City Council moves to limit ‘fractional use’ dwellings in residential and commercial zones

Fractional use up for debate in Park City. Photo: Annie Spratt

PARK CITY, Utah – Over the last two years, companies have begun modernizing the practice of co-owning a property under a fully managed company, partnership, or other joint ownership structure.

This practice, labeled ‘fractional use,’ takes up to eight buyers and puts them in one home. Those buyers were looking for single-family homes in the community. Instead, they share one luxury home.

Neighborhoods in Park City have been exposed to this strategy, a new homeownership model that involves multiple unrelated investors and a third-party management company.

“A lot of thought, analysis, and discussions have gone into crafting a policy that considers a broad spectrum of factors when contemplating this new commercial model,” said City Manager Matt Dias. “To protect our neighborhoods, the city worked hard to strike a legislative balance that best serves the entire community.” 

In the past year, Park City Municipal has worked on Land Management Code adjustments in order to protect primary resident neighborhoods and allow fractional use of dwelling units in zoning districts that permit secondary residences.

On October 27, the City Council adopted Ordinance No. 2022-21 to:

1. Define fractional use
2. Establish fractional use in those zoning districts that allow for timeshares and private residence clubs
3. Require an administrative letter for fractional use approval
4. Require the fractional use management company to have an active business license

Additionally, the  Council moved to initiate an ordinance and directed planning to undertake a study. The proposed ordinance is an amendment to multiple land management codes, which would prohibit timeshares, private residence clubs, and fractional ownership in residential and commercially zoned districts.

Specifically, the city initiated amendments to Land Management Code Sections 15-2.13-2, 15-2.14-2, and 15-2.18-2.

The proposed study would further consider land use regulations to mitigate adverse impacts and protect the long-term viability and character of these neighborhoods.

Brian McGuigan, Director of Corporate Communications for Pacaso, a home co-ownership company, said about the decision:

“As a result of this ordinance, Park City can now use co-ownership as a tool to sustainably incorporate second home owners into its community while giving buyers more options to reduce the cost and hassle of owning a second home there. It’s notable the ordinance passed just before ski season, when interest in second homes in Park City peaks. This year, that demand will run into record low inventory and record high prices.”

Pacaso has received both flack and support for its second homeownership model, with some arguing it is operating more like a timeshare versus true homeownership, while others argue it keeps homes from sitting empty year-round.

An initial public hearing before the Planning Commission on the proposed Ordinance and study is scheduled for Wednesday, January 11, 2023, at 5:30 p.m. at City Hall (445 Marsac Avenue, Park City).

For more information, a copy of the pending draft Ordinance (Project File PL-22-05439), or to provide input, please contact the Park City Planning Department: planning@parkcity.org, (435) 615-5060.