‘We’re still negotiating’: What Horry County’s vote means for the hospitality fee lawsuit
The hospitality fee lawsuit between Myrtle Beach and Horry County isn’t over.
All but two municipalities approved the agreement to end the hospitality fee lawsuit, but Horry County Council decided at the last minute it wanted to make a major change.
The initial deal was met after hours of pre-trial mediation in October. It reserved money for I-73, raising S.C. 22 and divided the money up among the governments in Horry County.
After nearly three hours of debate in a special meeting Monday night, County Council voted 7-5 to approve the plan with two amendments.
Myrtle Beach, North Myrtle Beach, Aynor, Atlantic Beach and Surfside Beach all approved the plan. Loris and Conway did not vote.
The first change was minor — all municipalities must approve the plan before it can be enacted. The City of Loris and Conway were the only municipalities that did not vote on the agreement.
The second is that no money from the hospitality fee can go to pay upwards of $6 million in the cities’ attorneys’ fees. This amendment changes the game and requires Myrtle Beach and the other municipalities to vote again.
“This is an agreement that couldn’t really be amended,” Horry County Council Chair Johnny Gardner said. “So we’re still negotiating.”
Myrtle Beach Mayor Brenda Bethune, in a statement released Tuesday afternoon, expressed her disappointment, asserting that county officials were not met with any surprises or new information in the proposed settlement agreement heading into Monday’s vote.
“The City of Myrtle Beach voted Monday to settle the suit with Horry County, as did Atlantic Beach, North Myrtle Beach, Aynor and Surfside Beach,” Bethune said. “Not only are we disappointed by Horry County Council’s decision last night, but we are dismayed by some of the assertions made which are factually inaccurate. “
Attorneys’ fees
Less than a week after the compromise to end the hospitality fee lawsuit was made on Oct. 31, the tone changed after Council Member Harold Worley said he was against the deal because it included millions for attorneys’ fees.
The mediation deal allows Myrtle Beach and the other municipalities to use up to one-third of nearly $19 million in hospitality fees to cover legal fees.
While the county can’t dictate how cities spend their money, Worley said it was a bad deal for his North Myrtle Beach constituents.
“This thing could end up being in the 8 million range for six months of work. I think that’s awful,” Worley said. “I’m saying its a bad deal.”
Gardner said if the cities really wants to pay their attorneys millions of dollars, they’ll find a way to do it. He just doesn’t think it should come from hospitality money.
The amendment was made by Council Member Dennis DiSabato.
“The city has to figure out what’s more important, settling the lawsuit or paying their attorneys,” DiSabato said.
It’s also unclear if hospitality fee money can be spent on the attorneys’ fees since S.C. law requires the money to be spent on tourism.
“Hospitality fees are supposed to be spent on tourist-related activities,” Gardner said. “It says nothing in that law book about paying the hospitality fee to lawyers.”
Horry County Council members were not the only ones troubled about paying the attorneys’ fees. Town of Surfside officials narrowly approved the original deal early Monday evening. The three dissenting votes, which included three newly elected officials, including Mayor Bob Hellyer, cited legal fees as the reason for their opposing vote.
“I didn’t personally totally agree with it so I couldn’t vote positive to it,” Hellyer said.
I-73
Horry County staff said the South Carolina portion of I-73 in total would cost in excess of $2 billion. That figure does not include the flood proofing of S.C 22, but the highway will be a part of I-73 if it is completed.
The deal in mediation would generate about $14.5 million annually toward I-73. That is a drop in the bucket compared to what is needed to actually build the road, Worley said, and completing an interstate project is unrealistic without higher government support.
“It is time for the federal government, it’s time for the state government to start up and help Horry County build this road. We can’t do it alone. They have to help us,” Worley said.
In the summer of 2018 before the lawsuit, Horry County committed to spending $25 million on I-73 with the hope of attracting state and federal donors. Since that time, Council Member Al Allen said not one dollar has been allocated to I-73 outside of the Horry County budget.
Allen isn’t inherently against I-73, but he doesn’t want Horry County to pay for it alone.
“If I have to be called shameful for looking out for the taxpayers of Horry County, I’ll wear that badge proudly,” Allen said.
Additionally, Worley is worried that giving the South Carolina Department of Transportation money means local taxpayers will lose control of a road for which they paid. He is specifically worried that the state will make I-73 a toll road, which will make locals pay twice.
The compromise doesn’t absolutely force the county to fund I-73, it just provides a framework for how it can be done, DiSabato said. If the hospitality fee is not used toward the interstate, it will be refunded back to the various municipalities.
During Hurricane Florence, S.C. 22 flooded, which contributed to the limited road access to eastern Horry County. Assistant Administrator Randy Webster said raising S.C. 22 would greatly improve safety during a flooding event.
The potential of having funds to make Horry County safer during the flood was a strong reason to approve the mediation deal, council member Tyler Servant said.
In Allen’s district, Aynor Town Councilman Paul McCracken voiced his opposition, stating that “he’s never been a fan of I-73.” He also is worried about using local money on statewide projects.
“I think our town doesn’t need to be sending money for I-73,” he said. “I feel like our little bit of money needs to stay at home.”
All need to agree
Depending on how the hospitality fee lawsuit ends, Horry County could owe $54 million to the municipalities to cover past fee collections. The hospitality fee and its revenue could simply be ended or I-73 lose its local funding.
And if not everyone agrees to the compromise, the matter could be brought up later if Conway or Loris decides they want to sue over the hospitality fee like Myrtle Beach did on March 20.
So even if Myrtle Beach resolves its lawsuit against the county, if Conway and Loris do not agree to the terms, they could demand upwards of $19 million.
It is not a guarantee that would happen, but it would be a legal risk.
“It would be silly for us to settle a case when we still have limited exposure,” DiSabato said.
If the municipalities do not agree to the amended terms, then the lawsuit will continue to the state Supreme Court, where the county has requested it settle an appeal.
If the municipalities accept the amended deal, the lawsuit is over if a judge approves.
While there is no confirmation on when the other municipalities could meet to vote on the altered agreement, Myrtle Beach City Council will hold a special meeting at 10 a.m. Thursday to discuss an action plan moving forward
“My Council and I remain resolute in our desire to reach a settlement that’s in the best interest of all Horry County residents, and we will do so in a professional and rational manner,” Bethune said.
Sun News Reporters Anna Young and Jason Lee contributed to this report.
This story was originally published December 17, 2019 at 7:19 AM with the headline "‘We’re still negotiating’: What Horry County’s vote means for the hospitality fee lawsuit."
