5313.
Sincerely,
LESLIE J. GIRARD
County Counsel
By: ______________________________
Kelly L. Donlon
Assistant County Counsel
cc: Monterey County Board of Supervisors
Charles J. McKee, County Administrative Officer
Leslie J. Girard, County Counsel
Erik Lundquist, Director of Housing Community & Development
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)
55575.18100\34590098.1
Indian Wells
(760) 568-2611
Irvine
(949) 263-2600
Los Angeles
(213) 617-8100
Manhattan Beach
(310) 643-8448
Ontario
(909) 989-8584
655 West Broadway, 15th Floor, San Diego, CA 92101
Phone: (619) 525-1300 | Fax: (619) 233-6118 | www.bbklaw.com
Riverside
(951) 686-1450
Sacramento
(916) 325-4000
San Diego
(619) 525-1300
Walnut Creek
(925) 977-3300
Washington, DC
(202) 785-0600
Jeffrey S. Ballinger
(619) 525-1343
jeff.ballinger@bbklaw.com
December 6, 2021
VIA E-MAIL ELLEN@PACASO.COM
Ellen Haberle
Director, Government & Industry Relations
Pacaso.com
2021 Fillmore St. Suite 183
San Francisco, CA 94115
Re: Pacaso’s Operations within the City of Palm Springs, California
Dear Ms. Haberle:
As you know, this law firm serves as City Attorney for the City of Palm Springs, California.
In that capacity, we are writing to advise Pacaso.com that Pacaso’s current operations within the
City are unlawful and must cease immediately.
While I appreciate your recent efforts to meet with City officials and present Pacaso’s
position as to why the City’s timeshare ordinance does not apply to Pacaso, as set forth more fully
below, such a position it not legally tenable.
Pacaso is a company that holds itself out as a new way to own a second home. According
to Pacaso’s website (https://www.pacaso.com/learn), accessed earlier this year, Pacaso operates as
follows:
“Co-ownership with Pacaso is the best way to buy and own a great second home.
From buying to closing here’s how Pacaso works. First, tell us a little about
yourself and what you are looking for in a second home. Then, start shopping. If
a listing currently on Pacaso is not a fit, find one you love on any real estate site
and share it with us. If the home is a match for Pacaso, we will partner with you to
purchase up to half of the property in a private and professionally managed LLC
uniquely designed for co-ownership. This LLC is referred to as the Pacaso Home
LLC. On behalf of Pacaso, we line up financing for the LLC and close quickly. In
parallel Pacaso remarkets remaining ownerships shares in the home to interested
buyers. Buyers can purchase their desired amount of ownership from one-eighth
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Page 2
to one-half of the whole home. We enable qualified buyers to access funds in the
LLC and finance up to half of their purchase. The financing relationship is directly
between the LLC and the buyer. Pacaso signs closing paperwork on behalf of the
LLC. In parallel buyer signs the LLC owner operating agreement to complete their
purchase. Ownership is recorded in the owner’s schedule section of the owner
operating agreement. Following closing the collective owners own 100%
ownership interest in the LLC. We transform the home with modern interior design
and address any necessary repairs. Owners use the mobile app to book stays 2 days
to 24 months in advance. Scheduling is easy and equitable based on the number of
shares owned. From there we take care of everything, overseeing local property
management, bill pay and platform technology, all from the mobile app. Owners
simply show up, relax and enjoy their Pacaso.”
The maximum length of a stay is based on shares owned. Owners of one share can enjoy
a stay anywhere from 2 to 14 nights. A stay with a duration of 2-7 nights counts as one general
stay, while a stay with a duration of 8-14 nights counts as 2 general stays. Owners of two shares
have the option to book stays up to 28 nights.
Pacaso asserts that the properties that they sell and manage are not timeshares. According
to Pacaso, a Pacaso home is no different from any other single family residence. Pacaso further
asserts that Pacaso co-owners agree to several restrictions to help ensure that their use promotes
the public interest, safety and comfort. For example, Pacaso states that there is a maximum of
eight co-owners for any home, with only one family using the property at a time; co-owners are
prohibited from having large events or parties that exceed the maximum occupancy of the home;
co-owners must adhere to a 9pm to 7am quiet hour policy; co-owners are prohibited from renting
the home; and Pacaso encouraged homeowners to avoid parking on the street unless absolutely
necessary. However, Pacaso does not provide any documentation or explanation of how these
rules are enforced. The stays are reserved on an app, and while each co-owner is prohibited from
renting the home as a short-term rental, they are permitted to allow other guests to stay there during
their allotted days.
According to Pacaso, as of September, one single-family residence within Palm Springs
has been fully sold, and Pacaso was marketing four others within the City.
City of Palm Springs Timeshare Ordinance
The City of Palm Springs regulates where timeshares can be located within the City and
taxes occupancy of timeshares. Specifically, under the City’s zoning ordinance, a timeshare
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project is allowed only in those zoning districts where a hotel use would be permitted (i.e., R-3,
R-4, R-4VP, C-B-D, C-1, C-1AA and C-2 zones, and G-R-5 and R-2 zones when fronting on a
major or secondary thoroughfare). (Palm Springs Zoning Code, § 93.23.11(B).) Indeed, such uses
are not allowed by right, but instead require a conditional use permit. Notably, timeshares are not
permitted in single-family zones.
