On January 21, 2022, a Grant Deed was recorded for a home which transferred title to Dolores 7 SW of 13th LLC, a Delaware limited liability company (hereafter “Dolores Home”).
Pacaso, Inc. (“Pacaso”) has marketed the Dolores Home as a fractional interest sale of 1/8 shares in which in which each share owner is entitled to occupy the Dolores Home for specified dates as agreed upon by the share owners to the exclusion of the other share owners.
The City Attorney submitted correspondence to correspondence to Pacaso in 2022 taking the position that the Dolores Home constitutes a timeshare within the meaning of the City Municipal Code as that Code existed in 2022. Pacaso responded that the Dolores Home is not a timeshare and is not in violation of the City Municipal Code.
On March 27, 2023, the City adopted Ordinance 2022-007, which amended the City Municipal Code relating to timeshares.
On April 24, 2023, the City submitted Ordinance 2022-007 to the California Coastal Commission (“CCC”) as a proposed amendment to the Local Coastal Plan Implementation Plan (“Implementation Plan Amendment”).
On October 13, 2023, the CCC certified the Implementation Plan Amendment finding that it conforms with, and is adequate to carry out the provisions of, the certified Land Use Plan.
There is currently a good faith dispute between the City and Pacasa regarding whether the ownership of the Dolores Home violates the 2022 Code and/or Ordinance 2022-007.
In order to resolve the dispute between the City and Pacaso regarding the Dolores Home, there is proposed for the Council’s consideration an Agreement (“Agreement”) between the City and Pacaso which is attached to the proposed Resolution submitted with this Staff Report.
Under the terms of the Agreement, the Dolores Home will be deemed a lawsuit, nonconforming use, sometimes referred to as “grandfathering”, in which a use that was permitted under the law in effect at the time of a transaction may become inconsistent with subsequent changes to the City codes.
The Agreement also provides that Pacaso will not, except for the Dolores Home, market, use, sell or purchase any real property or portion thereof in all zoning districts in the City that is fractionally-owned or intended to be fractionally-owned and would not assist others in the market, use, sale or purchase of fractionally-owned Property. Additional terms are set forth in the Agreement.
The recommended action is for the City Council to adopt the Resolution approving the Agreement with Pacaso.