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Mediation and escrow: Here’s the judge’s latest ruling on the hospitality fee battle

Here are the basics on the Horry County, Myrtle Beach lawsuit

Myrtle Beach and other cities are fighting with Horry County over hospitality tax. Myrtle Beach filed a lawsuit over the fee saying it was illegally collected.
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Myrtle Beach and other cities are fighting with Horry County over hospitality tax. Myrtle Beach filed a lawsuit over the fee saying it was illegally collected.

Myrtle Beach, North Myrtle Beach and Surfside Beach must take all new hospitality taxes they collects and place them aside while an appeal from Horry County over the fees is decided.

Judge William Seals Jr. issued that order on Wednesday as he also refused to change his decision that barred Horry County from collecting hospitality taxes. In addition, Seals Jr. ruled that the City of Myrtle Beach and Horry County must enter mediation.

Seals Jr. said he wants the two governments to undergo mediation for the hospitality fee collections lawsuit filed by Myrtle Beach against Horry County. This must be done within the next 20 days, the judge said in his latest order.

According to the order, both sides have agreed to allow Karl A. Folkens of Florence to act as the mediator. The cost for Folkens’ service will be split by Horry County and Myrtle Beach.

“Mr. Folkens has indicated that he is available to conduct this mediation on July 24, 2019, and continuing on August 1, 2019, should that become necessary,” Seals wrote.

Mediation is required in civil suits to see if the sides can settle their issues without needing a trial. The hope is that representatives from Horry County and Myrtle Beach can come to an agreement over where hospitality fees will wind up.

The hospitality tax was created in 1996 to fund road projects and collection was set to expire after 20 years. The county extended the collection, which the city argues was done illegally. Some of the recent funds were designated to help cover construction cost for I-73.

Under the old tax system, hospitality fees were split between county and city governments. But, now with the lawsuits and recent rulings, cities will keep all of the hospitality tax revenue until the lawsuit is resolved.

Earlier this year, Myrtle Beach, North Myrtle Beach and Surfside Beach passed ordinances proclaiming the municipal governments would collect a hospitality fee within their own borders. The cities said they did not consent to the fee being collected beyond the original agreements.

Horry County had previously promised to split the hospitality money revenue between building I-73 and public safety.

The municipality leaders said in a spring press conference it was not their intent to kill I-73, rather stating they wanted to protect the money of their own citizens.

Previous attempts to settle this dispute or at least begin informal mediation have failed to come to any fruition up to this point.

In March, Myrtle Beach sued Horry County over the fee’s collection.

In June, the matter went in front of Seals for the first time. After weeks of debate as to what Seals meant in an initial order, he clarified his that it banned Horry County from collecting the fee in all of the area municipalities until the case is settled.

Horry County has made several attempts to challenge the judge’s order, including filing for an appeal last week. County attorneys asked Seals to delay implementing his order until the appeal was completed.

In Seals’ decision on Wednesday, he declined to stop his order from going into full effect on Aug. 10, saying the county did not give sufficient reasons as to why it shouldn’t.

He did rule, however, that Myrtle Beach and municipalities “escrow” the hospitality money — which means putting the money in the hands of a third party — until the lawsuit is over in case the county’s appeal is successful.

“To cover any difference between the amount of the escrow and any costs and damages the County might incur or suffer in the event the Court’s injunction is reversed on appeal,” Seals wrote.

On Thursday, Seals further clarified his order by adding the case will not move past mediation until the county’s appeal is over.

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