Know Your Facts, Discover Consequences: Empower Informed Choices
On November 7th, the residents of Isle of Palms will be deciding on a referendum to cap all short-term rental properties on the island. These restrictions include residential homes, condos, multi-family dwellings, and hotel rooms.
The potential consequences of capping short-term rentals will be felt throughout our community. Folly Beach passed its cap in February 2023 and has seen property values lower by 25% in just a few months. We are discussing some potential consequences of capping short-term rentals on the Isle of Palms in the sections below.
Although proponents of the cap claim the new law will not decrease tax revenues and tourist spending, the truth is it will. When you impose a limit on short-term rental licenses, you are essentially capping revenue. Inflation and other factors will cause the cost of services to increase while revenue remains stagnant. The city will need to make up the difference by raising your taxes.
Isle of Palms has an advantage over other beach communities like Sullivan’s Island because of its tourism revenue. The Isle of Palms tourism revenues subsidize services like Police, Fire, Public Works, and recreation. This additional source of income keeps residents’ taxes lower than that of Sullivan’s Island.
Lower Property Values
We are confident the people of Folly Beach did not intend to lower their property values when they voted for the cap on short-term rentals. However, that happened in less than a year on the island. According to MLS, the average property value on Folly Beach is down 25% since February. A staggering statistic!
Enforcing current regulations on rental properties instead of capping them will ensure the residents’ low tax rate and quality municipal services are maintained. Although different, Folly Beach is an excellent example of what could happen on the Isle of Palms if the cap on short-term rentals passes in November.
Suppose you look at the results of short-term rental bans in cities in the United States, in states like New York, California, and North Carolina. In these cases, there is a common result in each municipality: lawsuits.
In Schoeder v. The City of Wilmington, North Carolina’s Superior Court ruled the cap on short-term rentals passed by the City of Wilmington violated state law. They found that because a short-term cap requires short-term rental owners to register their homes, this requirement violated state law. An appellate court upheld the ruling.
This legal battle took two years. In other places like New York City, the lawsuits have taken many more years than that and are still unresolved. Can the City of Isle of Palms afford the potential cost of multi-year lawsuits?
Get all the facts before you vote on November 7th
Isle of Palms voters must understand what they will vote on during the November 7th election. We only need to look at the results of other short-term rental caps in different communities throughout the states and understand the potential consequences of voting to cap short-term rentals on the Isle of Palms.