Pacaso: You can’t unring a warning bell
The latest assault on the social fabric of our rural neighborhoods has arrived. The Pacaso LLC business model sells a “fractional ownership" to eight parties, providing access to a rural mansion multiple times a year. There is no limit on the number of people occupying the timeshare and the model skirts the obligation to pay Transient Occupancy Tax. Pacaso’s “party pads” are now found in Santa Rosa, Dry Creek Valley and Napa County, with more timeshare sales underway.
Pacaso is just the latest destructive element in “Tourism’s Faustian Deal” - the term coined at a 2015 NapaVision2050 Conference, where tourism and economic experts presented compelling data about Napa’s tourist-based economy and its unintended consequences both to communities and public trust resources.
Organizations have formed across Sonoma County including in Sonoma Valley (StopPacasoNow) and Dry Creek Valley (S.C.A.T. – Sonoma County Against Timeshares). Preserve Rural Sonoma County presented data to Sonoma’s decision makers demonstrating that the “Arm’s Race” for winery use permits was resulting in destructive competition, and that the inevitable economic course correction would result in harm to our signature small, family wineries.
Despite subsequent disruption from fire, flood and drought, Napa and Sonoma officials ignored expert advice and gave in to the lure of “Tourism’s Faustian Deal” – seemingly ignoring tourism’s external costs. The 2020-21 pandemic brought the economic realities home to tourist-oriented businesses.
Meanwhile, cities continued permitting hotel rooms and large-scale restaurants, while County officials opened ag and forest lands to accessory dwelling units, with no restrictions limiting their use as vacation rentals. New residents are building massive water and energy-intensive structures for use a few weeks each year, or for the short-term rental market.
The 5 Stages of “Tourism’s Faustian Deal” are summarized below. Which stage is your community experiencing – is your neighborhood at a crossroads or has it passed the point of no return?
The 5 Stages of “Tourism’s Faustian Deal”
Stage 1: Tourism is supplemental and supportive to an existing economic base.
Stage 2: The local economy increases its reliance on tourist dollars and tourism is perceived by local governments and businesses as essential. Low paying jobs proliferate.
Stage 3: Dislocation of the local population begins: The influx of outsider investor wealth predominates, leading to a gradual tearing of the community’s social fabric.
Long-time residents move out and part-time owners buy in, yet rarely actually move in. Vacation rentals and now timeshares are owned by people who don’t vote in Sonoma County. Neighbors no longer know each other – or even have contact information for their absent neighbor.
The wealthy thrive, while local housing becomes increasingly unavailable for low-wage workers, with worker commute traffic adding to congestion. Tourism becomes increasing “unwelcome” by residents as traffic jams, parking hassles and road safety problems become daily occurrences.
Meanwhile, politically persuasive “tourism-value extraction entities” convince municipalities not to impose mitigation fees on the businesses benefiting from tourism – placing the costs directly on taxpayers.
Stage 4: By this stage, tourism’s deficit economy becomes evident in the wear and tear on our community resources and infrastructure, with public safety services requiring ever increasing funds for further expansion. Local governments must impose additional taxes on residents to pay for the maintenance of roads, expanded water and sewer systems, and to provide fire and police services.
Stage 5: Now, the Faustian deal is complete as local governments negotiate themselves into a corner of unfettered capitalism. Privatized benefits are yoked to socialized costs, with fiscal burdens extending decades into the future.
Faced with the vicious cycle of approving even more large-scale projects by out of state developers, government officials propose a false pretext that “we need Transient Occupancy Tax to pay the bills,” while taking little action to address the external costs associated with second homes, un-permitted vacation rentals or timeshares.
Decades of case studies reveal that a municipality will never catch up - the infrastructure erodes, costs to residents’ skyrocket while the quality of the community experience declines. Vacation destinations that were once-thriving communities are left with sub-standard public services and their social capital in tatters.
Bottom line: Absent governance by Napa and Sonoma officials, “Tourism’s Faustian Deal” will continue to devour our small-town charm and the social fabric of rural communities; degrading the rural character and unique beauty that drew people here in the first place.
Then, the cycle will start again at the next new, “hot destination”; because once authentic character is lost, tourists move on.