The mayor of Sullivan’s Island thinks it’s “a disturbing assault on home rule,” while the state legislator who represents island residents in the South Carolina House plans to fight it as it makes its way through his subcommittee and committee. Meanwhile, the lawmaker who introduced it is adamant that it will force cities and counties to contribute their share to the Palmetto State’s burgeoning tourism industry.
“It” is House Bill 3253, which would financially punish counties and municipalities for prohibiting short-term rentals, an important source of revenue for government on all levels. Prefiled on Dec. 8, 2022, and championed by State Rep. Lew Hewitt of Murrells Inlet, the legislation would permit cities, towns and counties to collect only the 4% property tax assessment, rather than 6%, on homes whose owners are prohibited from renting by local laws, regulations and resolutions. In addition, 3253 would put in jeopardy a government entity’s share of the Local Government Fund.
The legislation strikes home for Sullivan’s Island, where short-term rentals were banned more than two decades ago. Those that were rented in the 12 months prior to Nov. 21, 2000, were grandfathered in. According to Town Administrator Andy Benke, there were “90 to 95” of them at the time, and their numbers now have dwindled to “38 to 40.”
“We thought we had settled this issue about 22 years ago,” Sullivan’s Island Mayor Pat O’Neil said. “We had a very lengthy and open debate about short-term rentals. It was the will of the community that we stopped their growth. They were very harmful to the character and quality of life of Sullivan’s Island.”
The bill was referred to the Medical, Military, Public and Municipal Affairs Committee on Jan. 10. State Rep. Joe Bustos of Mount Pleasant, whose district includes Sullivan’s Island, is chair of the Municipal and Public Affairs Subcommittee. He’s apparently not a fan of the legislation.
“From my perspective, I’m a home rule guy. I think towns and cities should regulate whatever they need to for their communities. One size fits all usually doesn’t work,” he commented. “I’m not for that. I think the towns and cities need to be able to make laws to regulate their own political subdivision.”
Bustos said he expects the legislation to be considered by his subcommittee, then the full committee, then the entire House.
According to Hewitt, who is in the real estate business in Georgetown County, placing a cap on the number of short-term rentals in a municipality – which was done recently in Folly Beach and has been considered in Isle of Palms – is considered to be prohibiting them. He pointed out that caps impact tourism – the state’s No. 1 industry – in a negative way.
“More and more towns are starting to ban short-term rentals,” he said. “You’re coming to the state for beach renourishment funds but you’re hurting the cash flow coming into the state. Don’t come to the state and ask for money if you’re not contributing to the state’s tax coffers.”
“It’s not fair to the property owners. You’ve attacked their property rights,” he added. “It sends a bad message to homeowners and to the tourism industry. Restrictions are fine, but, when you prohibit it, therein lies the problem.”
Hewitt explained that under House Bill 3253, “If a town bans someone from renting, it would go to 4%. If they choose not to rent and the town doesn’t prevent them from renting, it would stay at 6%.”
Hewitt said that means Sullivan’s Island might not be able to collect the 6% assessment on vacation homes on the island that are not currently being rented.
He added that homes rented from online companies such as Airbnb cause most of the short-term rental problems.
“Towns need to have an ordinance that requires a 24-hour contact number for someone who lives with 30 minutes of the property and can take of any issues that happen,” he remarked. “That would correct the majority of the problems.”
Between fiscal year 2008-2009 and fiscal year 2021-2022, Sullivan’s Island received $598,053 from the Local Government Fund. Estimates for 2022-23 and 2023-24 are $44,318 and $46,533, respectively.
