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Council approves 5% of accommodations tax for workforce housing after passionate public comment
Summary
After hours of testimony from residents, nonprofit leaders and industry representatives, Hilton Head Island’s council approved a policy allocating 5% of projected FY26 accommodations‑tax revenue to workforce housing, a 4–3 vote that followed intense debate over the proper role of ATAX funds and tradeoffs for nonprofit and CIP funding.
Hilton Head Island Town Council voted 4–3 on July 15 to set a 5% allocation of projected FY26 accommodations‑tax (ATAX) revenues for workforce housing programs and projects. The measure was part of a broader ATAX grant policy and distribution proposal staff brought to council for adoption.
Assistant Town Manager Sean Cohen explained the proposed consolidated policy, the state code requirements for ATAX, the typical ATAX grant process and a projected FY26 revenue figure of $12,354,522. He said the state code requires initial deductions (a $25,000 allocation then 5% to the general fund and 30% to the town’s designated marketing organization) and that the balance is available for local distribution in categories including ATAX grants, capital projects and an optional housing allocation under Act 57.
Public comment filled the chamber. Speakers advocating for higher housing allocations urged council to use the full 15% that South Carolina law allows, saying tourist dollars should help keep essential workers in the community. Blaine Lotz told the council that 15% “would go a long way in providing necessary infrastructure required in any affordable housing construction.” Risa Prince and several residents described workforce shortages and urged immediate funding.
Hospitality industry speakers, including Sea Pines Resort president Steve Birdwell and vacation‑rental representatives, warned that a moratorium or sweeping redistribution of ATAX could send negative signals to visitors and hurt island businesses; some urged that existing ATAX grant processes be used rather than pre‑setting a distribution percentage.
Council debate focused on whether to set a fixed percentage in policy, what tradeoffs the allocation would create for ATAX grants to nonprofits and CIP projects, and whether the town should rely on other funding sources or public‑private partnerships for housing. Councilmember Bryson asked staff and colleagues to target roughly $1 million for housing; council considered 5%, 8% and other proposals during the finance committee discussion.
The final motion (by Mr. Alfred, seconded by Mr. Brown) to allocate 5% for workforce housing passed 4–3. Council also adopted associated severability and effective‑date language and instructed the town manager to begin related implementation steps.
What the allocation means: Based on the FY26 projection, 5% equates to approximately $617,000 to be made available to workforce‑housing activities consistent with state law and the town’s housing impact analysis and implementation rules. Applications for ATAX housing support will follow the standard ATAX review—ATAX committee review, finance committee review and council approval—or other programmatic mechanisms council may specify.
