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After a tech startup that buys then sells shares of luxury houses on the internet announced it was coming to Maui earlier this year, drawing backlash from residents, the County Council began looking at regulating the presence of similar companies accused of running de-facto timeshares in residential neighborhoods.

Council members moved forward Thursday with a proposal to tweak the county’s definition of timeshare in an effort to get a handle on the emergence of companies using fractional homeownership models — in other words, selling shares of properties to multiple owners — as a way to market stays in high-end vacation homes.

“Why are we proposing to change this? Basically, it’s to keep up with the times,” Jacky Takakura, the deputy director of Maui’s Planning Department, said during Thursday’s meeting.

Right now, a timeshare plan is defined as any scheme or arrangement that allows owners or members to divvy up stays on a property for periods of less than 60 days. Under the , that period would be expanded to less than 180 days, which is the threshold that the county currently uses to define so-called transient properties like vacation rentals.

The county’s push for regulation changes came after Pacaso, a company that describes itself as an “innovative luxury second home co-ownership platform,” listed its first home in Hawaii this spring. The Kapalua condominium could be split between either two or four owners — starting at $1.45 million per share.

Pacaso usually allows up to eight different owners to buy into a home but said it wouldn’t sell more than four shares of its properties on Maui. Pacaso has said its model is not like a timeshare since its customers own the properties and not just the ability to stay there, although it typically allows co-owners to stay at properties for two to 14 days at a time. Maui buyers who own 25% shares of the properties would be able to stay up to 28 days, according to the company.

Pacaso said in a statement Thursday that it was aware of the new proposal and is evaluating the bill. The company declined to comment further or say how many properties it owns on Maui since it expanded to the island this spring.

Launched in 2020 by former Zillow executives, Pacaso says its goal is to make “the dream of second homeownership possible for more people.” Over the last two years, the company bought up dozens of homes in places spanning from Spain to Colorado to California, offering shares for sale on its website or app — and allowing customers to pay in cryptocurrency, if they want.

“It’s not unique to Hawaii or to Maui. We see this in a lot of luxury destinations across the country, where these entities are selling like one-eighth ownership of a home,” said Takakura. “So we would like to nip this in the bud.”

During Thursday’s meeting, some residents welcomed the proposal and applauded county leaders for taking a stand against a company that might disrupt the fabric of neighborhoods. Others, however, questioned if the county had the bandwidth — and authority — to enforce such actions.

It’s not new or unusual for multiple owners to invest in properties or create limited liability companies to share ownership. Pacaso, however, markets the properties online with a website connecting buyers who don’t already know each other. It also serves as the property manager and arranges their stays  — something that county officials say makes it similar to a timeshare.

A county attorney said Thursday that the local government has been regulating timeshares since the 1980s, so the proposed change wouldn’t be all that new.

As Maui officials spent the last several months looking into ways to crack down on fractional homeownership schemes, some communities took matters into their own hands.

During the meeting, Jeff Roberts, the manager of the luxury condo complex in Kapalua where Pacaso bought its first Maui home, told council members that the community has since changed its rules to “close the barn door” to bar such ownership schemes in the future.

The Wailea Community Association, meanwhile, also strengthened its neighborhood rules banning timeshares when residents began to raise alarm about fractional homeownership models like Pacaso earlier this year. Bud Pikrone, who runs the community association, told council members that changing the rules meant getting buy-in not only from homeowners, but also winning the support of the seven hotels in the area.

The association, Pikrone said, viewed fractional homeownership as a “threat to our community.”

The proposal to limit fractional homeownership comes as part of a broader push by the Maui County Council to get a grip on tourism and the influx of wealthy investors buying second homes at a time when many longtime families can’t afford to buy homes at all.

In 2016, about 50% of homes were sold to people who didn’t plan to live in them full time, a figure that soared to 70% by 2020, according to a by a researcher from Hawaii Appleseed Center for Law and Economic Justice. Today, the typical price of a home stands at nearly $1.15 million — a massive jump from the start of 2020 when the typical price for a home stood around $777,500.

But during Thursday’s meeting, some people questioned whether the county had the bandwidth to enforce new regulations on fractional homeownership. Right now, for example, the county largely relies on agreements with Expedia and Airbnb to catch illegal vacation rental listings. Because fractional homeownership companies don’t use those sites, some worried it will be more difficult for the county track them down.

“It will be harder,” said Planning Director Michele McLean. “But I can tell you people are really concerned about this, so anytime they’re able to provide us with a link to a website or any marketing materials, we’d be able (to enforce it).”

Before the proposal becomes law, it must be voted on again by the full Maui County Council.

Civil Beat’s coverage of Maui County is supported in part by grants from the Nuestro Futuro Foundation and the Fred Baldwin Memorial Foundation.