January 27, 2023

The Nerve

Where Government Gets Exposed

House bill would protect short-term rentals in SC

By RICK BRUNDRETT

S.C. municipalities and counties that ban short-term rentals would face the loss of state aid and property taxes under a House bill filed for the second time since last year.

Contacted this week by The Nerve, Rep. Lee Hewitt, R-Georgetown, who is the bill’s main sponsor, said his proposal has “got the attention of a lot of local governments that have reached out to me.”

“Everybody now is trying to come up with some solutions on how we can make this work … in trying to protect people’s property rights and maybe give the cities and counties some teeth in enforcement,” said Hewitt, the broker-in-charge of sales at Garden City Realty.

The Nerve in July focused on the statewide battles over short-term rentals (STRs), as well as the perspectives of STR property owners and managers. In September, the South Carolina Policy Council – The Nerve’s parent organization – released a detailed report aimed at striking “a balance between renters’ property rights and community interests.”

Hewitt praised the Policy Council’s report, noting that it is “very, very good, and I think we could use that for moving forward.”

A growing number of STR property owners and property management businesses in South Carolina have voiced concerns about efforts by local governments to effectively ban or severely restrict STRs in residential areas.

They contend that some existing or proposed ordinances infringe on their property rights. The vast majority of STR owners take care of their properties and ensure that guests don’t disturb neighbors, they say.

Critics contend that STRs aren’t regulated enough. They typically cite loud parties and trash left by guests, along with parking problems, which they say interferes with the enjoyment of their properties and lowers property values.

The Policy Council as of July identified at least 11 municipalities that had existing or proposed STR ordinances:  Charleston, Columbia, Folly Beach, Greenville, Hilton Head, Mauldin, Mount Pleasant, North Charleston, Rock Hill, Spartanburg and Travelers Rest.

As of November, there were 41,963 available Airbnb or Vrbo listings in South Carolina, 95% of which were entire home listings, according to information provided Wednesday to The Nerve by AirDNA, which tracks STRs worldwide. The November figures for the Palmetto State represented a 19% increase from a year earlier and a 26% jump from November 2019.

The bill sponsored by Hewitt and co-sponsored by Rep. Melissa Oremus, R-Aiken, defines a short-term rental as a “residential dwelling that is offered for rent for a fee and for fewer than twenty-nine consecutive days.”

Under the bill, municipalities and counties that ban STRs could no longer collect property taxes on the investor-owned homes based on a 6% assessment rate. Instead, local governments would receive taxes based on the owner-occupied rate of 4%, according to Hewitt.

In addition, the bill also would stop state payments to those municipalities and counties from the Local Government Fund. Lawmakers appropriated a total of $318.6 million to the fund for this fiscal year, which started July 1.

“At the end of the day,” banning STRs, is “affecting the coffers of the state of South Carolina” with the loss of accommodations taxes, Hewitt said, adding, “They (local governments) continue to want more and more money, but they continue to find ways to hurt the state with their revenue streams.”

Hewitt said he hopes that local governments can “come up with something good that makes it where everybody is happy,” warning, though, that “if not, I’m prepared to move forward with the way I had it (the bill) written.”

The initial bill version was prefiled in November 2021 but never made it out of the House Judiciary Committee this year, though Hewitt noted that it passed the House as a separate amendment by a vote of 112-1 at the end of the regular legislative session. The latest bill was prefiled last week, with a proposed referral to the House Medical, Military, Public and Municipal Affairs Committee; the legislation is expected to be formally introduced when the Legislature reconvenes next month.

Meanwhile, municipalities statewide continue to grapple with the issue. As of October, for example, the city of Columbia had dropped its initial proposal – which The Nerve examined in-depth in July – to effectively ban STRs in residential areas, though a special City Council committee was exploring ways to cap the total number of STRs in those areas, according to a story in The State newspaper.

The “Columbia Short-Term Rentals Ad Hoc Committee” met again on Wednesday. WIS-TV reported that one of the proposals included requiring STR operators to obtain a business license, though there would be a cap, which wasn’t specified, on the total number of STRs that could operate annually.

The capital city – the state’s second-largest city – had an estimated population last year of more than 137,500, U.S. Census records show.

Informed about the city’s efforts to cap the number of STRs, Hewitt told The Nerve, “Well, they’re back to picking winners and losers.”

Interviewed by The Nerve for the July stories, Ari Bargil, a property rights attorney with the Virginia-based Institute for Justice, questioned the constitutionality of annual caps imposed by S.C. municipalities. He also said then that local governments could face legal challenges if they violate the “vested rights” doctrine by banning or severely restricting STRs even though the affected property owners legally rented their houses before the bans or restrictions took effect.

The Nerve in July also reported about the ongoing STR debate in the coastal town of Mount Pleasant, which as of last year had an estimated population of more than 92,000. Under the town’s existing ordinance, the maximum number of STRs in the municipality is capped at 400.

In an email response Wednesday to The Nerve, Michele Reed, the town’s director of planning, land use and neighborhoods, said the Town Council last month amended the ordinance to establish an earlier permit-application period for current STR operators. Those operators who don’t apply by today will have to “get in line come January 1 like those without a permit to see if there are any left.”

“This was put in place to ensure the cap of 400 is maintained,” Reed said, adding that other possible ordinance changes likely will be on the town’s Planning Committee agenda for its Jan. 3 meeting.

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.

Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

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