Hospitality fee: After municipalities agree to end lawsuit, Horry County makes major change
A deal that would have put an end to the hospitality fee lawsuit between Horry County and Myrtle Beach will continue on after county officials amended the agreement.
Myrtle Beach City Council unanimously approved on Monday a compromise reached in mediation at the end of October. Horry County Council voted 7-5 to approve the deal but made an alteration — in which all municipalities would again have to agree — that wouldn’t let any funds go toward legal fees.
The change forces Myrtle Beach and other municipalities to take a vote on the altered deal, one that does not include upwards of $6 million in legal fees.
The deal would have split the revenues collected within municipal limits. Sixty-five percent would have been collected by Myrtle Beach to use for any lawful purpose, while the remainder would have funded Horry County’s portion of I-73 and widening S.C. Highway 22 to address flooding issues, city officials said.
“This council has been very diligent in working towards a mediation settlement that’s best for our residents,” Mayor Brenda Bethune said Monday night. “What we have before us is going to be great for all county residents, not just the City of Myrtle Beach.”
Surfside Beach, Atlantic Beach, North Myrtle Beach and Aynor officials also met in special meetings on Monday to approve the plan. Loris did not schedule a meeting, and while Conway Council met, the hospitality fee lawsuit was not on the agenda.
Myrtle Beach is the only city government explicitly listed on the lawsuit, but it filed it on behalf of “similarly situated plaintiffs” that has included all the municipalities in past rulings.
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 has appealed that decision to the state Supreme Court.
In August, Gardner said he would still like to see a deal reached sooner to avoid a lengthy appeals and trial process. A deal was made on Oct. 31 after 20 hours of mediation.
Exact details of the plan were kept private, but Horry County Council Member Harold Worley said at a fall council meeting the deal was bad for taxpayers. He described the deal as requiring millions to be paid in legal fees and very similar to an offer made in March that gave municipalities hospitality money minus funds to build I-73.
The mediation deal was not acted upon for over a month. During November, local representatives to the South Carolina Legislature filed a bill that would give the county control over the collection of the fee with the requirement the money go to I-73.
On Dec. 13, it was announced the governments would finally vote on the mediation deal at the same time.
This story was originally published December 16, 2019 at 9:04 PM.
