Horry County, Myrtle Beach reach tentative deal in hospitality tax feud
Horry County and Myrtle Beach reached a tentative compromise over who is authorized to collect a hospitality fee within municipal borders.
Following 10 hours spent in closed-door mediation, officials said a decision was reached, though the terms of the agreement were not disclosed pending approval by both governments’ councils.
The deal moves Myrtle Beach and county officials a step closer to ending an eight-month legal dispute.
“We’ve made significant progress today and what we’re going to do next is go back and recommend a settlement to our respective parties,” Horry County Council Chairman Johnny Gardner said. “Three full days of work, a lot of progress was made, a lot of help from a lot of wise people, and we’re going to recommend a resolution.”
Representatives from both governments met at the McNair Law Firm on Thursday to discuss a compromise over how a tax on hospitality services within municipal borders would be dispersed.
With a decision now made, it requires approval from both governments’ councils. A judge will then need to rubber stamp it before it’s officially in place. Failure to come to terms means the matter would keep the tax fight in the court system.
“There’s always a possibility that we go back to mediation (if a decision) isn’t approved,” Gardner said. “But we feel comfortable after three big days of mediating this case, we think we have a resolution that we’ll recommend to the full council.”
There were no elected Myrtle Beach officials at the meditation on Thursday. City representatives did not speak after the tentative settlement was reached.
Karl Folkens, from Florence, was chosen to mediate all three sessions and is trying to facilitate a compromise. Mediation is a mandatory part of the pretrial process for a civil case.
Thursday marked the third day of mediation between the sides, though they have already exceeded the minimum amount of time they must spend in sessions. Collectively, officials have spent about 30 hours in mediation, with the chance of additional mediation sessions in the future.
How we got here
Horry County’s collection of 1.5 percent of the hospitality tax stemmed from a 1996 vote 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 without Myrtle Beach’s renewed consent.
In 2018, county officials voted to dedicate the hospitality funds toward public safety and building Interstate 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.
In March, Myrtle Beach, on behalf of itself and the other municipalities, sued Horry County over its collection of the hospitality tax.
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, a judge ordered Horry County to cease collecting the fee in the municipalities. The judge allowed the municipalities to collect the fee, but they must keep the revenue in a third-party trust.
Horry County then appealed that decision. The appeals court told the municipalities they could continue collecting the hospitality fee during the lawsuit.
In August, Gardner said he would still like to see a deal reached sooner to avoid a lengthy appeals and trial process.
This story was originally published October 31, 2019 at 8:05 PM.
