Ad Ops Test

Worker housing at risk on Hilton Head

At least 1,400 homes exist in Hilton Head Island’s traditionally low-cost areas — not nearly enough for the island’s roughly 8,400 hospitality workers on which the tourism economy depends.

Hilton Head Mayor David Bennett, whose company Bennett & Reindl LLC builds affordable housing, estimates there’s a demand for at least several hundred more workforce units on the island alone, and likely more in the greater Bluffton area.

The lack of affordable housing is increasingly problematic when considered along with the island’s outdated workforce transportation system, a pay scale that isn’t keeping up with inflation and the growth of neighboring Bluffton, where an increasing number of Hilton Head’s hospitality workers are finding jobs. In 2014, 35 percent fewer people both lived and worked on the island than 12 years earlier, according to census data.

The result: a shortage of hospitality workers that island employers are calling a crisis. They, along with town leaders, worry the shortage will eventually impact the island’s reputation as a premier tourist destination and the quality of life for residents.

Meanwhile, the island’s stock of workforce housing is anticipated to dwindle, worsening the worker shortage.

Just this year, for example:

▪  Owners of one Hilton Head community, Chimney Cove, evicted about 40 working families.

▪  A developer seriously considered high-end redevelopment that would have booted about 30 families out of their housing at Rollers Trailer Park and surrounding communities. Future redevelopment efforts are anticipated.

▪  A new mobile home park on Spanish Wells Road was going to sell land and trailers for cheap, but ended up charging residents $1,400 monthly rent.

▪  Owners of several communities where the working poor live — Cordillo Courts, The Hedges and Woodhaven Villas — are close to pricing out residents.

Ward 1 town councilman Marc Grant says he can envision a time when little to none of the tourism workforce calls the island home.

“As the economy gets better, people are going to find ways to get that dream house they wanted on Hilton Head and it’s going to be harder for people who have to work here,” Grant said. “I don’t have an answer.”

Many of the island’s renters are already paying too much for housing. Since 2000, their ranks have increased from 35 percent to half of the town’s population, according to U.S. Census surveys.

These are the people who in 2014 were paying rents higher than 30 percent of what they made in a month — whether a slim $500 or the island’s median rent of $1,096 per month — according to the most recent census survey available. Of those renters, 40 percent were putting more than half of their monthly earnings toward housing, according to the data.

Today, the island’s stable of lower-cost housing comprises about 860 units spread between 14 apartment and condo complexes and neighborhoods, and another 550 or so homes on 8 miles of unpaved roads. They range from trailers to ranch houses, from tiny, efficiencies in Woodhaven to subsidized units in 90 Dillon Apartments and income-adjusted rentals in Cedar Well and Sylby Tub apartments.

Some workers also manage to find cheap, long-term rentals in higher-end Cordillo complexes like Treetops-Ocean Breeze Villas, within walking distance of the ocean and plenty of tourism jobs.

Still, some leaders caution that workforce housing is a relatively small factor in solving Hilton Head’s workforce shortage.

“We just aren’t going to be able to house the tens of thousands of employees we need on a small island,” Ward 3 councilman David Ames said in July.

But most town leaders, including Bennett, agree it must be part of the town’s strategy to fill tourism jobs for years to come. He said he can imagine Hilton Head benefiting from the type of housing his company built in Bluffton in 2011. May River Village Apartments complex, located near the intersection of Bruin and Burnt Church roads, has 68 units for rent to those who earn between 50 and 60 percent of the county’s median income.

Town leaders will discuss workforce housing as part of the town’s visioning process, a year-long effort kicking off this fall to give Hilton Head direction for its economic and cultural future.

“My hope would be that (the issue of housing) makes it to the front burner this coming year so we can begin working on it,” Bennett said. “But that's not a quick process.”

Workforce housing in jeopardy

Many of the island’s existing lower-cost units could be in jeopardy as the economy improves and the hunt intensifies for land that can be redeveloped.

A prime example sits on Pope Avenue — the 300-unit cluster of Cordillo Courts, The Hedges and Woodhaven Villas, all built in the 1970s as workforce housing and still some of the best deals on Hilton Head for hospitality workers who want to live where they work.

