By Brian Sherman for The Island Eye News
Representatives of Pacaso, a company that would like to sell fractional ownerships in a luxury home on Sullivan’s Island, made their case at a meeting of the Town Council’s Land Use and Natural Resources Committee July 13, but neither committee members nor local residents appeared convinced that the plan is appropriate for the residential island. “Like I think is the case with a majority of island residents, when I bought property here, it was to make a life, not to make a killing,” said Mayor Pat O’Neil, a member of the committee, commented after the meeting. The home, at 3115 Ion Ave., was removed from the Multiple Listing Service later in the week, sparking speculation on the island that, in the face of local opposition, Pacaso had decided to dump its plans to sell the house to multiple owners.
However, Brian McGuigan, the company’s director of corporate communications, denied that Pacaso considered changing its plans. “We previously listed it ourselves. When it goes back up, it will be listed by a local agent. This is routine,” McGuigan said. “We routinely list with local agents. MLS does not allow concurrent listings, so we took ours down, and the local agent will repost later today under his account.” The home was listed again on July 18 by Tim Schneider of the Cassina Group. The LUNR Committee, chaired by Council Member Gary Visser, took no action and made no recommendations following presentations by Pacaso Public Affairs Manager Sarah Filosa and John Carroll, a partner in the law firm of Burr Forman, which represents the real estate company.
Several Sullivan’s Island homeowners also spoke at the meeting, all of them opposed to Pacaso’s plans to sell oneeighth shares in a 4,331-squarefoot home for $902,000. Filosa explained that Pacaso operates in 40 markets throughout the United States. She said owners are required to put 30% down and that Pacaso forms a property-specific LLC and, after closing, retains no ownership in the home. She said the company profits by charging buyers a 12% upfront fee and a $99 per month maintenance fee.
She said all potential owners must pass a criminal and background check, owners must sign a code of conduct and renting the home out to nonowners is strictly prohibited.
Owners may stay in the house for up to 44 nights a year, according to Pacaso’s website.
Filosa added that a local home manager would be available to owners as well as neighbors.
“We are open to working with the municipality. We’re not opposed to regulation. We just want to come to a fair and equitable agreement with all parties involved,” Filosa said. “We understand that there are a lot of concerns from the residents, and we want to make sure that we’re making ourselves accessible and hopefully can open a dialog to educate everyone on what Pacaso is.” Carroll said he has worked with other coastal towns, “navigating the issues you are navigating now.” “I would be reluctant to regulate purchasing properties in the name of LLCs for a variety of reasons,” Carroll commented. “I’m sure your general counsel might agree that that might even be unlawful. In the event the town does want to regulate this in some fashion, there’s a variety of ways that we can work with you to do so to make a mutually beneficial outcome, both for the community and to those interested in second home ownership.” “I would caution the committee that any attempt to regulate the LLC ownership structure could have very poor unintended consequences,” Carroll added.
Local residents who attended the meeting seemed unimpressed with Pacaso’s efforts to win them over. Aussie Geer cited a study by the town’s Planning Commission, noting that its guiding principles were to “work to remain predominantly a low-density, single-family community.” Sallie Pritchard pointed out that Sullivan’s Island is “about single families owning one piece of property.”
Laurie Arthur said that numerous towns throughout California are pushing back on the Pacaso model for the same reasons that we are concerned about the essence and the fabric of Sullivan’s Island as a single family residential community, while Barbara Spell said people buy houses on the island specifically to avoid commercial areas. “What she (Filosa) described was clearly a commercial business,” Spell commented. “If it walks like a duck and quacks like a duck, it is a duck. We have regulations that are set up to stop short-term vacation rentals because that is what our residents want. We don’t want businesses in our neighborhoods. This could change everything about Sullivan’s Island.” Karen Byko also voiced her strong opposition to Pacaso’s plans, accusing the company of coming up with “a clever marketing term to attempt to circumvent our single-family residential zoning ordinances.” “They certainly operate like a hotel, VRBO or a timeshare,” Byko added. “I don’t know about you, but this is not how I host family and friends in my home, and I doubt that other homes on the island operate the massive marketing machine and scheduling app to manage their time in their home. Nor do I have PR machines and lawyers. No matter what clever marketing terms they use, a vacation timeshare is a vacation timeshare, and there’s no place for them on our residential island.” Resident Mike Walsh said, “I am simultaneously dismayed and angered that any company and any real estate person working with them would think that transforming a private residence on this island into a timeshare would be welcomed by most islanders. We have prohibited hotels and high-rise buildings, and we have severely limited short-term rentals. Those are the values of this community. Yet we are now faced with this shabby attempt to work around those values and bring commercialization where it is not wanted.” O’Neil pointed out that the town has been considering its legal options “to see what our position is and can be.” He was elected to the Town Council shortly after serving on the Planning Commission, which recommended that Sullivan’s Island ban short-term rentals in 2001. “The town made the very forward-looking decision at that time to ban short-term rentals. I think that illustrates the town’s commitment to single-family residential neighborhoods. I don’t think anything has changed in 21 years that would lead us to think that we don’t think that’s a good idea,” O’Neil said. “We have nothing against this specific company, but I think what we’re hearing is pretty inconsistent with a community that made a decision 22 years ago to forgo economic gain in many cases,” O’Neil. “The town is passing up a lot of accommodation taxes that we could be collecting, and there are a lot of owners who could be making money off of shortterm rentals, but the community made the decision that we would forgo that in favor of quality of life.” “I speak just for myself, but I have a feeling the majority of us on Council are still very committed to that idea that we want to preserve our quality of life in any way that we can,” O’Neil concluded. At the same meeting, the LUNR Committee voted to forward the recommendations of the Historic Preservation and Design Study Group to the full Town Council. Policy matters can be approved by the Council, while text amendments must be sent to the Planning Commission and also require a public hearing.
The HPDSG compiled its report after nine public meetings, from March 3 through March 7.