Oct 01 2009

Sullivan’s Island puts squeeze on vacation rentals

Staff Report

Last year, the Sullivan’s Island Town Council came under fire after discussing the possibility of raising business license rates for restaurants and bars by 200%. When those business owners began attending meetings and debating with Council members, the Council decided to raise those rates by only 50%, which was still significantly higher than the 10% increase which other businesses received. Discussions on that rate increase suggested that local restaurants/bars were not paying as much as they would in other, similar areas. However, the negative impacts that some residents and the Council believed those businesses were having on the community was also a concern. Now, according to Council member Mike Perkis, it’s time to address vacation rentals.

The Town Council passed first reading of an ordinance that will significantly raise business license rates for many owners of vacation rentals. The ordinance will create a tiered rate system for vacation rentals based on how much income is produced. Property owners that only had to pay a base rate of $1000 in the past could be paying 75% more without making any additional money.

The logic, according to Perkis, is that higher revenues for rental properties suggest that the properties are being rented more frequently. Consequently, the Town incurs an additional impact because of those extra visitors, Perkis said. The increased rates reflect a desire to charge property owners for creating that increased burden on the Town. Possible impacts might be more trash to be picked up or police having to spend time with a vacationer when they could be providing service to residents.

The existing rate system charges a base rate of $1000, which is doubled for non-residents and those without an office on the island. It then charged an additional $8.80 per $1000 for those properties that collect more than $50,000 in revenue per year. However, property owners who make at least $20,000 a year from their vacation rentals will begin to see an increase with the new ordinance and that increase will become more significant as the revenues increase. If the ordinance passes as it was currently written during first reading, then vacation rental rates would look like this:

Those with revenues of less than $20,000 would be charged the base rate of $1000 (double for non-residents). Those with revenues between $20,000 and $30,000 would have a $10 per $1000 additional fee, an increased rate of 14% over the previous rate. Revenues between $30,001 and $50,000 will have a $15 per $1000 fee, which is an 82% increase. Properties that bring in more than $50,000 will have a new rate of $20 per $1000, an increase of 120%.

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