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Panel OKs plan to convert Aqua restaurant into villas

A Hilton Head Island resort that has had trouble keeping restaurant space filled may be able to convert the struggling enterprise into villas.

The Planning and Development Standards Committee voted unanimously Wednesday to recommend Town Council amend the land management ordinance to allow restaurant and retail space at residential developments to be converted into living quarters.

The request was made on behalf of Sea Crest Development Co., which owns Sea Crest Resort off North Forest Beach Drive. The resort has an on-site restaurant, Aqua Grill & Lounge, that is struggling. Sea Crest wants to convert the restaurant into villas, according to the company's lawyer.

The ordinance change also would allow increased residential density, as long as the development is within a tax increment financing district. The special districts allow municipalities to collect taxes to spur revitalization in blighted areas. When money collected from taxes in a TIF district increases because property values increase, the excess pays for local development projects.

Adequate parking would be required. Owners would not be allowed to expand beyond the building's existing size and would have to conform to all current regulations.

Town staff says the amendment is part of an effort to encourage redevelopment and would apply to future and current developments.

Barry Johnson, an attorney for Sea Crest, told the town Planning Commission in December that several restaurants have occupied the space over the years, with various themes and menus, and none has succeeded.

Without the ordinance change, the space would likely remain vacant, said Nicole Dixon, town senior planner.

"The restaurant space is not being properly used, and they can't add density," Dixon said. She added that no other properties on the island have been identified that would meet requirements under the amendment.

The town's Planning Commission recommended approval of the amendment Dec. 15, but with some concerns.

Commissioner Loretta Warden cautioned against the town's "piecemeal" fashion of changing the land management ordinance, and said the amendment would benefit a specific property owner and business.

While the intent is good, Warden said the town should focus on the "big picture" and determine whether unintended consequences could result.

But Town Council members on the standards committee said Wednesday the town needs to be more flexible so businesses can survive and make the best use of their properties.

"If you have a restaurant or gift shop space in a residential development, it seems a shame to have the space sit there and go to waste, especially if there is no compelling reason not to grant a variance in density," said Councilwoman Kim Likins.

The amendment must be approved by the full Town Council.

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