ISLE OF PALMS — A bumper crop of yard signs has sprouted across this barrier island as voters prepare for a referendum Nov. 7 that could limit short-term rental licenses.

It’s the latest skirmish in a much broader fight over the future of these sorts of vacation usages that’s been playing out across South Carolina.

“If nothing else, we are keeping the sign business afloat,” said Mayor Phillip Pounds.

Isle of Palms is among the communities on the frontlines — all places where high demand from vacationers fuels the short-term rental business. Charleston, Mount Pleasant, Folly Beach and Beaufort limit such rentals; Sullivan’s Island prohibits them; Myrtle Beach doesn’t allow new ones in residential neighborhoods.

The Isle of Palms referendum calls for imposing a 1,600 cap on short-term rental licenses for investors and second-home owners.

There would continue to be no cap for homes that are the owners’ primary residence.

It’s about preserving the island’s quality of life, say supporters. More than 30 percent of the city’s registered voters signed a petition to get the referendum on the ballot.

“We have a growing number of short-term rental licenses in residential communities,” said Randy Bell, a former councilman working with pro-referendum group Preserve Isle of Palms Now.

“We are trying to maintain the one-third, one-third, one-third split between fulltime residents, second homes and rental properties.”

Opponents say it’s really about property rights and property values. An investment property or second home could be harder to sell, and worth less, if there’s no certainty it could be used for short-term rentals.

“What are we trying to solve?” said Hugh Swingle, an island resident whose family business is Palm Blvd Vacation Rentals. “We just don’t see that there’s an actual problem.”

The city had issued 1,625 licenses to property owners who are not full-time residents as of early October, and if the referendum were to pass, no new ones would be available until the number drops below 1,600.

“Obviously, we don’t think it’s good,” said Ryan Buckhannon, president of the Isle of Palms Chamber of Commerce.

He’s a former councilman who owns an investment property licensed for short-term rentals.

Supporters and detractors of the referendum have set up websites, put out yard signs and sent mailings.

Isle of Palms United opposes the cap and claims on its website, iopunited.com, that taxes “have to” go up and property values will go down if the referendum were to pass. That group and others claim property values plunged 25 to 30 percent on Folly Beach after a February voter referendum capped short-term licenses there at 800.

Charleston Trident Association of Realtors data gives reason to question such claims. According to CTAR data, the median price of a house sold on Folly Beach in 2023 through September was down 14.9 percent, but the median price of a condo or townhouse sold there was up 28.2 percent.

“There’s no basis for the claim that property values will plummet by 40 percent,” said Bell.

Swingle, who is affiliated with Isle of Palms United, said a cap could be a big problem for people who want to sell a property in the years ahead.

“If there were a cap in place, and you own one of those tiny condos and you went to sell it, you could have a really hard time without a (short-term rental) license,” he said.

Swingle expects the vote to be close.

Preserve Isle of Palms Now supports the referendum, which the group says on preserveiop.org is about keeping the island a great place to live and preserving its residential nature by not allowing unlimited short-term rentals.

“IOP residents are either already experiencing or can foresee future problems with water and sewer capacity, traffic & parking congestion, environmental impacts, and the availability of long-term rental housing,” the group’s website says.

The Palm Republic, an organization created by former Isle of Palms Mayor Jimmy Carroll and current Councilman Blair Hahn, has also created programming opposing the referendum.

Hahn even alleged in a YouTube video that referendum supporters have talked about driving down property values in order to get deals on real estate.

The island has long been known as a place to rent a house or condo at the beach, or to have a second home that could be rented out for much of the year.

Full-time residents own about a third of the homes, and they can rent out those homes for up to 72 days each year if they have a short-term rental license. As of early October, 184 owner-occupied homes on Isle of Palms had short-term rental licenses.

“It’s a vacation spot, and has always been a rental community, to some extent,” said Pounds, the mayor, who declined to say how he will vote. “We have 1,400 condos, give or take.”

That’s a lot on an island with about 4,400 residents.

Most of those condos are in Wild Dunes or former hotels in the commercial area along the beachfront, and most are for rent. Many single-family homes across the island are also licensed for short-term renters.

While full-time residents are the minority of property owners on the island, they are the only people who can vote.

The referendum is on the ballot because of a petition signed by 1,173 of the city’s 3,740 registered voters. That petition put a short-term rental ordinance before City Council, and after the council declined to pass that ordinance in July, it became a ballot referendum.

If the referendum were to pass, the ordinance would take effect.

The Isle of Palms yes/ no referendum question is: “Shall the City of Isle of Palms limit the investment short-term rental business licenses to a maximum of 1,600?”

Across the marsh in neighboring Mount Pleasant, which has more than 94,000 residents, just 400 short-term rental permits are allowed.

Supporters of short-term rentals hope state lawmakers will act to prohibit and invalidate any local restrictions in 2024. A measure aimed at limiting local governments’ ability to restrain short-term rentals failed earlier this year.

Folly Beach earlier this year imposed a short-term rental cap following a referendum.

Folly Beach has fewer than half as many residences as Isle of Palms, and the town now has an 800-license limit on short-term rentals.

Isle of Palms would have 1,600, plus as many licenses as full-time residents want for their homes, if the referendum were to pass. Residents will also choose four City Council members in the election, from eight candidates.

Reach David Slade at 843-937-5552. Follow him on Twitter @DSladeNews.