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Myrtle Beach, Horry County meet behind closed doors to reach hospitality fee agreement

Horry County and Myrtle Beach met to settle their differences on Thursday in the first round of scheduled mediation.

The mediation process took over 13 hours, and the two parties will meet again on Aug. 10 at 9 a.m.

Representatives from both governments gathered on Thursday in the Myrtle Beach Convention Center on North Oak Street to see if a compromise could be met. Karl Folkens, the mediator from Florence, has assisted in over 4,200 sessions, according to his website.

“I’m tired,” Horry County Chairman Johnny Gardner said.

Mediation was held behind closed doors and out of the public eye. While starting in the same room, Folkens divided the two sides into separate rooms and spent time with each. Besides the occasional breaks, the representatives largely stayed in their respective areas.

Gardner said both sides worked hard during the 13-hour session, but more time is needed to work out the differences.

Hypothetically, if both Myrtle Beach and Horry County agree to terms, then this could mark the end of a lengthy dispute over hospitality tax collections. Failing to reach an agreement during the mediation process will most likely mean the matter will go back to Judge William Seals Jr. for a trial.

How we got here

Horry County’s collection of 1.5 percent of the hospitality tax stemmed from a 1996 program to help short-and long-term transportation needs. As part of the program, the tax called a hospitality fee would apply to Horry County municipalities. The money funded a road-improvement program throughout the county.

With the program originally set to expire in 2017, it was extended in perpetuity by Horry County Council that same year without Myrtle Beach’s consent. In 2018, county officials voted to dedicate the hospitality funds toward public safety and building I-73.

Council’s decision resulted in Myrtle Beach, North Myrtle Beach and Surfside Beach all passing ordinances earlier this year allowing them to collect the tax and barring the county from collecting any hospitality taxes the municipalities collect within their borders starting July 1.

In March, Myrtle Beach, on behalf of itself and the other municipalities, sued Horry County over its collection of the hospitality tax, a uniform tax imposed on sectors of the hospitality industry, including prepared meals, food and beverages sold in or by establishments.

As part of the suit, the city claimed the county needed consent from municipal leaders to continue to collect the tax within city limits after the program expired. Myrtle Beach asked the judge to prevent the county from collecting the tax as the lawsuit was heard.

While county officials argued Myrtle Beach was going to destroy any plans to construct I-73, municipal leaders in a May news conference said the purpose of the lawsuit was about home rule and protecting taxpayers, not an attempt to kill I-73.

Since then, both Horry County and Myrtle Beach have continued to file motions to take control of the tax. In June, Seals ordered Horry County to cease collecting the fee in the municipalities. He allowed the municipalities to collect the fee, but they must keep the revenue in a third-party trust.

If mediation proves unsuccessful, the next matter will be resolving an appeal Horry County filed asking a higher court to reverse Seals’ order and allow the county to continue collecting the fee.

Once the appeal is over, then the lawsuit can have its day in court.

Check myrtlebeachonline.com for ongoing coverage of the hospitality fee dispute.

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