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Homeowners on private SC island chose to keep a federal bailout amid public backlash

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The property owners association on Dewees Island, located north of Charleston, decided to keep a $218,315 federally-backed loan from the U.S. Small Business Administration, amid public backlash over the funding. File/Staff

The homeowners on Dewees Island, a private community north of Charleston and accessible only by boat, chose to keep a $218,315 federal bailout loan even as they faced public criticism over their acceptance of the money.

Rep. Joe Cunningham, a Democrat who represents South Carolina's 1st Congressional District, and his Republican challenger, Nancy Mace, called on the island's residents to return the emergency loan in early June.

Both candidates argued the loan — part of the federal Paycheck Protection Program — would be put to better use assisting small businesses hurt by the coronavirus pandemic. 

But according to an email obtained by The Post and Courier, the group's leadership voted unanimously in June to keep the funding in order to stabilize its finances and prevent further fee increases on its members. 

The federal loan can be completely forgiven if the property owners association uses the money to cover payroll costs for its employees. 

"The Dewees Island community feels a strong sense of responsibility to our employees and their families," Wendell Reilly, the association's president, said in a statement Tuesday. "We are comfortable in our decision to accept the PPP funds, which have helped to cover the payroll of our staff as well as lost revenue due to COVID-19." 

The Dewees Island property association isn't the only homeowners group to net one of the emergency loans, which are being administered by the U.S. Small Business Administration. 

A similar group on Kiawah Island, another private island just south of Charleston, also received a $1 million PPP loan in April. But later that month, the homeowners on Kiawah announced they would return the money, after Cunningham and others criticized their use of the federal program. 

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Reilly emphasized that the group was eligible for the emergency loan under the rules set up by the Trump administration, and he noted that billions of dollars remain in the Paycheck Protection Program for other businesses interested in applying for the loans. 

"We wish all communities and businesses, as well as their employees, all the best as we all work to keep people safe, healthy and employed during these challenging times," Reilly added. 

Still, the federal loan won't offset all of the costs that will need to be passed onto the island's residents this year, according to the email obtained by the newspaper.

The association is still raising its annual fees for property owners on the island in order to make up for the lost revenue from operating the island's private ferry during the pandemic.

According to the email from the group's treasurer, part of the problem is that sizable number of homeowners on the island are delinquent on their payments to the association.

The group reported this month that it owns 22 of the available lots on the island, which don't provide revenue, and another 12 lots are owned by people who owe the association money. 

With climbing costs and the loss of revenue, each homeowner on the private island is being asked to pay an extra $3,426 to the property association this year. 

Without the federal loan, the financial burden on the homeowners would have likely been even higher. 

Reach Andrew Brown at 843-708-1830 or follow him on Twitter @andy_ed_brown.

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