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What’s up with the Rental Kerfuffle?

I’m getting a lot of calls about this current short term rental discussion, so I thought I’d share as much as I could to give some context and history. This is my personal and professional opinion, and it doesn’t reflect any position of the POA or anyone else, although I have tried to be as accurate as possible.

What is the history of rentals on Dewees Island? How are they managed? How do they work within the context of our conservation easements and guidelines? I am writing in my capacity as your neighbor, and in terms of what I have learned in the real estate and hospitality industries.  

Two Issues

We are at a current crossroads because of two converging issues: Charleston County’s new ordinance about short term rentals in unincorporated Charleston County and resident concerns about the impact of visitors (both invited and paying) on the ecosystems (human and natural) of the island. As you’ll see from this history, this last one is an ongoing concern, which has been addressed in various ways since 1999.

Quick History

There have been rentals and guest homes on the island since our current governmental system, the Property Owners Association (POA) was put in place in 1992. I went and looked through the developer’s monthly newsletters.

Visitor/renter housing begins in April 1992. The developer describes the Royal House and the island’s “guest house” to be used for marketing. It also describes a rather opulent crab feast for realtors to visit the island.

By July 1995, The developer is making connections with Area Tourism outfitters to show them the island. This encourages those tourism operators to send their clients to the island for a great vacation.

By November 1996, the newsletter advertises last minute vacancies at the “Guest House” to give people a “test drive” on the island.

In June 1997, Dewees Island Rentals is formed by the developer, and they put the first house into an island based rental program.

In April of 1998, Huyler House is completed, and the four guest suites are added to the 5 rental homes the developer advertises under the column written by island manager Jim Haley. Jim’s wife Jamie, who now runs Lowcountry Local First, was the hospitality coordinator. Of the 19 finished homes on the island, 5 are available for short term rentals, representing a far higher percentage than today.

By August of 1998, Huyler House has opened as an Inn, with sustainability as a buzzword, in a grand opening ceremony with 300 guests. Jack Huyler regaled the group with his tales of growing up on the island.

By summer of 1999, the island manager’s report boasts 8 rental homes in addition to Huyler House, and Jim Haley describes the education and contract that rental guests need to follow.  This means that thinking of the ways renters impact the island and how we educate them has been part of our culture for 20 years.

 This marketing brochure was designed to attract renters and visitors to the island in 1998.

By the year 2000, the island has begun to prepare for transfer from the developer and there is a new employee in charge of rentals. This brochure was printed in 2003, when the new property owners association realized what costs were included in managing a successful rental program, and began using Island Realty as the official sales and rental office.

 

I joined what was then called the Environmental Committee in 2004, and education of renters was a big topic of conversation even then. We published a book, The Visitor’s Guide to Dewees Island, and offered it to people who rent their homes, and several videos about being good stewards.

Eventually, Reggie and I merged his enthusiasm for real estate technology with my interest in education and formed our own Dewees Rentals, focusing exclusively on Dewees, and developing materials for people to learn about the island.  We have more books and an app, and Emily Watson worked with us for the entire 5 years while we built the company.  When we realized the company could economically sustain one family but not two, and and we wanted to focus on Real Estate Sales, Watson Property Management eventually bought our rental company, Dewees Rentals. In Fall of 2017, Dunes Properties acquired Watson Property Management.  

So this historical record demonstrates a twenty-five year old culture supportive of rentals since the inception of the community. In addition, there has been a consistent emphasis on education of paying guests so that they understand our culture before we arrive.

Charleston County

This summer, on July 24, 2018, Charleston County implemented a new short term rental ordinance, which is a response to consumer driven portals for short term rentals. This has caused some confusion around the issue of Dewees.  I have some questions about this:  Are we in fact Unincorporated Charleston County?  We are also officially a PUD, or planned unit development; are Charleston County rules superseded by the master plan of our PUD? Does this limit an individual’s property ownership rights?  Legal discussions are ongoing.

 

Effects of Eliminating Rentals

I have spent a LOT of time on the issues surrounding rentals over the last decade.  My first complete summer on the island was 2008, five years after the POA took over. One of the most frustrating pieces for me was that there were a lot of challenges blamed on renters that really had to do with guests and unaccompanied visitors.  So we built a rental company based on education and love for our island environment.  We greeted folks and pointed them in the right direction and we helped create an intern program so visitors and guests alike would have easy access to information about renting.  We made educational videos and we created an app.

