FOLLY BEACH – Folly Beach City Council has begun replacing its short-term rental ordinance, voting Sept. 8 to repeal the current law and reinstate it with one major change: eliminating the income-based registration fee for vacation rental operators.
In a 6-0 vote, council approved the first reading of the revised ordinance. If adopted on second reading, investment short-term rental operators would no longer pay the separate registration fee tied to rental income, though the city’s existing business license fees would remain.
The action comes as Folly Beach appeals an August court ruling that found the rental limits – specifically the required fee – illegal. On Aug. 14, the registration fee was ruled an improper tax that violated state law barring governments from levying a tax through an ordinance.
Mayor Chris Bizzell said the city’s latest vote is meant to provide short-term stability while the legal appeal and a temporary pause on new permits continue. "Tonight’s vote is really about creating a stable policy framework for the near term, while the appeal is ongoing and the moratorium remains in place", Mayor Chris Bizzell said.
Under the city’s ordinance, investment short-term rental operators currently must pay $17.50 for every $1,000 in income earned, in addition to business license fees of at least $245 plus $2.75 for every additional $1,000 earned.
According to the city budget, Folly Beach collected more than $1.5 million in registration fee revenue in 2025.
City leaders said removing the registration fee would "remove the uncertainty created by the ruling" and "will allow the city to further the goals" the law originally sought to fulfill: "protecting the integrity of the city’s neighborhoods" and "ensuring a level playing field for individuals in the short-term rental market", the ordinance states.
The fee change does not alter the city’s temporary moratorium or the cap on investment short-term rental licenses. Last month, City Council adopted a temporary moratorium on Aug 26 to stop issuing any new short-term rental permits until a study on the properties’ effect on the city is completed. The anticipated timeline for that study is around February 2027.
Councilman D.J. Rich said the broader approach to short-term rentals remains unchanged despite the ordinance rewrite. "We are still on the same path that we were on before, as far as getting the study and all that. We just have to make sure that city’s covered", Councilman D.J. Rich said at the meeting.
The short-term rental cap remains in place, limiting the number of business licenses permitted for investment short-term rentals on Folly Beach to 800.
Councilman Blair Holladay did not attend the Sept. 8 meeting, but had previously signaled opposition to a repeal-and-replace approach. He urged council to wait until the city’s study of short-term rental laws is finished. "We need STR reform, but we don’t need a cap on this island", Holladay said on Aug. 26.
The Sept. 8 vote marked only the first reading of the updated ordinance. A second reading is still required before the measure can take effect under city law.