An Horry County councilman on Tuesday blasted the proposed hospitality fee deal between the county and Grand Strand cities, saying the arrangement would provide more than $6 million in legal fees to the cities’ lawyers.
Councilman Harold Worley said the tentative agreement that the cities and the county reached last week is a “bad deal.” Although Worley was not present for the mediation between the two sides, he said he had been told about the potential settlement.
“I don’t represent lawyers,” he said. “And I don’t like what I’m hearing. … There was never intended to be a settlement. It was intended to be a class [action] and that way they can rape the taxpayers. It’s awful.”
The legal fight between the cities and the county started earlier this year when Myrtle Beach leaders decided they no longer wanted the county collecting a 1.5 % hospitality fee inside city limits on restaurant meals, hotel stays and admission tickets.
Over the years, hospitality fee revenues have been used to pay for major road projects, including S.C. 31 and S.C. 22. Once the debt for the highways was paid off, county officials announced plans to spend some of the tax money on I-73 and improving the county's public safety services. But Myrtle Beach officials became upset that the county would use money collected inside the city for county services. North Myrtle Beach and Surfside Beach leaders agreed with Myrtle Beach, which sued the county in March. Earlier this year, the cities approved new fee structures that did not require them to share similar revenues with the county.
So far, the cities have prevailed in court and the rulings have prohibited the county from collecting its fee inside municipal borders, though the county still charges the fee in the unincorporated areas.
So where is all the concern about legal fees coming from?
Worley said he's referring to the taxpayer money that was collected in the cities between the time the road debt was paid off and this summer — when the county stopped charging the fee in municipal borders.
That pot holds more than $18.5 million, according to public records. Worley maintains the money would go to the city as part of the settlement, but the city's lawyers would collect between $6 and $7 million of it if the case is certified as a class action.
The councilman is also frustrated because both sides had discussed a compromise that would allow the 1.5 % fee to continue to be collected countywide with .5% of the revenues earmarked for the construction of Interstate 73. Each jurisdiction would then be allowed to keep the remaining 1% collected inside its borders for the local government.
“What they’re proposing, we have said all along we agree to that,” Worley said. “We will give you every nickel of your money. … I will not be a party to pay attorney fees to the tune of $7 million, plus or minus, when … there was no argument. The only argument all along has been what? Attorney fees."
Councilman Johnny Vaught added that the county's proposal had been on the table since the spring.
The cities and the county reached a tentative agreement after 10 hours of mediation on Thursday, their third day of attempting a settlement.
During Tuesday’s council meeting, county attorney Arrigo Carotti cautioned Worley that all the parties were bound by a confidentiality agreement. Worley noted that he wasn’t in the mediation, even though some other councilmen were.
After Worley’s monologue, council members went into a closed-door session to discuss the proposed hospitality fee deal, but Worley declined to join them.
County leaders have been particularly concerned about the hospitality fee case because they signed a contract with the S.C. Department of Transportation (DOT) in late 2018 to pay for work on I-73.
County officials had planned to use hospitality fee revenues to pay for $12.4 million worth of projects in the first year of the DOT contract as well as tens of millions more in subsequent years.
The contract is also a critical part of a federal grant application the DOT submitted for I-73 funding. DOT Secretary Christy Hall has warned that the state could be forced to withdraw its request for the $348 million grant because of uncertainty about how much local tax money would be available for the I-73 project.
County leaders insist they don’t have enough money to pay the DOT for work on the proposed interstate without additional city funding.
On Aug. 28, county council voted cancel the DOT contract in 90 days unless the county reaches an agreement with local municipalities to jointly fund the road.
But last month, Gov. Henry McMaster met with leaders from the county and the cities to see if there was a way to pay for I-73. That led to Thursday’s marathon mediation.
Horry County Council Chairman Johnny Gardner said all of the cities and the county agreed to consider the proposed settlement. If they each vote in favor of the deal this month and a judge signs off on the settlement in December, the county could begin collecting the 1.5 % fee countywide as early as February.
However, until Tuesday’s meeting few details of the proposed deal had been made public.
After the council's executive session Tuesday, Gardner said he couldn't discuss the terms of the proposal.
"It's a pretty good deal," he said.
When asked about Worley's comments, Gardner said Worley could have been briefed on the matter with other council members.
"Street talk is what it is," he said. "It's hearsay."
Myrtle Beach spokesman Mark Kruea said he couldn’t discuss the settlement because he didn’t know what had been proposed.
If the two sides can't agree to on the terms, the S.C. Supreme Court has agreed to hear the case.
Reporter Janet Morgan contributed to this story.