Some think the hospitality tax drama is payback for the Air Force Base lawsuit. Here’s why

I-73 funding depends on local municipalities working through tax allocations

Myrtle Beach City Council passed a motion Tuesday morning in support of I-73 and intergovernmental negotiations to fund the project from jurisdictions directly benefiting from construction of the interstate.
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Myrtle Beach City Council passed a motion Tuesday morning in support of I-73 and intergovernmental negotiations to fund the project from jurisdictions directly benefiting from construction of the interstate.

A disagreement among the largest public agencies in Horry County regarding the redevelopment of the former Air Force base is playing itself out in court documents.

Horry County and Horry County Schools jointly filed the lawsuit against the City of Myrtle Beach and Myrtle Beach Air Force Base Redevelopment Authority on Dec. 21.

At issue is the redevelopment of the 4,000-acre former Air Force base, which closed in 1993, and allegations that the city and authority are misusing tax increment financing and taxpayer funds on a project the county and school district argue has already been completed.

Tax revenues have been frozen on properties within the area, which includes The Market Common, since 2004 while the assessed value of the land has increased from about $4.2 million to more than $38.2 million, according to court documents.

The county and school district filed the lawsuit, in part, to prevent plans by the city to issue $15 million in additional bonds to pay for further improvements to the area, a successful endeavor that has led the city and authority to file a counterclaim.

“(The county’s and school district’s) underlying action is a case of cutting off one’s nose to spite his face,” the counterclaim reads. “In order to score an immediate political victory, a victory they obtain solely through delay even though they cannot prevail on the merits, Plaintiffs have jeopardized over $40,000,000 in tax revenues City will receive, and over $100,000,000 projected to flow to Plaintiffs themselves, from continued redevelopment of the Air Force Base.”

The city had entered into an agreement with Wells Fargo for the sale of $12.6 million in bonds prior to the filing of the lawsuit, but failed to close the deal due to the suit, which could cost the city more than $42 million in losses, according to court documents.

The public agencies have gone back and forth in court, with the city and authority asking the court to dismiss the suit, but no trial date is currently set.

County councilman Harold Worley suggested during Tuesday’s council meeting that the lawsuit is directly impacting a separate lawsuit that the city filed against the county in March claiming the county unlawfully collected a hospitality fee and devoted funds to the construction of I-73 without the city’s consent.

Worley reiterated his point Wednesday, telling The Sun News he doesn’t see any other logical reason city officials have stipulated that they’d only discuss the hospitality fee dispute with the county in an executive session.

“I’m not going in a back room with them to discuss the people’s business,” he said.

Worley said he’s committed to prohibiting the city from issuing an additional bond for improvements to The Market Common area because it’s not fair to other county taxpayers.

School board member Holly Heniford agreed, saying that it’s her understanding the original agreement was to allow tax increment financing to help with a blighted area, and that no longer describes the former Air Force base.

Part of the lawsuit deals with plans to place a school on the redeveloped land, a project that was removed from the authority’s to-do list in late 2017, according to court documents.

The school district argues that it expended funds and forewent other opportunities in anticipation of that school being built, while the authority and city countered that the school was never promised and there’s no longer a need or available space to build it.

Court documents state the original plan was for an elementary school, but only about 200 K-5 students live in the redevelopment area.

Heniford said a STEM or vocational school in that area would present a great benefit to the entire county.

City spokesman Mark Kruea said the lawsuit speaks for itself, and the city doesn’t typically comment on pending litigation.

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Investigative project reporter David Weissman joined The Sun News after three years working at The York Dispatch in Pennsylvania, where he earned awards for his investigative reports on topics including health, business, politics and education.