News & Updates

How do Short Term Rentals Help Pay for Isle of Palms’ Amenities and Services?

Posted: October 31, 2023

It is a myth that the City of Isle of Palms compares fiscally to the Town of Sullivan’s Island. Isle of Palms has a vibrant economy fueled by local businesses, residents, and tourism. The recent short term rental debate on Isle of Palms has compared the two islands as equals, but this simply is not true. 

Tourism dollars have afforded Isle of Palms several services and amenities that Sullivan’s Island cannot afford because of their lack of tourism revenue. Here are some of the ways tourism and short term rentals help pay for these services and amenities that make IOP a full-service municipality. 

Isle of Palms is fiscally healthy

In a turbulent economic time, the City of Isle of Palms is fiscally healthy with over $40M in the bank. Much of that surplus is thanks to the resorts, golf courses, rental properties, businesses, and beach access points that promote and support tourism. 

Of course property taxes contribute to the general fund and help support the city. But 4% Residents contribute 6% of the annual budget. This equates to $2.2M, which is enough to operate the recreation department annually. The IOP city budget is $24M. All property taxes from 6% and 4% equal $4.7M, of which approximately 1/3rd are 4%, or 33% of this revenue (a liberal estimate). 0.33 x $4.7M = $1.5M. $1.5M ÷ $24M = .0629 or 6% of the budget. 

Isle of Palms amenities

Isle of Palms enjoys multiple amenities and services that Sullivan’s Island cannot afford to provide. These include:

  • Police
  • Fire
  • Public Works
  • Recreation
  • Front Beach Management

The Municipal Accommodations Tax 

The municipal accommodations tax funds a number of services and amenities on Isle of Palms, such as: 

  • 40% of Debt and Bank Service of Recreation Center Bond
  • Annual Tree Trimming
  • Street Signs
  • Holiday Decorations
  • Pooper Scooper Stations
  • $200K drainage plan and ditch maintenance 
  • Parking Enforcement
  • Many others

Sullivan’s Island tax increases

The services and amenities Sullivan’s Island does provide are majority-funded by property taxes. In fiscal year 2021/22, Sullivan’s Island had a 21.7% property tax increase versus Isle of Palms’ 5.7% (according to the Charleston County Auditor, as published in the Post and Courier). 

The new pickleball court is a good example of how tourism revenue helps fund Isle of Palms amenities. The new court cost $225K; $25K of that came from the general fund and $200K came from accommodation taxes (tourism). 

Consider the potential impact of the STR cap before November 7th

It remains to be seen what effect the proposed STR cap on Isle of Palms will have on tourism dollars, tax revenue and property taxes. It is not true, however, that Isle of Palms and Sullivan’s Island are similar municipalities because IOP funds the large majority of its services and amenities with tourism dollars. Sullivan’s Island’s only option is to raise property taxes in order to fund services and amenities. 
Before making a decision on the November 7th referendum to cap short term rentals on Isle of Palms, consider the ramifications, both long term and short term.