Planning Commission denies applicant's proposed hotel-to-housing conversion text amendment, urges staff coordination

The Hilton Head Island Planning Commission voted to deny a privately drafted text amendment that would have allowed adaptive reuse of existing hotels and motels into multifamily residential units under a 1:1 room-to-unit conversion. The denial followed two hours of staff presentations, developer testimony and public comment.

Planning Director Missy Luik opened a wide-ranging introduction of ten priority Land Management Ordinance (LMO) amendments, saying the items were "introduction" material ahead of public hearings set for Feb. 19. "In this agenda item we are going to discuss introduction of 10 amendments to the land management ordinance," Luik told the commission.

Separately, the commission heard a formal text amendment application from Chris Breen of Blue Hour Housing to create an "adaptive reuse hotel/motel conversion" program that, as submitted, would permit a 1:1 conversion of existing guest rooms into dwelling units, set minimum unit sizes (micro efficiency 210 sq. ft., studio 301 sq. ft., 1-bedroom 420 sq. ft., 2-bedroom 562 sq. ft., 3-bedroom 698 sq. ft.), require one off-street parking space per guest room, and prohibit short-term rentals on converted properties.

Breen said the proposal aimed to put undercapitalized hotels back into productive, locally available housing without town subsidy. "The tax amendment that we're proposing is similar but different than the 1 that the town has proposed," Breen said, adding the program would, in his view, produce "obtainable housing on the island" and could be implemented quickly.

Town staff advised the commission that the town is concurrently drafting its own adaptive-reuse amendment as part of the LMO priority package and that the staff's draft contains differences the council had previously asked staff to address: ties to workforce-affordability rules, minimum communal space and open-space thresholds, and other site-design and parking clarifications. Trey (planning staff) presented the staff analysis and itemized the proposed requirements in the applicant's submittal.

Public comment split along expected lines. Rob Jordan, a local business owner, said conversions could be a fast, practical addition to the island's housing supply. Opponents questioned unit sizes, potential market rents and lack of explicit affordability controls. Chester Williams, speaking in public comment, said the Blue Hour proposal contains no binding affordability guarantees and would permit densities greater than those currently allowed unless the town requires offsets.

Commission debate focused on three recurring concerns: (1) whether conversions should be tied to explicit affordability or income limits, (2) whether the minimum unit sizes proposed are adequate for long-term livability, and (3) parking and neighborhood impacts. Several commissioners said they supported the goal of adding housing, but not in the form proposed by the applicant.

After debate, a motion to deny the applicant's text amendment passed by a recorded voice vote (five commissioners in favor). The motion to deny also included direction that the applicant and town staff continue to coordinate so a revised approach that better aligns with the town's workforce-housing objectives could be brought to council.

Planning staff told commissioners the town's priority amendment package (the staff's adaptive-reuse language and nine other LMO amendments) will proceed to public hearing on Feb. 19; staff also said it will prepare a side-by-side comparison of the applicant's proposal and the town's draft for council review if requested.

The commission closed the public hearing and moved on to other agenda items.