The City’s Zoning Ordinance defines a “timeshare” as follows:
“…a “time-share project” is one in which time-share rights or entitlement to use or
occupy any real property or portion thereof has been divided as defined in
Section 3.24.020(7) of the Palm Springs Municipal Code into twelve (12) or more
time periods of such rights or entitlement.” (PSZC, § 93.23.11(A).)
Section 3.24.020(7) defines timeshares, for purposes of taxation. It defines a “timeshare”
as
“occupancy related to the situation wherein a purchaser receives the right or
entitlement in perpetuity, for life, or for a term of years or other extended term, to
the recurrent, exclusive use or occupancy of a lot, parcel, unit, room(s), hotel or
portion thereof, or segment of real property, annually or on some other seasonable
or periodic basis, for a period of time that has been or will be allotted from the use
or occupancy periods into which the time-share project which is involved has been
divided. The said right or entitlement to occupancy may attach in advance to a
specific lot, parcel, unit, room(s), or portion of a hotel, or segment of real property,
or may involve designation or selection of the same at a future time or times.”
Despite Pacaso’s assertions to the contrary, Pacaso’s business model meets the City’s
Ordinance’s definition of a “timeshare”. The City’s definition, broken down into its constituent
parts, applies to Pacaso.
Specifically, Pacaso’s business model fits the following definition: “wherein a purchaser
receives the right in perpetuity… or other extended term, to the recurrent, exclusive use or
occupancy of a lot … annually or on some other … periodic basis, for a period of time that has
been or will be allotted from the use or occupancy periods into which the time-share project which
is involved has been divided.”
Here, purchasers of a Pacaso LLC receive the right, in perpetuity or some other period
defined in the LLC agreement, to the recurrent and exclusive use of the lot on which the residence
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is located. The right to such use is on some periodic basis, for a period of time that is allotted
under the LLC agreement.
Thus, by its terms, the City’s ordinance applies to a use such as Pacaso’s. As such, Pacaso’s
operations are not permitted in single family-zones within the City of Palm Springs, California.
In addition to the City’s Zoning Ordinance, the City’s business license ordinance requires
any party that is transacting any business within the City to first procure a business license and pay
the applicable business license tax. (Palm Springs Municipal Code, § 3.48.010.) Pacaso does not
possess a City business license, nor has it paid any business license tax to the City. As a result,
Pacaso’s operations within the City also are in conflict with the City’s business license ordinance.
Finally, several significant policy reasons justify the City’s prohibition against timeshares
in single-family zones. As the City’s Housing Element of the General Plan states,
“Palm Springs considers housing affordability to be a critical issue. The inability to
afford housing leads to a number of undesirable situations, including the doubling
up of families in a single home, overextension of a household’s financial resources,
premature deterioration of housing due to the high number of occupants, situations
where children and seniors cannot afford to live near other family members because
of the lack of affordable housing options, and in more extreme cases,
homelessness.” (City of Palm Springs General Plan, Housing Element, p. 3-19,
(2014-2019).)
For every house that Pacaso sells to one of its limited liability corporations, to be used as
a second, vacation home, that house becomes unavailable to a buyer or renter who could live there
full time. This necessarily reduces the amount of housing stock that is available for full time
residents in the City. The reduction in housing stock, in turn, feeds the affordability crisis, making
the remaining houses within the City more costly.
Pacaso may claim that it only purchases and sells “luxury” homes, and therefore does not
impact the availability of affordable housing. However, basic laws of supply and demand dictate
that every home that is made unavailable to a full time resident, whether “luxury” or not,
necessarily reduces the supply of homes, and therefore reduces the affordability of housing in the
City.
One of the policies of the City’s Housing Elements is to “protect established single-family
residential neighborhoods from the transition, intensification, and encroachment of uses that
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detract and/or change the character of the neighborhood.” (Housing Element, HS1.8, p. 3-63.)
Pacaso portrays its business model as “the modern way to buy and own a second home”. However,
Pacaso’s “modern way” involves up to eight (8) investors and their guests rotating occupancy
throughout the year. Although the LLC investors are not technically “renters”, neighbors can
expect the property to have many of the secondary impacts of vacation rentals, which are currently
prohibited in many Coachella Valley cities and heavily regulated in Palm Springs. For example,
house cleaners will have to come to the home in between each stay, and the home can turn over
multiple times in a week. To a neighbor, that impact is very much the same as if the occupants
were short-term vacation renters. In addition, the “co-owners” of the limited liability company
really have no connection with one another, other than their investment in the company. All of
this necessarily changes the character of a neighborhood, in contravention of the City’s stated
policy of preserving the single-family residential character of its neighborhoods.
Another Housing Element policy is to “preserve the supply of affordable rental housing in
the community, including mobile home parks, publicly subsidized rental housing, and special
needs housing.” (Housing Element, HS2.9, p. 3-68.) As stated above, Pacaso’s business model
removes single-family homes from the housing market for individuals or families who wish to
reside in Palm Springs and therefore reduces the supply of affordable rental housing for those
individuals or families.
Therefore, Pacaso’s current operations within the City are unlawful and must cease
immediately.
Should you have any questions, please do not hesitate to contact me.
Sincerely,
Jeffrey S. Ballinger
of BEST BEST & KRIEGER LLP
City Attorney
City of Palm Springs
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cc: Hon. Mayor and Councilmembers
Justin Clifton, City Manager
Teresa Gallavan, Asst. City Manager
Flinn Fagg, Development Services Director
Planning Commission Special Meeting - October 6, 2022 Item No. 2e - Additional Materials Submitted After Deadline Code Update Related to Fractional Homeownership (PA2022-0202)