Cordillo Courts homeowner’s association board member Bill Kicinski doesn’t worry about renting his eight apartments, all owned by his property management company Mid Atlantic Rentals.

They’ve been full since he bought them in 2014, and Mid Atlantic has a healthy waiting list of tenants’ friends and family to turn to in the unlikely event that someone ups and leaves. So Kicinski wasn’t surprised when another company outbid him on several other units he tried to acquire.

But then, he and other owners realized the new owner, HHI Investment Company, was licensed to B. Dean Pierce, CEO of property management company Elite Resort Group and manager of Coral Sands Resort. Several years ago, they knew, that timeshare resort had replaced a low-income apartment complex at nearby 66 Pope Avenue. And, they learned, Pierce had been buying up units in their own communities since 2012.

Since then, the long-whispered rumors of a timeshare takeover have only intensified.

Pierce now owns 41 units in the complexes, according to town business and county property records. And Stan Snell, an accountant with Elite Resort Group, is already a board member at the Woodhaven Homeowner’s Association and a failed applicant for the board at Cordillo Courts, members say.

“My guess is he wants to tear this place down and put timeshares up,” Kicinski said on Aug. 17. “This island’s not making any more land. … I think they’re really working toward this.”

The purchases by HHI Investment Company started around the time the Town of Hilton Head Island offered to sell its tennis courts inside the Cordillo Courts and the Hedges neighborhoods back to the homeowner’s associations. That sale was abandoned in April, but could have made it easier for owners to redevelop down the road.

On Wednesday, Pierce said he did not want to buy up and redevelop the communities, adding that the number of owners at the properties would make it “difficult, if not impossible,” for anyone to do.”

Kicinski, assistant treasurer and past president of Cordillo’s board, said he isn’t opposed to redevelopment as long as owners get fair deals.

“Somebody’s going to make a lot of money,” he said. “God bless ‘em; I wish it was me. I don’t have enough money to buy everybody out, but somebody’s going to make a lot of money.”

However, he and association president James Ackerman, also a partner at Mid Atlantic, acknowledge eliminating 300 affordable units could place a strain on the islands’ already stressed workforce.

And even if nobody buys out the complexes, it may soon become too expensive for many workers.

At Cordillo Courts, owners have been working to stop what they call dangerous and unsavory behavior, including multiple families sharing apartment units and using their balconies for storage. Efforts are also underway to stop illegal drug use and prostitution in the community. Factor in renovations and improved maintenance and Ackerman said he expects his rentals to creep up from $750 and $800 per month to the $900s by the end of the year.

A few years ago, his company was charging just $650 per month.

“It’s supply and demand,” Ackerman said. “The people you want to rent to, you want them to be good tenants, obey rules, keep people safe ... When you start getting low-income families and a lot of them in one area, and over-occupancy, you tend to run into other issues.”

Waiting for evictions

The Pope Avenue corridor is not the only area catching developers’ eyes.

Until last month, Hilton Head brokerage firm Coastal Apartment Advisors was looking to buy waterfront land along Marshland Road to replace the existing, run-down mobile homes — including Rollers Trailer Park and portions of neighboring Pine Field Road and Mackerel, Julia and Dianahs Drives — with luxury, mixed-use condominiums, according to the firm’s CEO Jim Sewell.

Together, they’re home to at least 30 families, most working in hospitality and a few who own their own businesses, like Santiago Landscape Services, Dynasty Tile and Smart Trim Inc.

A bookkeeper for Rollers Trailer Park said the property owners have no plans to develop or sell, and noted residents just signed new year-long leases. But many residents are unconvinced, and say they’ve been looking for land to purchase in Ridgeland in the event they’re later kicked out of their homes.

“My uncle is looking for land because he doesn’t want to wake up and have the property owner say, ‘OK, you have to move out in six months,’ and have everybody looking at the same time,” said Yessika Santiago, a 22-year-old student. “We already made our lives here. We’re all like family.”

