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Different Cities, Different Short-Term Rental Solutions

With companies like Airbnb and Vrbo establishing more short-term rentals, or STRs, in residential areas throughout South Carolina, many cities and towns have enacted regulations for these enterprises.

The regulatory framework often generates a huge amount of interest as it aims to balance the ability of property owners to rent spaces to overnight guests with the desires of neighbors concerned about the potential of STRs for disruption.

When cities craft STR ordinances, they do so in a way that meets their particular needs. An STR discussion that took place during Hometown Legislative Action Day brought together two mayors from opposite ends of the state — Mayor Stephen Murray of Beaufort and Mayor Robert Halfacre of Clemson. The STR concerns of a coastal city and those of a college city differ significantly, but both officials explained how their municipality’s planning processes led to an ordinance that suited the community.

Murray had two pieces of advice for his audience: those cities and towns that don’t have STR ordinances should start working on one, and they should know that STRs can become a surprisingly contentious issue, with people expressing fear about the future of their neighborhood character.

In terms of what council action might attract the notice of residents, he said, “it will be crickets through the entire budget process, but mention short-term rentals or horse carriages or parking meters, and we’re going to have a packed house [in council chambers].”

Beaufort has a decades-long history of STR properties, but when the new online rental methods emerged, its council decided to get the process of making an ordinance started with a resident task force. Using an application process for membership, the city made certain it included some of those opposed to STR development, some of those in favor and some with a neutral position.

“We tasked them with looking into the state and national best practices, talking to neighbors to find out what they would accept and what they wouldn’t, going to the police department and pulling a call list for the operating short-term rentals, because there’s a lot of hyperbole around crime and litter [with STRs]. And in certain cases, that’s true, but for [Beaufort,] it’s typically retirees or families coming to see their folks graduate from Parris Island.”

Murray noted that traditional hotel operators felt that STRs created “an unfair playing field. They were collecting accommodations taxes, hospitality taxes, remitting them to the local government and to the state. It was generating this pot of marketing money that was driving people into the area. And we had all these short-term rental operators who were not complying and not paying into those funds. I thought that was unfair.”

Traditional property managers must also comply with a number of state regulations that STR owners and operators do not. From state licensure to the handling of renter deposits to rules on overbooking, the state regulations that traditional property managers face but them at a competitive disadvantage compared to STR owners and operators.

Beaufort’s finished ordinance established a STR cap — neighborhoods cannot have more than 6% of residential properties operate as STRs. Some exemptions to the cap apply, including vacant and abandoned properties being rehabilitated for use as an STR.

The law requires operators to have a business license, a STR license, and pay local and state accommodations taxes. STRs must have a local property manager, parking must be available and defined, and limitations on the number of guests and cars exist, determined by house type and number of bedrooms.

Beaufort manages compliance by using software to identify STRs being advertised without authorization. The city charges a $1,000 fine for STRs being operated out of compliance.

The City of Clemson’s ordinance, also developed through public input, has property owners register their STRs, and then outlines the city’s requirements for STRs in areas like number of guests, parking and safety standards. For both Clemson and Beaufort, the city explains all the rules through their websites and informational packets.

The ultimate purpose of Clemson’s ordinance, Halfacre noted, is to provide for “what’s best for our residents, and to allow them to make some extra money, too.” Halfacre stressed that every city has unique aspects that influence how STRs may develop, and therefore every city has unique regulatory needs.

“Every city is different. I grew up in Clemson, it’s evolved a lot,” he said. “Everybody always thinks of seven home football games. That’s what everybody comes to Clemson for, but not anymore,” he said. “[STR rentals] are being used for graduation from Clemson University. We have another university, Southern Wesleyan, and Tri-County Technical College in the area. We have other opportunities.” Councilmember John Ducworth explained the evolution of Clemson’s approach to STRs. Recognizing that home football games are “an economic engine” for the area, the city defined STRs as properties rented for a period of no more than 25 days per year. Past that, property rentals are regulated differently. The logic is that seven home football weekends would equate to about 14 rental days per football season, with additional days to account for graduation weekends and some other events.

Debate about the best way to handle STRs continues at the General Assembly. The current bill H3253 would prohibit municipalities and other governing bodies from prohibiting STRs — a proposal also seen in previous sessions. The Municipal Association named protecting the authority of cities and towns to regulate STRs as one of its 2023 – 24 Advocacy Initiatives

“This idea that the General Assembly would take away our ability to regulate short-term rentals in our jurisdictions is very scary to me,” Murray said. “I’m a proponent of short-term rentals, I think they have a place in all of our communities, but I also think they have to be regulated.”