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Short-term rental owners, managers worry about discrimination

By RICK BRUNDRETT

Editor’s note: Today’s story is the second of two initial articles on short-term rentals in South Carolina. The other story can be found here.

Update: The city of Columbia’s ad hoc committee on short-term rentals is set to meet again on Sept. 29, according to city clerk Erika Hammond. Meanwhile, the first reading of an amended ordinance that would establish a two-permit system for short-term rentals was scheduled to be heard at a Mount Pleasant Town Council meeting on Sept. 13, according to Michele Reed, the town’s director of planning, land use and neighborhoods.

For Graeme Moore, the city of Columbia’s proposal to effectively ban short-term rentals in residential areas is personal to him.

Moore, who operates a Columbia real estate firm, says he’s watching the debate closely because he owns a short-term rental house next to his Columbia home.

“A lot of people do this for primary income,” Moore told The Nerve when contacted recently. “That’s not why we do it necessarily, but it helps pay for the house.”

Moore is among a growing number of short-term rental (STR) owners and property management businesses in South Carolina concerned about efforts by local governments to effectively ban or severely restrict short-term rentals in residential areas.

They view some existing or proposed ordinances as an infringement on their property rights. They contend the vast majority of STR owners take care of their properties and ensure that guests don’t disturb neighbors. Any problems with noise, trash or parking in most places typically can be handled through existing ordinances, they say.

The South Carolina Policy Council – The Nerve’s parent organization – has identified at least 11 municipalities that have existing or proposed STR ordinances: Charleston, Columbia, Folly Beach, Greenville, Hilton Head, Mauldin, Mount Pleasant, North Charleston, Rock Hill, Spartanburg and Travelers Rest.

The Nerve recently sought out STR owners and property managers statewide to better understand their concerns.

“I’m not against regulation,” said Moore, who owns The Moore Company, a real-estate sales firm; and Soda City Rentals, the company’s long-term, property-management division, when asked about Columbia’s proposed STR ordinance. “I am against irrational regulation, and I think this is irrational regulation.”

Under the capital city’s proposed ordinance, a short-term rental is defined as the rental of all or part of a “residential dwelling unit” for less than 30 consecutive days. Non-owner-occupied STRs – properties such as vacation homes that are assessed for tax purposes at 6% compared to owner-occupied homes, which are assessed at 4% – would be banned in residentially zoned areas.

Among other proposals, STR homes located in commercial areas would be required to have sprinkler systems like hotels.

“What you have is a boutique hotel in residential areas,” city councilman Howard Duvall said at an April hearing on the proposed ordinance. “When you have an investor that comes in and buys a property for the purpose of short-term rentals … they should not be allowed in residential areas.”

Duvall, who is chairman of a special panel considering the proposal and the former longtime head of the state municipal association, got plenty of pushback during the hearing from STR supporters.

“The ordinance as proposed by Duvall – not to be trite – was a bit Draconian,” Moore told The Nerve. “His purpose, in my estimation, is to basically outlaw any short-term rental in any residential district in the city.”

If adopted as written, the proposed ordinance, which Duvall described as a “draft,” would follow the lead of cities such as Charleston and Greenville, which have restrictive STR ordinances.

During the April 26 meeting of the “Columbia Short-Term Rentals Ad Hoc Committee,” Duvall cited Charleston and Greenville among cities in South Carolina and North Carolina “dealing with this issue right now.”

With an estimated population of 137,541 as of July 1, 2021, Columbia is the second-largest city in the state next to Charleston, which had an estimated population of 151,612 last year, according to the U.S. Census Bureau.

Charleston severely limits STRs in residential areas, allowing them only if they are the owner’s full-time primary residence. Investment properties are “not eligible for short term renting” except for “commercially zoned properties in the Short Term Rental Overlay,” according to the city’s website.

Columbia city housing official David Hatcher contended at the April hearing that STRs are a “growing concern in our community,” though he provided no statistics on noise, trash or other complaints.

City councilwoman Tina Herbert, a member of the special committee considering the proposed ordinance, expressed concerns about banning investor-owned STRs in residential areas, saying she believed it “truly impacts the whole (STR) business model and makes it very difficult, which may be the point.”

Moore said he typically has charged $325 a night for STR guests to stay in his approximately 2,100-square-foot, three-bedroom, 3.5-bathroom Airbnb house, adding that between rental stays, the property has been used by relatives, friends and business clients.

Asked if he believed the proposed STR ordinance will pass as written, Moore replied: “I don’t think it will be passed in its current version. I really think Howard Duvall is the one most fired up about it.”

