An Isle of Palms Council member has come up with a plan that he hopes will work for local residents on both sides of the question of how to deal with the issue of short-term rental properties on the island.
Under a proposal presented by Scott Pierce at a Jan. 23 Council workshop, all residential areas of the city would be treated the same, and the current balance between residential properties and short-term rentals would be maintained. There would be no cap on the number of short-term rental licenses issued to residents who pay the 4% property tax rate, and all current license holders would have the opportunity to renew them each year.
The plan also calls for the city to hire a full-time employee who would be responsible for making sure all short-term rental license holders are in compliance with IOP’s rules and regulations. Pierce said new technology would be necessary “to facilitate compliance and enforce noncompliance.” He added that to help pay for these additional resources, the cost of an investor license – for properties that are taxed based on the 6% rate – would increase by $50 per year.
“This isn’t a zoning thing. It’s a business license approach,” Pierce said. “We would be working with residential and commercial zones already in place on the Isle of Palms.”
Under Pierce’s plan, there would be no cap on short-term rental licenses on Front Beach, which is the only commercial-zoned area of the city that would be affected by any proposed restrictions. According to Director of Building, Planning and Zoning Douglas Kerr, there are no short-term rentals in other the commercial areas of the city – Breach Inlet and the Marina.
Investor licenses in areas zoned residential would be limited to 33% of the total number of dwelling units. Those that don’t generate at least $20,000 a year in revenue would not be renewed, and, if the property was sold, the license would not transfer automatically – the new owner would have to apply for a new short-term rental license. Once the maximum number of investor licenses was issued, a wait list would be established.
Pierce said consideration would be given to transfers of property among family members.
According to City Administrator Desiree Fragoso, the island has 1,724 short-term rentals, a number that does not include 34 pending applications. Pierce pointed out that there are 56 properties in IOP that are currently being rented without a short-term license. Kerr said the city has sent enforcement letters to the property owners but added that “it’s a challenge. It’s somebody paying the taxes in a distant state.”
According to Kerr, a short-term rental license costs between $350 and $4,300, depending on gross revenue. He said property owners who have not paid the fee are charged a late penalty of 5% a month and face a possible fine of $500 plus court costs.
Council Member Blair Hahn said the issue of short-term rentals does not present as much of an emergency as it might seem.
“Everybody is concerned about residential neighborhoods,” he said. The denominator is not 4,569. The denominator is 3,103. That’s how many single-family houses and dwellings we have. That excludes condominiums. That excludes the hotels. That excludes all of the properties in Wild Dunes and Front Beach that were specifically built and designed for short-term rentals.”
“Let’s get real on what the numbers are and let’s deal with it,” he added. “Let’s talk about a cap on that number and not a bigger number that includes all the multifamily residences that have their own HOAs. If they want to restrict short-term rentals, that’s their business and they can do so.”
According to Granicus, the compliance software used by the city, there are 1,539 short-term rentals on the island, and just over 1,200 had rental activity in the past year. The software gathers its information from 50 to 60 rental websites.
“I wouldn’t put a lot of faith in saying we have only 1,539 rentals being advertised on the island and only 1,200 that have been rented in the last 12 months,” Council Member John Bogosian commented.
When Mayor Phillip Pounds said he thought that number was “pretty accurate,” Bogosian responded: “You may. I think it’s not.”
“I think we really need to look forward, not backward, and determine how many potential rooms and units are available for rental. That is the market we’re dealing with,” Pierce said. “I’m all for carving out 4 percents. I’m all for carving out commercially-zoned areas, but every time we look at a chart, we’ve carving this out, carving that out. We’re down to 300 or 400 licenses that we want to talk about. I’m just not there. I think we need to determine what we’re going to include and what we’re not going to include.”
“You’re skirting the issue,” Hahn commented, and Pierce shot back: “I’m not skirting anything. I’m stating a fact.”
Most of the 14 local residents who spoke during the citizens’ comments part of the workshop voiced their support for greater restrictions on short-term rentals. Laura Lovins said that “the trend is very clear.”
“Our island is becoming a short-term rental business community. There has to be a balance. A license is not a right – it’s a privilege,” she said.
Elizabeth Campsen warned the Council that “your inaction in the name of fighting change brings with it real consequences that actually will change the look and feel of the island forever – negatively.”
Bev Miller, speaking for the Barrier Island Preservation Alliance, said: “We want to preserve, not change, what we have now. You cannot change the past, but, by golly, you can change the future. If you as a Council do not restrict the rapid growth of these investment short-term rentals in residentially zoned areas, this city will become a city of transients.’
Brian Duffy said, “We are in a battle for the soul of Isle of Palms,” while Sean Griffin supported a cap but added that “the city needs a balance.”
A few speakers at the workshop were opposed to restricting short-term rentals. Rod Turnage, vice president of the IOP Chamber of Commerce, said the organization recently surveyed its members and found that most of them oppose caps on short-terms rentals. And real estate agent Mark Mitchell denied the claim that outside investors are buying up homes that they hope to rent on IOP.
“I’m hearing that if they’re not residents and voters, you don’t really care what they think or what they’re interested in. They’re not big corporate interests. The majority of them are not.”
The Council is scheduled to hold another short-term rental workshop at 5 p.m. Feb. 6.
