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Horry County v Myrtle Beach: Judge weighs in on hospitality fee lawsuit

Judge William Seals Jr. has ordered Horry County to stop collection of the hospitality fee within all area municipalities.

The order came hours after Horry County went back to court on Wednesday to ask Seals to reverse course from a previous order and bring a swift end to a legal battle over who can collect a hospitality fee in city limits.

While the timeline for the remainder of the lawsuit is not set in store, Seals was clear that Horry County cannot continue collecting the fee from after Aug. 10 till whenever a final decision is made.

This is the second time the case has gone in front of Seals since March 20, when Myrtle Beach initially sued Horry County over the hospitality tax, a uniform tax imposed on sectors of the hospitality industry, including prepared meals and food and beverages sold in or by establishments.

Myrtle Beach said in its lawsuit the 1.5 percent hospitality tax the county collected stemmed from a 1996 program to help short- and long-term transportation needs. As part of the program, a tax called a hospitality fee would apply to Horry County municipalities. The money funded a road-improvement program through the county.

With the program having expired in 2017, the city claimed in the lawsuit the county extended the tax without city approval and voted to direct funding to I-73 — a long-coveted interstate that would serve as a major pipeline to and from Myrtle Beach — without its consent. Myrtle Beach asked the judge to declare the Horry County ordinance that extended the tax deadline invalid and to prevent the county from collecting the hospitality fee.

A recent study by the Myrtle Beach Area Chamber of Commerce said 74 percent of all Horry County residents support I-73 being built.

Although Myrtle Beach initially approved of the tax in the ‘90s and many leaders are vocal supporters of I-73, the city feels it should now collect the fee.

Wednesday’s hearing was not necessarily about the whole case, rather it was about an injunction Seals wrote last month that stopped Horry County from collecting the hospitality fee in the “City of Myrtle Beach, For Itself and a Class of Similarly Situated Plaintiffs.”

Myrtle Beach, North Myrtle Beach and Surfside Beach said the judge’s order includes all of them. Horry County’s attorney Henrietta Golding believed it only included Myrtle Beach because governments cannot enter into a class-action lawsuit. The county does not need the consent of the municipalities to collect the fees, she said.

Golding asked that the judge end his injunction and bring a swift end to the lawsuit.

She also argued the judge’s order does harm to Horry County’s budget and could result in increases in property taxes or the laying off of staff if this issue goes on too long. Myrtle Beach has suggested the trial begin at the end of 2020, she said, but she wants to see the trial streamlined.

“The fact is Horry County is in an extremely precarious situation because of this injunction,” Golding said. “We have and are now feeling a dramatic effect because of this drastic action taken by the court that should have never happened. The city does not care, it does not appreciate the affect this injunction has on Horry County.”

The Myrtle Beach attorney John Hoefer said Horry County’s stances are just legal tactics, not substantive arguments about the actual intent of the order.

“The mindset of Horry County is that it doesn’t matter what Judge Seals says, we can do what we want,” Hoefer said. “It’s not a matter of opinion, it is about legal strategy.”

The injunction does apply to all the municipalities, Hoefer said, because Horry County is explicitly in the lawsuit. It is the government being told to stop collecting the fee in the municipalities.

Hoefer ultimately asked the judge to keep the injunction in place in order to protect the citizens of Myrtle Beach and order Horry County to cease collecting the hospitality fee in all of the municipalities until the lawsuit is completed.

And the judge sided with Myrtle Beach.

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