Real Estate

With soaring rent and staff shortages, what happens to Hilton Head? Experts say it’s grim

Clayton Rollison said there wasn’t even a discussion when he decided to cut the hours at his restaurant, Lucky Rooster Kitchen + Bar, down to six days a week.

“It was pretty easy, it was either have humans to come to work or don’t,” Rollison said. “There was no conversation... it was too hard to find staff.”

Rollison is on Hilton Head whose business has been hurt by the island’s increasing workforce shortage in the last few years.

He called the crisis Hilton Head is facing a “reckoning” — restaurants are hiring from smaller pools of applicants because workers cannot afford to live on the island.

The town of Hilton Head Island has hired a team of experts to study the island and make recommendations for workforce housing to help address that “reckoning.”

Lisa Sturtevant and Associates presented their first round of key findings to the public planning committee last week, where the team drew on two months of data analysis to form their Assessment of Workforce Housing Needs study. The team will deliver two more reports before the final study is complete in April 2019.

Rollison, who was seated in the front row at the meeting, said something has to change.

“If we’re not able to attract a diverse socioeconomic group to the island… there will be no one to service the lifestyle,” Rollison told the Island Packet. “Hilton Head as a brand will no longer be able to maintain the world-class destination that we have.”

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What’s the problem?

On Nov. 29, the Sturtevant team made its first presentation to the town committee and around 40 people in the audience, where they painted a bleak picture of Hilton Head’s future — a growing retired class that is disproportionate to a shrinking amount of working-age adults on the island.

“If trends continue... more and more Hilton Head Island residents will be relying on relatively fewer and fewer residents of working age to support the local economy,” the study says.

The Sturtevant team said Hilton Head would need to build 571 homes or units every year for the next ten years to meet future housing needs and maintain the brand Rollison fears is in jeopardy.

The audience gasped at the findings.

That data came from this year’s Beaufort County Housing Needs Assessment, but the Sturtevant team’s use of that statistic comes with a caveat — those homes need to be affordable for the workforce, which the study defines as “homes and apartments that have rents of $875 or less.”

The county’s study projects that only 8.6 percent of rental units on Hilton Head will need to be rented for $875 per month or less, but the Sturtevant team’s study says that “seems low.”

“These forecasts may understate the amount of lower-cost housing that future residents and workers need,” the study said.

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A “gap” between the working and the retired

Rollison, who grew up on Hilton Head as a child and has been the chef and owner of Lucky Rooster for five years, said there is a widening gap between the working class and the growing retired class on Hilton Head. He said he hears council members and retirees refer to food service employees as “those people.”

“The people who are the ‘thems’ and ‘those’ are the people who grew up here,” Rollison said at the meeting, speaking on behalf of service industry workers. “You’re speaking about me.”

Rollison said he sees the disconnect a lot when he hears Hilton Head leaders talk about solving workforce issues.

For instance, several mayoral candidates discussed the possibility of revamping abandoned real estate, such as the old Sam’s Club building, for workforce housing.

“(If you’re) living in a 400 to 500-square-foot apartment with no amenities tucked away in some little nook that didn’t work on Hilton Head in some poorly conceived building,” Rollison said. “Are you enjoying the things you’re working so hard to live here for?”

The consultant team also said that Hilton Head is experiencing a “hollowing out” of the middle class because the fastest-growing income groups are those that make more than $150,000 each year followed by those who make less than $25,000 per year.

“She got my attention when she used the words hollowing out,” council member and committee chairman David Ames told the Island Packet. “That is a powerful way of describing what’s going on.”

Study: wages don’t keep up with cost of living

Pointing to income data from 11 job sectors, the experts painted a clear picture of the problem facing Hilton Head’s workers where a majority of people earning median wages can not afford Hilton Head’s median rental rates.

Sturtevant said the market is out of touch with the real housing needs on the island. The study showed there were only 419 rental units in 2016 that cost less than $750 per month.

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Assessment of Workforce Housing Needs, Sturtevant & Associates

The team found that seven of the 11 industries did not have high enough wages to afford the median rent on Hilton Head of $1,114 per month, which has increased 4.5 percent in the last year.

But lower rent would only solve half the problem.

According to the team’s findings, five of the 11 industries wouldn’t be able to afford rent at $875 per month, either.

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Assessment of Workforce Housing Needs, Sturtevant & Associates

Sturtevant’s data listed affordable rent for workers in retail trade as $650 per month, and public administration — including teachers — at $984 per month.

However, the industries represent broad swaths of workers on Hilton Head.

For example, Beaufort County School District records for the 2018-2019 school year show that first-year teachers made an average of $36,000 along with a $4,000 cost of living supplement.

And homeownership for most working adults on Hilton Head is out of the question, too, the study found.

Sturtevant said that 40 percent of homes for sale on Hilton Head are listed for $600,000 or higher, and that “homeownership is likely out of reach for most—if not all—workers” in accommodations and food service, arts and entertainment and retail trade.

What’s wrong with a commuting workforce?

As Hilton Head grows, traffic on the bridge leads to near-daily accidents that affect a commuting workforce.

The Sturtevant team’s study said most of those commuters, 16.8 percent of which travel 50 miles or more each way to get to work, drive alone over the Hilton Head bridge.

Hundreds of workers commute by bus for hours, some up to five per day, to get to jobs on the island, according to previous Island Packet reporting.

Ames said that workforce housing on the island is crucial because workers are not “widgets” to be moved back and forth without care for their quality of life.

Rollison agreed.

“I think David (Ames) said it best,” Rollison told the Island Packet. “People are not widgets to be put on a bus to bring them to serve you and then to be put away.”

Lisa Sturtevant, founder of Lisa Sturtevant and Associates, LLC., delivers the timeline for developing a workforce housing plan for the Town of Hilton Head Island. Katherine Kokal, the Island Packet.

At Lucky Rooster, Rollison said he needs to nearly double his staff of 25 people by March 1 to start preparing for the high season. Rollison said he can’t do that without being able to choose from workers who live on the island.

“Busing in workers erodes the community,” he said at last week’s meeting. “Your service will suffer from the transient workforce.”

Why now?

The town’s visioning process, one of former Mayor David Bennett’s key projects, outlines the implementation of “a scattered affordable housing program throughout the island.”

One of the first steps in developing that program is the report by the Sturtevant team.

The town’s spending on the Sturtevant team’s report is capped at $46,960, Richard Groth, the town’s procurement officer, said in October. The team’s full report and periodic updates can be found on the town’s website.

But time is ticking for Rollison as tourist season approaches. He said he’s tired of the talk about workforce housing and what he perceives to be a lack of action.

“We’re at a point where we’ve been talking about this on a 30,000-foot level,” he told the Island Packet. “At some point we have to put a shovel in the ground and get something started.”