The Carmel City Council takes a strong stand against fractional vacation ownership.

The Carmel City Council issued a resounding “no” to fractional vacation home ownership in a 5-0 vote on Tuesday, Feb. 7. It was a major blow to the company Pacaso, an online company that purchased a home in Carmel after it launched in 2020, then turned around and sold shares of the home to others.

Last year the city of Carmel sent Pacaso a cease-and-desist letter, claiming that the practice ran afoul of its ordinance against timeshares. The city followed up by updating the language of the older ordinance to reflect the newer realities of online companies seeking to “disrupt” industries like vacation home ownership.

The amended ordinance came before the council on Tuesday for final approval. A representative of Pacaso addressed the council, as did co-owners of the Carmel home in question, urging the council to vote against the ordinance. They argued that their model of doing business was not a timeshare at all, but just another way to co-own a vacation home, something that they said was already common practice in Carmel.

“We take pride in our home, we care about our home, we invest in our home, we engage with the community. We are good neighbors and we are huge supporters and fans of the restaurants, galleries, shops and local community activities,” said one woman from Denver who said she and her husband own 25 percent of the Pacaso home on Dolores Street.

Other residents contended that because co-owners could stay for less than 30 days, as required by an ordinance that prohibits any rental stays less than that, it made it into nothing more than another commercial short-term rental.

One neighbor of the home complained of the “beehive of activity when they leave,” due to cleaning crews and maintenance people coming and going. “We have chosen to live in a residential community,” he said. “We did not choose to live across from an inn or a hotel.”

All five councilmembers backed the new ordinance, including Mayor Dave Potter.

“It’s basically the commercialization of our private neighborhoods. It’s unfortunate this is happening. It’s short-term rentals masquerading as timeshares,” Potter said.

Pacaso is currently selling shares in homes up and down California, as well as other states. In Monterey County the company is advertising two shares out of eight left for a home in Pebble Beach. Shares start at 1.15 million.