Planning commission recommends denial of Blue Hour Housing hotel-to-housing text amendment

The Town of Hilton Head Island Planning Commission on Wednesday voted 5–2 to recommend denial of a proposed text amendment from Blue Hour Housing that would create an adaptive-reuse hotel and motel conversion program in the town’s Land Management Ordinance (Title 16).

The amendment, submitted by Chris Breen of Blue Hour Housing, would have permitted conversions only for existing hotels and motels and would have allowed a conversion density of up to nine dwelling units for every 10 guest rooms (a 10% reduction from the original hotel room count). It would bar short-term rentals, require on-site property management, quarterly certificates of eligibility verifying workforce occupancy, a recorded program agreement, and a 75% local-employment occupancy requirement (up from 25% in earlier drafts).

Missy Lewis, the town’s planning director, told commissioners staff recommended denial. Lewis said the revised draft now before the commission reduces the number of zoning districts where the use would be allowed to five (Light Commercial, Main Street, Mitchellville, Waterfront Mixed Use and Stony District), but that only the Light Commercial district contains the seven existing hotels the amendment targets. “Staff is recommending denial on this text amendment application,” Lewis said, citing concerns about unit size, parking, affordability controls and consistency with the town’s workforce housing program.

Lewis highlighted several specific issues: the proposal does not include an affordability requirement tied to area median income, it allows micro-efficiency and studio units (both capped at two people) without limits on how many such small units could be created, and it sets only one off-street parking space per existing guest room while the town’s multifamily parking standards require 1.4 spaces per 1-bedroom, 1.7 per 2-bedroom and 2 per 3-bedroom. She also noted the draft does not clearly exclude timeshare properties in the Waterfront Mixed Use district and does not add exterior-site requirements to encourage multimodal connectivity.

Chris Breen of Blue Hour Housing said the proposal is a citywide text amendment, not a permit for a specific project, and described changes the applicant made after earlier hearings. Breen said the firm increased minimum unit sizes, added an occupancy cap of two people for micro-efficiency and studio units, raised the local-employment requirement to 75%, required on-site management, and agreed that converted properties would remain under the program in perpetuity. “This is a text amendment, which means that any change would apply to any developer on Hilton Head,” Breen said. He added the company has experience converting similar properties elsewhere and that conversions would be subject to the town’s permitting and building-code review.

Public commenters were split. Allen Wolf, president of the Surgent Restaurant Group and founder of the Coastal Community Development Corporation, urged the commission to move the proposal forward, saying the island needs new housing solutions fast: “We need new solutions to produce workforce housing units and we need them quickly.” Several local business leaders, including Matt Suko (Beach House food and beverage director), described staffing shortages tied to lack of housing.

Other speakers raised process, safety and livability concerns. Resident Grace Smith warned about concentrated group-living outcomes and cited a Bluffton conversion she said had deteriorated. Local attorney Chester Williams argued the changes submitted after the initial public hearing were material and said portions of the current draft had not been the subject of a new public hearing; he quoted South Carolina law and said, “This is essentially a brand new application.”

Commission discussion covered two broad positions: some commissioners urged flexibility to convert underutilized hotels quickly to meet employer demand and avoid losing opportunities if the developer’s timeline lapses; others said the proposed amendment would set island-wide policy with too many unresolved details and recommended adherence to the town staff and the scheduled Land Management Ordinance (LMO) overhaul. One commissioner said an approved amendment would apply to all properties and should meet the town’s workforce-housing standards before becoming policy.

A motion to follow staff’s recommendation and recommend denial to town council was made and seconded. The commission voted to recommend denial, 5 in favor and 2 opposed. The recommendation will be forwarded to a town council committee (Community Services and Public Safety) and then to full town council for further action or revision.

The proposal’s key technical points and points of contention documented in the record include: conversions limited to existing hotels/motels at adoption; prohibition on short-term rentals for converted units; a conversion ratio up to 9 dwelling units per 10 guest rooms; minimum interior communal space at 6% and minimum external open space at 10% of building square footage; a proposed 75% of units occupied by at least one person employed by a lawfully licensed business in the town; on-site property manager and quarterly eligibility reporting; a recorded program agreement; and one parking space per existing guest room (staff and several speakers said that likely undercounts expected vehicle demand).

Next steps: the commission’s recommendation (denial) will be sent to the Community Services and Public Safety Committee and then to full town council. Town staff said the adaptive-reuse item will be considered in the near-term priority-amendment process or folded into the town’s full LMO overhaul and that additional community engagement is planned as the town refines workforce housing policy.