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SC House bill would prohibit cities from banning short-term rentals such as Airbnb

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Some state lawmakers have proposed a bill that would prohibit cities and towns from banning short-term rentals, such as residences used for lodging through Airbnb. File/Matthew Fortner/Staff

COLUMBIA — A proposed state law would make it illegal for cities and towns to ban short-term rentals, a bill that municipal advocates say is currently a solution without a problem.

Under the bill, local governments would be prohibited from creating rules that bar renting a residential dwelling to a short-term guest, rentals advertised on popular sites such as Airbnb and Vrbo.

The bill was pre-filed in November for possible consideration in the upcoming legislative session and sponsored by Rep. Lee Hewitt, R-Murrells Inlet; Rep. Melissa Oremus, R-Aiken; and Lin Bennett, R-Charleston. 

Local governments that violate the rules would be unable to collect property tax at the higher 6 percent commercial rate for short-term rental properties and ineligible to receive money from the state's Local Government Fund and other state aid.

Property owners kept from operating a short-term rental would only be subject to the 4 percent property tax rate for a primary residence, even if the property was used as a second home or long-term rental, Hewitt said.

"You've taken away some property rights from that person, then they need to be compensated and need to be treated just as the other properties are," Hewitt said.

While more cities have considered and adopted regulations for short-term rentals, none in South Carolina are known to have outright banned the practice, said Scott Slatton, director of advocacy and communications for the Municipal Association of South Carolina. The nonprofit organization that lobbies lawmakers on behalf of the state's cities and towns doesn't oppose the bill as written, Slatton said. That could change if the bill were rewritten to prevent regulating the rentals, Slatton noted.

"This is just one of many many bills that seek to preempt local authority and, on principle, those are things that we generally we're going to oppose because local officials know best how to address issues in their communities," Slatton said.

Cities throughout the state have considered and implemented short-term rental rules as sites such as Airbnb and Vrbo have gained popularity. It's not just in typical tourist areas. Slatton noted that people throughout the state might be surprised if they searched for rentals in their city — from rentals aimed at football fans or business or government travelers in the capital city to more rural areas of the state.

In Greenville, short-term rentals are prohibited in certain residential areas except with a special zoning exception.

Mount Pleasant capped the number of short-term rental units at 1 percent of all residential units in the town.

The city of Folly Beach has a four-strike penalty during a six-month period that could result in a rental owner's license being revoked if they break too many rules.

Many jurisdictions have similar guidelines in place requiring registration, someone available locally to respond to issues at the property and parking and occupancy requirements.

Hewitt conceded his home of Georgetown County currently doesn't have such restrictions in place or proposed. He said the concern is governments will consider such rules as more and more people move to the coast or by property there to operate as rentals.

"You're just saying, 'Hey, guys, that's fine. If you want to do it, you can do it. But here are the consequences if you do,' " Hewitt said.

Reach Stephen Fastenau at 803-365-3235. Follow him on Twitter @StephenFastenau.

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