by Scott Slatton, Director of Advocacy and Communications, Municipal Association of SC
South Carolina’s workforce housing shortage is a well-chronicled problem that has proven difficult to solve. Housing that was once attainable for people working in the area where they live has been displaced by housing they cannot afford. Gentrification, conversion to short-term rentals and increasingly expensive real estate markets and construction costs have conspired to push workforce housing out of many cities and towns.
Despite these challenges, a number of efforts by state and local governments have sought to incentivize the development of workforce housing. South Carolina’s Low Income Housing Tax Credit program has proven very popular with developers over the years. In FY 2022 the LIHTC program helped fund the development of 1,755 homes, according to the SC Housing Finance and Development Authority.
Municipal efforts to incentivize and develop workforce housing have been ongoing and will certainly remain a priority in the future.
Despite these successes, cities and towns still need more tools and flexibility to encourage developers to build workforce housing. To that end, Lowcountry cities and towns worked with Sen. Tom Davis (R-Bluffton) to introduce S284. The bill seeks to add the development of workforce housing as an allowable use of state and local accommodations taxes and hospitality taxes.
A generation ago, the SC General Assembly enacted state and local accommodations taxes and the hospitality tax to fund the promotion of tourism and the economic development that comes with it. Cities and towns have used these taxes successfully to become tourist destinations and, in many cases, the permanent home of new residents. As these new residents seek homes in growing communities, they often displace the workers that the local tourism industry relies upon. To find attainable housing, tourism workers must move further away from their places of employment, which leads to a cascading set of other issues for them and their communities.
S284 would provide cities and towns with a reliable and flexible funding source to encourage workforce housing development for the very workers who are helping to sustain our state’s tourism economy. Potential uses of the funds could include land purchases, development credits, rent assistance and more. Bonding for long-term financing of projects is allowed in the bill.
The bill would not raise the taxes’ rates nor would it displace any of the required or allowable spending already in state law. Regarding the state accommodations tax in particular, cities and towns must continue to fund tourism promotion and contract with a designated marketing organization. But like it does for the local accommodations and hospitality tax, the bill would add the development of workforce housing as an allowable use for the state accommodations tax.
Cities and towns across South Carolina are working hard to address the workforce housing shortage they all face. S284 offers local officials another flexible tool for them and their residents to use to help sustain a workforce that is vital to their economies.
Follow along with legislative action in the Association’s From the Dome to Your Home weekly report or with the Legislative Tracking System.