WMBF Investigates: Residents concerned that short-term rentals lead to 'fraternity central'

MYRTLE BEACH, SC (WMBF) - Myrtle Beach resident Lyn Tayloe describes her street in Forest Dunes as "fraternity central" on the weekends.

New cars coming and going and parking on the grass is one of the many issues caused by tourists vacationing in the neighborhood, a situation Tayloe calls "unnerving".

"As a resident who has lived here all my life, it's hard to see so much tourism just completely envelope all the residential neighborhoods," she said.

Short-term renting in neighborhoods throughout Myrtle Beach is prohibited in many areas by city zoning laws.

"There is a reason why a residential neighborhood is for long-term residential use. If you turn it into a commercial area then you've lost something intrinsic to the residential area," said Mark Kruea, spokesperson for the city of Myrtle Beach.

Despite these restrictions, 30 properties throughout the city are allowed to operate within illegal zones because they were rented before the zoning law was enacted.

Many of these homes are in the Golden Mile. The Forest Dunes area has four short-term rental properties.

WMBF Investigates discovered multiple other properties throughout Myrtle Beach and Horry County operating without business licenses and against city zoning codes.

"It's just free cash for them at our expense because they are putting our neighborhood at risk," said De'Anna Fryar, a Knots Landing resident.

Short-term rentals are defined as renting a place for 90 days or less. In recent years, cities and counties across the United States have scrambled to craft rules and regulations as online vacation booking sites increase in popularity.

Throughout the Myrtle Beach area there are more than 2,500 rentals ran by over 700 hosts, according to Airdna, a company that analyzes Airbnb data.

Click here for a complete list of short-term rentals in the area.

These numbers only account for rentals listed on Airbnb and don't account for the growing other online rental sites from VRBO to Craigslist.

No matter where properties are advertised, South Carolina homeowners are required to have a business license to rent their home or room for short-term.

Kim Perl has advertised her rental properties on VRBO for years. She operates a condo in Myrtle Beach and other listings in Garden City and Lake Lore, N.C.

"I think if you are going to take your business seriously, you need to follow all the steps and be what you need to be for all the areas you are in," Perl said.

Below is a map of grandfathered properties in Myrtle Beach:

Despite enacted laws on short-term rentals, tourism across the Grand Strand is encroaching into residential areas.

"Homeowners bought into here because it is a quiet residential area and that's what they want." Forest Dune resident Sue Trew said.

Knots Landing resident Fryar lives near Valene Court, a street where residents and WMBF have multiple rental units.

"It used to be such a quaint nice neighborhood and it just takes one, two, three people to make it look like this and that's what's happening," said Fryar.

She said long-term rentals have negatively affected the area for a while and she recently noticed an increase in traffic from nightly rentals.

"Whenever you start to have these nightly renters come in, they are of all sorts, you know? You don't know what they are bringing in," Fryar said. "It doesn't make you feel as safe as you once felt because you knew all your neighbors."

Another resident in the area said the problem has becoming increasingly frustrating.

"When your neighborhood has so much riff-raff going in and out that you think they are selling drugs and then you later find out they are renting their rooms out," the Knot Landing resident said.

This is a feeling shared by residents in other areas as well.

A resident in the Pine Lakes neighborhood lived next to a short-term rental operating without a business license for months.

The resident said "weird people" were coming and going next door all summer, creating an environment that made her concerned for her small child.

"Your home is your greatest investment and you want to be able to go home and ride through the neighborhood to go home and feel safe and want to be able to appreciate where you put your money" Fryar said.

The Market Common is another area where it is prohibited to rent a house or room out for less than 90 days. Residential property manager Heather Gray said subleasing is strictly prohibited in residents' leases because of the extensive background check required.

Gray said she has never heard any complaints. However, WMBF found multiple listings within the area on Airbnb.

"I know the livelihood of this beach survives on tourism, but there's got to be a fine line to stop somewhere," Tayloe said.

Despite zoning and business license laws, compliance remains and it's an increasing issue for local departments.

On many sites, the listing's address is not revealed until a guest books the home. This makes it impossible for the government departments to run simple address checks.

This time-consuming regulation process makes it hard for small departments to keep up.

"It's like nailing Jell-O to a tree," James Wood, North Myrtle Beach planning director, said when explaining the issue of crafting laws and regulations around short-term rentals.

Short-term rentals within North Myrtle Beach are contributing to an increasing parking problem as hosts allow huge groups of renters to cram into significantly smaller houses.

Alten Driggers, the Horry County Business License Office's revenue manager, said the way hosts market properties is changing every year.

Municipalities are faced with new websites popping up every day and hosts getting more clever.

One of the newer sites is RedAwning, a worldwide collector of vacation properties. The organization amplifies owners and property companies' marketing efforts by posting rental listings across sites.

The site recently started listing properties along the Grand Strand, according to North Myrtle Beach public information officer Pat Dowling.

Numerous properties listed under the host RedAwning were found to be advertising as a vacation rental but not operating with a business license.

