Horry County Councilman Harold Worley wants the public to see the county’s proposed hospitality fee settlement contract before the deal is approved.
But county leaders plan to keep the agreement — which involves millions in public money — hidden until after they vote on the proposed settlement and a judge approves it.
“It’s too late,” Worley said of that process. “It’s too important not to do a public hearing … The people have a right to know what that agreement is before we vote on it.”
Worley said he has been told about what the document contains but he hasn't seen it.
The agenda for Tuesday’s council meeting states that county council will go behind closed doors to discuss the proposed settlement with Grand Strand cities and the county’s contract with the S.C. Department of Transportation (DOT) for I-73.
The two issues are related because county leaders want to use hospitality fee revenues to pay for work on the interstate and they insist they can’t fulfill their contract unless the cities contribute to that effort. County leaders had voted to cancel the DOT contract on Dec. 1 if a compromise with the cities could not be reached. Tuesday is the last regular county council meeting before that deadline.
The money involved comes from the county’s hospitality fee, a 1.5 % levy traditionally collected on all restaurant meals, hotel stays and admission tickets sold countywide.
Businesses charge the fee to customers, then remit that money back to the county. Historically, the fee has been used to pay for road projects such as S.C. 31 and S.C. 22.
But Myrtle Beach officials became upset with county leadership after the county announced plans to spend some of the money on I-73 and a portion of it on the county’s public safety departments. City officials objected to the county collecting money in the city’s borders and using it to pay for county services. So Myrtle Beach sued the county in March. Other area municipalities soon joined that fight, and a judge ruled that the county could not collect the hospitality fee inside municipal limits while the lawsuit is pending.
But after a 10-hour mediation session on Oct. 31, county officials announced that they had a tentative agreement with the cities to share the hospitality fees and jointly pay for I-73.
For the deal to become reality, Horry County Council Chairman Johnny Gardner said all the councils involved must vote in favor of it. A mediator would then present the agreement to a judge for approval. The chairman expects the governments to vote on the deal this month and he hopes the court process will be over by the year’s end.
But Gardner, who is an attorney, doesn’t expect the county to release the settlement agreement before it’s approved.
"I don’t think there's a mechanism available for that," he said. "Because this is a mediated, recommended settlement, it’s still confidential so it can only be revealed to the board or to council in executive session. … We absolutely have no choice right now."
Worley disagrees. He doesn’t have a problem with council members getting a briefing on the settlement behind closed doors, but he doesn't want to vote on the deal until the document is released to the public and citizens can share their views on the proposal with the council.
"So everybody knows what’s in it,” he said. “Let the people see it before they vote on it."
This is not the first time Worley has publicly criticized the proposed settlement. Although he was not part of the mediation discussions and refused to participate in county council’s last executive session on the matter, Worley has expressed concerns about the legal fees for the case.
Specifically, he’s worried about a request from the cities that the case be certified as a class action, a type of litigation that involves a plaintiff representing a larger group. Although they can vary, attorney fees are customarily one-third of a settlement.
In the hospitality fee lawsuit, the treasurer’s office is holding more than $18.5 million that county officials have said would likely go to the cities under the proposed deal. That money was collected between the time the road debt was paid off and a judge's ruling that the county had to stop collecting the fee in the city limits.
Worley said he wouldn’t support an agreement that would lead to $6-7 million of taxpayer money going to legal fees. During a council meeting earlier this month, he described the arrangement as a deal that could “rape the taxpayers.”
Jay Bender, an attorney and expert on the state's Freedom of Information Act (FOIA), said releasing the proposed contract before a vote would give the public a chance to weigh in on the issue.
"Under mediation rules the process and results are to be confidential, but such confidentiality is inconsistent with the expenditure of public funds," he said via email. "I would think public disclosure of the proposed settlement would serve the FOIA’s goal of preventing secret government activity. Disclosure in advance of approval provides a meaningful opportunity for public comment, and that may be the thing council members fear most."
Although the full settlement proposal hasn’t been released, a document obtained by myhorrynews.com shows how local governments plan to divide the hospitality fees, which are projected to annually generate nearly $44 million countywide.
Under the proposed deal, the city of Myrtle Beach would receive $12.8 million per year in hospitality fees (the city collects the most fee revenue of any local government). Horry County would get $8.5 million. North Myrtle Beach ($5.3 million), Surfside Beach ($1.1 million), Conway ($1.1 million), Aynor ($133,272), Loris ($160,288), and Atlantic Beach ($46,463) would each receive a share as well.
The rest of the money collected (more than $14.5 million) would go toward I-73, and officials expect hospitality fee revenues to continue growing.
Tuesday’s council meeting is scheduled to begin at 6 p.m. inside the Horry County Government & Justice Center. Gardner said the council will vote on the DOT contract Tuesday but not the settlement. He said he had hoped the council would vote on the settlement, but all the municipalities and the county have to vote on the deal at the same time and that process is still being coordinated.