SC bill could keep cities, counties from restricting short-term rentals - Charleston Post Courier

COLUMBIA — Cities and counties could lose state funding if they restrict short-term rentals under a proposed state bill.

In South Carolina, around 20 cities have regulated short-term rentals, according to data collected by the Municipal Association of South Carolina. A handful of others have been considering regulations.

Those restrictions range from caps on the number of permits to geographic restrictions based on zoning.

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"We are seeing local government overreach like we've never seen before," said House Minority Leader Todd Rutherford, D-Columbia, the bill's co-sponsor.

While the bill wouldn't necessarily stop a local government from imposing restrictions, it would keep state funds from those with restrictions and require the rentals to be taxed at the same rate as residential properties, as opposed to the higher commercial rate.

"They can still ban the rentals if they want to," co-sponsor Rep. Lee Hewitt, R-Murrells Inlet, said.

The bill defines short-term as 29 days or less, which falls in line with the 29- or 30-day timeframe most cities with restrictions used to specify what qualifies as a short-term rental. One notable exception is Myrtle Beach, which defines short-term as anything less than 90 days.

A similar bill last year failed to make it to the House floor.

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The market for short-term rentals is growing, University of South Carolina economist Joey Von Nessen said, with a 17 percent increase since 2018.

Even in cities like Charleston, which only allows short-term rentals of individual rooms and not entire houses, or Myrtle Beach, where short-term rentals are not allowed in residential areas, the numbers have grown, according to data from market research site AirDNA. Charleston had around 2,200 rentals available as of Feb. 16, while Myrtle Beach had nearly 8,500.

Short-term rentals' popularity continues to grow despite the number of hotels available, suggesting the rentals are drawing more tourists than would otherwise come to the state, Von Nessen said.

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Hotel rooms aren't in short supply, so that's not driving people to rent for a short term, Von Nessen said. "This is actually something that is emerging as a new market."

That growth translates to an estimated $4.2 billion statewide annual economic impact from short-term renters, including visiting local restaurants, shopping and paying sales taxes. Renting out a room or property can be a lucrative business: Another $1.8 billion or so in revenue was estimated to go into the pockets of the property owners.

Cities and counties are shooting themselves in the foot by cutting off that stream of revenue, South Carolina Realtors representatives said.

"The economic data here shows us this is an engine that should not be stopped," state Realtors President-elect Reah Smith said.

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The proposed bill would not keep local governments from requiring rentals to register, Hewitt said. In fact, he and Rutherford encouraged that practice as a way of holding short-term rental owners accountable for renters partying or breaking other local rules.

What was overstepping, the lawmakers said, was putting restrictions on how many rentals could operate or where.

"We can create a market where we have responsible homeowners, responsible short-term rentals," Rutherford said. "We can do that without banning short-term rentals across the board. We can do that without all of these regulations that are coming up from city governments, from county governments, telling people what they can do but their neighbor can't or what their neighbor can but they can't."

Scott Slatton, director of advocacy and communications for the state Municipal Association, said the association did not know of any cities banning the rentals outright.

A one-size-fits-all proposal such as permitting would not work for every city, Slatton said.

"The solutions for dealing with short-term rentals in Myrtle Beach are very different than perhaps they are in Spartanburg," Slatton said. "Local officials should be left to make those decisions in concert with their residents and their communities."

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