90% of the renters that come to the island are amazing additions to the community: for a week or a weekend, every so often or every year.  They send us holiday cards, follow us on social media, and become our friends.  They are careful with packing and garbage, they clean trash off the beach and volunteer for turtle team opportunities.  And eventually, they become our neighbors by buying on the island.  Depending on how you count a new owner, between 45 and 65 percent were renters first.

If we remove 65% of buyers from the pool, our niche market takes a pretty big hit.  Even as we’ve contemplated this issue in the last couple of weeks, I have seen five buyers either ice their plans or walk away completely.  Given that we see five or six sales a year, and it might take me 100 inquiries and sixty tours to get those buyers to commit to our niche market, that’s almost a years worth of sales on ice.  In addition, more inventory leads to lower prices, and I have been contacted by several owners to put their homes on the market.  We are not known for our liquid market, and my broker Randy Walker cautions people to be prepared for any of the big D’s that can change circumstances and require someone to need to sell their home quickly: Disease, Divorce, Disability, Death, Disaster, and Depreciation.  He follows up with:

 

A property is an asset whose value is determined by the lessons we learned in Econ. 101: Supply and Demand. 

 
Visitors to the island generate interest which in turn creates demand. As we all understand, Dewees is an island with limited access due to the location. It’s hard enough now to attract buying prospects to a location by boat. With the elimination of the rental income for second homes, and fewer visitors to experience the island, demand for property will absolutely decrease. And how many home owners and vacant lot owners will choose to sell asap, when their income option disappears? Too many, too quickly. 
 
Vacation guests have always been the lifeblood of demand for second homes on all south Atlantic islands. Visitors keep the island economically vibrant and desirable. They allow second homeowners to maintain their properties.  Eliminate short term rentals and the supply of homes and vacant lots for sale will skyrocket, with even fewer visitors to provide the demand needed to shore up values. Picture an overabundant supply and even more limited demand.  Do the math and everyone loses.

So it seems that we all should be on the same page, allowing residents the right to use their property as economic circumstances dictate and within the paradigms that have been in place for the last 25 years. We certainly should be able to present that perspective to Charleston County. And there are surely ways to manage the system so it provides a quality experience for the guests and a comfortable way of life for full and part-time residents.

How do we Mitigate the Impact of Increased Use?

This is the second, perhaps even more essential question. And it’s one the community is grappling with in many ways: the Residential Use Study Group met for a few months this winter and made a bunch of recommendations. If you are an owner, these were sent to you. Dewees does not have an unlimited capacity for rentals. We are not a resort. If we have four or five large rental homes that switch on weekends, the ferry would be hard pressed to accommodate more on those days. If renters begin to have significantly negative experiences, and supply exceeds demand, the price will drop, making values lower.

What about visitors that don’t respect the island? Sadly, a small number of our guests do not respect the island rules and ethos. Dunes Properties provides extensive education for paying guests, and our app has a lot of information. The RUSG and the recent new guidelines for the ARB mandate extra education efforts.

There are a LOT of other suggestions on the list from the RUSG, and there are a lot of people working on their pieces of the puzzle: I published the new transportation video on the last post here, and Reggie and I developed maps for visitors with all the rules, paid for by dunes properties. The app is getting an update.

The POA has taken a more proactive role in hiring and training our summer hospitality interns this year, and they are excited to start working with guests and visitors. Casey Jenkins has been on the island in advance of her summer term, assisting with spring break traffic, and she says this on her social media:

On this #earthday, I am celebrating the beautiful island I get to call home in a few weeks, Dewees Island. Everyone here is dedicated to sustainability and keeping every inch pristine. You can walk the entire beach and see only footprints in the sand. South Carolina’s nature here is at its wildest and most authentic, as it should be.

Won’t that be a great perspective to share with new visitors to the island!

photo by Casey Jenkins

In addition, we have other groups looking at long range planning and what we are going to be when we grow up. How many lots? Parking? Water and wastewater? Utilities? Ferry? Emergency Services?

You’ll have a chance to weigh in on some of these issues: I believe the POA is sending out a survey to members soon.

One of my favorite parts of this community is the way we come together to find creative solutions to problems and listen to each other. In advance of the 2017 Eclipse, when we planned to have more humans on the island than at any previous point in history, we were able to create an experience that was joyful, seamless and cooperative. Skeptics who were worried about the parking were astounded when community members voluntarily moved their cars.

We volunteer to clean the pool and the roadways after hurricanes, we help our neighbors pack up, we assist when someone is sick, and we lend a hand with the myriad crises that affect our neighbors. We are a community built on respect for the land and each other. We can handle this. We can solve it. We’ve got this.