On July 12, the neighborhood was quiet. With their rickety porches and sagging lattice skirts, the mobile homes seemed to have sunk into the ground.

The next street over is paved near Marshland Road, then turns to dirt and pine straw and jungle. Past the brush, and yards filled with furniture, debris, chicken coops and Internet satellites, is another stunning view of marsh.

Rollers Trailer Park’s owner, investor Harinderjit Singh of Martinez, Ga., did not return requests for comment.

Ultimately, Sewell said, he gave up on his redevelopment plans because he couldn’t settle on a price with a few of the landowners.

“I don’t have the time to continue to chase that rabbit,” Sewell said. “But it’s prime land. Eventually, whether it’s a month from now or 20 years from now, somebody will buy it and do something.”

A history of housing their own

It used to not be this way.

In the 1970s, Hilton Head’s earliest days of tourism, developers carved out space in their own resorts for employees to live and sleep.

From Palmetto Dunes to Sea Pines, bungalow-style homes housed the people building hotels, landscaping gardens, trucking sand over beaches by night and furiously selling pieces of the blossoming Hilton Head dream, one lot at a time.

“In those days, that was a very integral part of what needed to be done and we had the wherewithal and the vision to understand that,” said Bob Onorato, the first president of Palmetto Dunes. “We took care of our workers as family.”

The trend of building affordable housing continued — even after the resorts were complete.

As recently as 2000, more than 800 long-term rental units were constructed on the island, according to newspaper accounts. Some apartment complexes even sweetened the new leases with free first-month rent and $500 Wal-Mart gift cards.

But affordable housing has taken some big hits.

In 2004, Sixty Pope Apartments near Cordillo Parkway was sold and demolished to make way for new Coral Sands Resort timeshares. Families were forced out of 95 units.

And in December, the Chimney Cove community just outside Palmetto Dunes was purchased by local hoteliers and cousins Sam Johal and Hari Johl, who evicted about 40 Hispanic families living there. Most had lived there and paid rent well below market value for decades.

Palmetto Dunes originally built Chimney Cove in the 1970s to house its own workers, and later sold it to owners who maintained that vision over the next 30 years. Until this year, they’d rented the increasingly-dilapidated lodgings to housekeepers, cooks, dishwashers and landscapers for well below market value.

Now owned by Johal and Johl, Chimney Cove has undergone significant renovations to house another vital segment of the island’s workforce — international employees. Each year, the $3 million property will put up about 150 to 200 H-2B Temporary Non-Agricultural Workers from March to November, Johal said.

Town efforts abandoned

Meanwhile, the Town of Hilton Head has halted its efforts to bring additional affordable housing to the island.

▪  A program launched in about 1995 resulted in just three affordable housing projects over the next 10 years. The town abandoned the program altogether in 2007, after trying to revise it for two years, amid criticism its income requirements and restrictions on reselling the homes made it virtually unworkable for homeowners.

▪  The town also failed to take a 1999 task force recommendation to buy up multi-family complexes to keep them affordable. There was simply no public support for the costly, altruistic endeavor, according to newspaper accounts.

▪  The last push came in 2010, when Town Council donated 14 acres of land between Leg O’ Mutton Road and Mathews Drive to Hilton Head Regional Habitat for Humanity. Even that initiative met initial resistance, CEO Pat Wirth says.

When she attended a town council meeting that year along with volunteers and prospective homeowners, the group found a contingent of islanders ready to argue their proposed affordable community would bring crime and undesirable people to the area.

One of Wirth’s homeowners, an elderly woman dressed in her Sunday best, stood and addressed the angry crowd.

“‘I want you to know that we are not riffraff,’ ” Wirth recalls her saying. “Suddenly, they all felt like their mom or maybe their grandma was telling them they were wrong and maybe they needed to change their attitude. The opposition just disappeared.”

Habitat is now spending about $1.4 million to build up to 34 houses in the community, called The Glen, by 2021. Mortgage payments will be just about $550 per month for a three-bedroom house.

The town is remiss to not do more to keep hospitality workers on the island, said Eric Esquivel, president and publisher of La Isla Magazine and a member of several Latino advocacy groups, including Neighborhood Outreach Connection and Lowcountry Immigration Coalition.