In a July 5 email response to The Nerve, city clerk Erika Hammond said a date had not been set for the next special committee meeting, though she added it “most likely” will be held next month.

‘Overly restrictive’

To the north in Greenville, STR homes, which are defined as rentals for a period of less than 30 days, generally are banned in zoned single-family and multi-family residential areas, according to the city’s website. Bed-and-breakfast inns, which must be owner-occupied to rent rooms, are allowed in commercial districts if they meet certain criteria and in residential districts with a “special exception” permit, the website says.

Chad Hensel, who founded a Greenville-based STR management company known as Upstate CoHost, doesn’t like the city’s restrictions on STRs. In 2021, Greenville ranked as the state’s sixth-largest city with an estimated population of 72,095.

“From my perspective, the ordinances are overly restrictive,” Hensel told The Nerve when contacted recently. “I’m more on the side of liberty and allowing people to do what they wish with their property.”

“There is a real market need,” he continued, “and as a professional host, we’re doing everything we can to fill that need. And in a lot of ways we’re kind of demonized for events that are happening in other parts of the country, or things are really perceived problems rather actual on-the-ground realities.”

Asked about the complaint typically cited by STR opponents that the properties often are used as party houses, Hensel said his business does “everything possible to screen guests on the way in.” He also said many property management companies have cameras in parking lots and other common areas for security purposes, and that noise-monitoring software can be used to alert managers when noise becomes excessive.

As of last month, Hensel said his firm was managing eight STRs in the Greenville area, with a “couple more coming on line.” Average STR rates in the area range from $80 to $100 a night for smaller apartments to $120 to $180 per night for a typical three-bedroom, two-bath home, he said.

He added there are no ordinances banning STRs in unincorporated areas of Greenville County.

Property rights threatened

Across South Carolina, short-term rental owners come from a variety of backgrounds and have different reasons for becoming landlords. Take Kevin Gowland, for example.

When the Canadian resident and his wife were looking for a place to retire eventually, they visited the Charleston area during different seasons before buying a three-bedroom, three-bathroom house in the coastal town of Mount Pleasant in 2011.

Gowland, who is a certified public accountant in Canada and the U.S., and his wife rent the approximately 1,450-square-foot house to guests for short stays when they aren’t vacationing there, listing it online through popular vacation-rental sites, including Airbnb and Vrbo. The daily rent is $300, which he noted is the market rate for the tourist area. His annual occupancy rate averages around 40%, he said.

In a recent interview with The Nerve, Gowland said he’s concerned that proposed changes to the town’s ordinance regulating STRs would make it harder to rent their house.

“I don’t think a town should be able to restrain trade in terms of your property rights,” he said.

As of last year, Mount Pleasant was South Carolina’s fourth-largest municipality with an estimated population of 92,398, U.S. Census records show.

Under Mount Pleasant’s existing ordinance, which initially was adopted in 2019, short-term rental stays must be less than 30 consecutive days, with the maximum number of STR dwellings in the town set at 400. STR owners have to obtain annual permits.

Gowland provided The Nerve with an email he sent to the Mount Pleasant Planning Commission outlining his concerns about proposed amendments to the existing ordinance, including:

*A requirement that STR tenants “utilize designated off-street parking assigned” to the STR property. Gowland wrote that the town “seems to be asserting the power to dictate where and what a tenant/lease can do during their stay.”

*The town’s right to audit “any STR at any time during the permit period.” Gowland wrote that the provision, “without a limit, opens up the prospect of ‘fishing expeditions.’”

*A requirement that STR homes be rented for a minimum total of 120 days in a year; STR owners who don’t meet the minimum would not be exempt the following year from the town’s STR permit cap. Gowland wrote that the provision is “likely an egregious overreach since homeowners will be penalized through no fault of their own due to potential external circumstances (e.g. covid, hurricane etc.) and potentially denied their economic livelihood.”

The planning commission at its May 18 meeting denied the proposed ordinance changes, though town spokeswoman Martine Wolfe-Miller in a June email response to The Nerve said the matter is “going back to the Planning Commission in July.”

A regular planning commission meeting that was scheduled for last Wednesday was canceled, however. In a written response last Thursday to The Nerve, Michele Reed, the town’s director of planning, land use and neighborhoods, said the commission will hold a public hearing at its regular meeting on Aug. 24 to consider creating “two permit systems” for STR owners, depending on whether they rent their properties for more or less than 72 days a year.

The commission also will consider a fee increase for those STR owners who rent their properties for more than 72 days a year, Reed said.

Gowland believes the town will continue to push for ordinance changes, some of which he contends “impinge on your property rights.”

“The underlying ignorance has not gone away,” he said.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-394-8273 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

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