"RedAwning represents something of a new wrinkle in online rental channels in that it is not a 'property management company' per se," Dowling said. "It acts as a technological middleman."

RedAwning, like Airbnb or VRBO, does not have a registered business license within Myrtle Beach or North Myrtle Beach.

Once cities find violators, it can be hard to enforce compliance.

In 2014, South Carolina aimed to help law enforcement by passing the Fairness in Lodging Act.

The law gave cities and counties more power to monitor violators, including fines and data sharing with the Department of Revenue.

"That's going to be the best thing we got because a lot of people who own property are from out of state so ain't no way. It ain't feasible to go and try to file civil suits in their county so what we'll do is put a lean against their properties and make them pay the leans and they'll pay us," Driggers said of the new law.

Hosts can be fined $500 and/or 30 days in jail for violating the hospitality fee in Horry County.

However, local departments rarely use such a strict approach to reprimand violators.

Bruce Young, North Myrtle Beach's risk manager, said he checks in on short-term rentals the same way for the last 20 years by using the tax records and mailing letters.

He said he gets a good response rate for the letters and he doesn't question people if they say they are not renting short term.

"I'm not sure if we are handling it as good as we could," Young said. "We don't have the manpower to look up every website."

It's the same challenge in Myrtle Beach.

Zoning administrator Kenneth May said the city just doesn't have that size of staff and enforcement is driven by neighbors' complaints.

Violators in Myrtle Beach first receive a letter alerting them they are in violation of city codes.

"The idea behind any ordinance is really compliance; that's the goal. If you comply with the law, we're happy with it, so we'll be glad to send you a letter," Kruea said.

Myrtle Beach has had to resort to court for violators in the past.

Another issue is determining if owners are even renting the house.

"We really don't know if they are telling us the truth," said Lance Thompson, vice president of Ocean Lakes Campground. "The problem becomes in some cases, 'I don't even rent my place. It's family's friends.' We have no way of knowing that."

Thompson said people have been caught renting without business licenses and for managing other owner's property without Ocean Lakes knowing.

Enforcement of short-term rental regulations comes with a financial incentive at the state and local level.

Individuals operating short-term rentals in South Carolina are required to pay state and local accommodation taxes, and hospitality fees. Airbnb recently started automatically collecting state taxes from hosts, but without a registered business license, cities and counties are still shorted their revenue.

Business licenses fees make up a large portion of Myrtle Beach's funding.

The city's 2017 financial report listed these fees accounted for around 20 percent of the total government revenue, or around $25 million.

In 2017, the accommodation and hospitality fees increased by around $677,000. These funds are used for capital projects.

The number of business licenses increased in 2015 and continued to increase, according to the 2017 financial report. Yet this number and generated revenue could be higher if all renters are registered with the city.

Kruea doesn't think tax money from the units creates that much financial impact for the city.

"The money is not really the issue. It's the enforcement of the zoning. It's making sure the neighbors around you who expected a single-family home environment are getting that single-family environment. That's the goal," Kruea said.

However, efforts by the county suggest enforcing the law has a big payoff.

Driggers said in the past, his department spent over a year scanning online booking sites and finding violators within the county.

The effort generated $1 million from tax revenue and around $20,000 from business license fees, according to Driggers.

"When you get them, they have to keep paying every month or every quarter, every year so it just streams in. It just keeps on coming in," he said.

Driggers estimated an average summer vacation house would generate around $16,000 in 16 weeks and would owe $480 in taxes.

Last year, North Myrtle Beach hired a firm to track businesses operating without a license.

The city generated $100,000 from additional business license fees and penalties, according to Dowling.

Earlier this year, short-term rentals were added to this search.

"Unlike brick and mortar businesses, short-term rentals represent a constantly shifting market. The vast majority of property owners play by the rules. Some attempt to fly under the radar but the Achilles heel in that approach is that they must somehow market their house in order to rent it, which means they have a public profile that ultimately will be identified," Dowling said.

The county recently found 144 listings that violate short-term renting laws in the Ocean Lakes area.

In response, Horry County sent out letters requesting financial information from property owners.

"So far, the response from property owners has been positive. Many are new property owners unaware of county ordinances and are eager to comply with our request," Driggers said.

Horry County recently updated their computer system and Driggers hopes it will help the county identify even more violators.

"They get smarter. They don't put as much information on the website no more," Driggers said. "But when they get smarter we get new tools to fight the violators."

Driggers said in some cases hosts may be trying to sneak around the laws but in many cases host aren't familiar with the laws.

To solve this, the county is working to inform more people of the laws by speaking to realtors and attending meetings and conferences.

VRBO host Kim Perl has also noticed a lack of understanding in the short-term rental business and said she plans to start consulting interested hosts.

Meanwhile, residents are also taking the issue into their own hands. Fryar said neighbors in Knot Landing will be taking their issue to the city in the upcoming month and are considering creating a homeowners association.

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