“It’s very tough odds, if not almost impossible, when it comes to (living) on Hilton Head, unless they find a very lucky scenario or know somebody,” Esquivel said. “The (advantage) is in demand, not in the supply right now, and prices are going up.”

A possible solution

Hilton Head could eventually see a return to private sector worker housing.

Architect Tom Crews, who led the town’s Land Management Ordinance rewrite in 2014, says he’s in early discussions with several people about the possibility of building dormitory-style apartments for employees.

“We recognize we can’t necessarily build employee housing right across from the beach on Coligny, but I think there can be a mix of affordable housing that can serve that community,” he said.

One of those potential clients, realtor and Coligny Plaza owner J.R. Richardson, said through an administrator that it was too early to discuss the details, but that he is looking to learn more about worker housing. Sea Pines is the second entity interested in building workforce housing, according to Crews, but its leaders did not return phone calls.

Johal has already gone through the process at Chimney Cove.

He said he and his cousin were inspired to house international workers after taking over two run-down South Forest Beach hotels, one of which still had several international workers weathering the bed bug-infested rooms.

The now-revamped hotels, rebranded as a Best Western and soon-to-open Grand Hilton Head Inn, aren’t short on staff, Johal said, but it’s clear to see larger properties are struggling.

“I think for us, being in the hotel industry, we understand the shortage, how dire it is,” Johal said. “We’re trying to do our best or what we could to accommodate these workers.”

Others who have tried to create new affordable housing have found it nearly impossible.

Enrique Lopez Huerta recently developed a mobile home park at 177 Spanish Wells Road, where he hoped to sell 14 lots for $70,000 a piece and four-bedroom, two-bath mobile homes foe $35,000. But nearly every aspect of the process cost Huerta more than he anticipated, from clearing and landscaping the property to hooking up to sewer.

The now-opened neighborhood, dubbed White Oak, is still the most economical of three new developments to the area — along with high-end Salt Creek Landing and Silver Moss — but it’s not nearly as affordable as Huerta had planned. He’s renting the lots and mobile homes for $1,400 per month.

Pierce, of Coral Sands Resort, says he still envisions the government playing an active role in creating more affordable housing issue.

“The best solution,” he said, “would involve the town earmarking for affordable housing one or more properties it currently holds and working with interested developers to produce affordable housing that must be maintained as affordable housing.”

But just finding a location for employee housing is no easy task. A number of stars must align:

▪  Waterfront properties are out, due to their sky-high values.

▪  Leasing property from the town for little to nothing, as affordable housing developers sometimes do, is only possible if residents have an appetite for it. Still, Ames said it’s “very possible” the town would entertain that kind of arrangement.

▪  The town’s zoning is a roadblock to redeveloping some empty commercial buildings and low-density areas into multi-family homes.

▪ Many of the town’s parcels of open land are ill-suited for workforce housing because they are too far from amenities like schools and grocery stores. That makes them virtually ineligible for the federal Affordable Housing Tax Credit Program, which Bennett’s company used to build May River Village, a low-income development in Bluffton, a few years back.

Other parcels of the island’s 1,370 acres of town-owned, open land are precluded from development under the town’s land acquisition program. They’re the same problems the town has faced for decades. Crews says that leaves him feeling “stuck in the pluff mud.”

For now, he’s hoping the town will be willing to accommodate workforce housing plans by adjusting its zoning. That would also avoid some officials’ concerns about renting town land to the private sector for free or below market value.

“At one point do you give one developer an unfair advantage over the other? What about others who already acquired land?” Ward 5 councilman Tom Lennox said, referencing Johal and Johl.

Johal declined to comment on Lennox’s statement, but said he wanted to be involved in future discussions about workforce housing.

Those will start in the fall and continue through the next year as part of the town’s visioning effort and Town Council’s fall planning sessions.

“It needs to happen,” Crews says. “It’s important it happen. And I hope this is the year.”

Rebecca Lurye: 843-706-8155, @IPBG_Rebecca