Horry County, Myrtle Beach, others reach deal in lawsuit over hospitality fee dispute
Horry County, Myrtle Beach and other municipalities reached a deal in the long-standing hospitality fee lawsuit.
The agreement ends 18 months of fighting between the groups over a fee initially designed to fund road projects.
Last year, Myrtle Beach sued Horry County over the collection of the fee and raised issues about it being used to fund Interstate 73. The city also voiced concerns about the tax being extended after it expired, without Myrtle Beach’s consent.
Other Horry County municipalities then joined Myrtle Beach with its concerns.
The deal was announced late Friday.
According to the agreement, the county will resume collection of the tax and will distribute it to the municipalities each month.
There is about $19 million collected from the municipalities between 2017 and the lawsuit. Half the money will be distributed back to the cities. A judge will decide the other half’s distribution.
Fight over tax
Myrtle Beach sued Horry County in March 2019 over collection of the hospitality fee. Myrtle Beach officials argued in the initial filing that since 2017 the county “wrongfully imposed, collected, retained and used revenues derived from the 1.5 percent hospitality fee.”
The fee is collected from hotels and other accommodations.
The lawsuit stated the 1.5 percent hospitality tax stemmed from a 1996 program to help short- and long-term transportation needs. As part of that program, a tax would apply to Horry County municipalities called a hospitality fee, the filing states. The money funded a road improvement program throughout the county.
In 2018, the Horry County Council approved $30 million from the fee towards the construction of I-73.
However, city leaders argued they did not agree to the plan nor taxes being collected after 2017.
The lawsuit did not specifically name other Horry County municipalities - such as Surfside Beach, Conway and North Myrtle Beach - as plaintiffs, but grouped them together as similarly situated plaintiffs.
That lawsuit sparked a months-long legal fight, often in public, between city and county leaders.
In June 2019, a judge appointed to oversee the case sided with Myrtle Beach and issued an injunction that barred Horry County from collecting the fee inside of municipality limits. However, the cities could not spend the money collected.
At one point, Horry County and Myrtle Beach officials met behind closed doors for hours and announced they had reached a settlement in the case. However, concerns over using the hospitality tax to cover Myrtle Beach’s $6 million in attorney fees led to the deal falling apart.
As the sides neared appearing before the South Carolina Supreme Court on the case, they again met and tried to reach a settlement. But, confusion reigned following simultaneous meetings by both governments to approve a deal.
Myrtle Beach voted for the agreement, but Horry County voted to let the court decide how the money would be distributed. Even as the sides argued before the high court, there was disagreement with Horry County’s attorney saying that the deal was not complete.
The city and county were waiting for the Supreme Court to issue a ruling in the case, which now appears to be moot given Friday’s announcement.
This story was originally published September 4, 2020 at 5:52 PM with the headline "Horry County, Myrtle Beach, others reach deal in lawsuit over hospitality fee dispute."
