Is Myrtle Beach misspending millions? The latest on Air Force Base lawsuit
Myrtle Beach potentially misused millions of taxpayer dollars, according to issues identified by an auditing firm retained by Horry County and Horry County Schools in its joint lawsuit against the city.
The lawsuit, centered around redevelopment of the former Air Force base, has been ongoing for nearly a year. The county and school district allege the city and Myrtle Beach Air Force Base Redevelopment Authority are misusing tax increment financing and taxpayer funds on a project the county and school district argue has already been completed.
The school district on Monday filed a motion to compel, alleging that the city has obstructed its ability to access requested data during the discovery period, and asking the judge to grant an extension to the discovery timeline as a result.
The district notes that the city has produced more than 39,000 pages of documents in response to their discovery requests, but argues that those documents aren’t organized in a helpful way and some of those documents are in a format that will needlessly require extra time to extract data, according to court filings.
Several documents are attached as exhibits as part of the district’s latest motion including a letter to the judge from McAbee, Schwartz, Holliday & Co., a Spartanburg-based accounting and consulting firm hired by the county and district to audit the city and authority’s financial records related to the TIF project.
Tax revenues have been frozen on properties within the former Air Force base 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 firm’s letter identifies three potential issues in its review of the documents provided by the city: more than $2.3 million of TIF funds spent under the label “Community Development” that don’t match the city’s comprehensive annual financial reports; more than $1.1 million transferred from the TIF fund for a 2012 city bond not related to the redevelopment effort; and almost $10 million listed as “2016 Special Allocation” that appear in excess of what’s needed to fulfill its remaining 2016 TIF bond obligations.
“From the limited information it has produced since we last spoke to Your Honor, the City appears to be using TIF monies—that is, taxpayer dollars—to service City-only debt,” an attorney representing the school district wrote in an email to the judge and his clerk. “Horry County taxpayers have a right to know this.”
The firm’s letter notes that they need further requested information in a usable format from the city to fully evaluate these potential issues.
Attorneys for all parties involved held a a telephone status call with the judge regarding discovery issues Oct. 17 and were scheduled for a follow-up last Friday, but the city asked for that call to be continued after seeing the firm’s letter to the judge.
John Hoefer, an attorney representing the city in the litigation, emphasizes in an email to the judge and his clerk that the accounting firm isn’t a party to the case and its claims are unverified, calling into question its reliability and admissibility.
“In addition, the City takes issue with the characterization of the litigation by the author who, I would note, draws conclusions while at the same time asserts that he lacks sufficient information to proceed in an extra‐discovery process,” Hoefer wrote.
In emails exchanges presented as exhibits, Hoefer and other counsel for the city continually take issue with the assertion that they’ve not been cooperative during discovery and argue that the reason so many documents were provided is because the plaintiffs’ requests were “exceedingly broad.”
“Your (assertion) appears to be a manufactured excuse to extend Judge Mullen’s 90‐day discovery deadline to determine whether the Plaintiffs have evidence to support their claims,” an attorney representing the city wrote in an email to attorneys representing the county and school district.
Hoefer wrote in a separate email that if the school district files a motion to compel, the city would counter with a motion for sanctions.
City spokesman Mark Kruea said the city is in the process of writing a response to the latest motion, which they believe is frivolous and contains factual errors.
Spokespeople for the county and school district both declined to comment, citing policies on pending litigation.
The lawsuit remains ongoing with no court date set. In August the judge denied the plaintiffs’ motion for preliminary injunction, which would have required the city and authority to stop using the TIF fund beyond what was necessary to pay debt service on the 2016 bond. The judge also is still considering the defendants’ motion to dismiss the case.
Horry County and Myrtle Beach are engaged in a separate lawsuit regarding a hospitality fee with plans for the two sides to engage in mediation Thursday.
This story was originally published October 29, 2019 at 4:47 PM.
