Could there finally be a settlement in the Horry County hospitality fee case?
Horry County Council plans to hold a special virtual meeting at 10 a.m. Friday to discuss the latest developments in the hospitality fee lawsuit, council chairman Johnny Gardner said. He said council members will likely be briefed by their attorney in executive session and could vote on the deal afterwards.
“I’ve been hopeful since Day 1,” Gardner said. “If we could put something together this week or next, that would be great for Horry County.”
The county and Grand Strand cities thought they had an agreement worked out last year, but the S.C. Supreme Court threw out their settlement proposal in December, forcing the parties back to the negotiating table.
The high court’s rejection of the settlement stunned county officials, who were preparing to send out notices to city businesses reminding them to begin charging the 1.5% fee on restaurant meals, hotel stays and admissions tickets on Jan. 1. They had to scrap all those plans and local governments throughout the county had to recalculate their budgets without the millions tied up in the litigation.
Created in the 1990s, the hospitality fee was collected countywide until a judge forced the county to stop collecting the fee in the municipalities in 2019.
The fee was originally created to pay for road projects such as S.C. 22 and S.C. 31, but county officials continued collecting the fee once the road debt was paid off. They wanted to use that money for building I-73, a proposed interstate that would connect the Grand Strand with I-95. They also hoped to set aside some money for public safety services. That idea frustrated Myrtle Beach officials; they did not want the county collecting a fee inside their borders and using it to pay for county services.
Other local cities sided with Myrtle Beach. That dispute prompted the lawsuit.
But in August the county and the cities agreed to settle the case. Under the proposed settlement, each city would receive the money collected within its borders minus a 1% administration fee. The county would receive the fees collected in the unincorporated areas. All of the parties agreed to those terms.
The only issue was what should happen with the $19 million that was collected in the cities between when the original road debts were paid off and the moment the court forced the county to stop collecting the fee in municipal borders.
The county had already agreed to give that money to the cities, but the two sides disagreed on how it should be distributed.
Under the cities’ proposal, a “common fund” would be established to allow people who had been unlawfully charged the fee to present receipts showing that they were due reimbursement. After six months, the money left over would be divided evenly between the cities and the S.C. Bar Foundation, the charitable arm of the S.C. Bar Association.
The county, however, wants to provide all of the money to the cities based on where the funds were collected.
Although the two sides agreed to all the terms, they asked the court to render a final decision. In October, a circuit court judge agreed with the county’s position. Myrtle Beach’s attorneys then filed an appeal and asked the S.C. Supreme Court for an expedited review of the case.
That led to the December opinion.
The high court refused to weigh in on the $19 million question. Instead, the court said the two sides could resolve the issue.
“Settlement is a voluntary matter between the parties and can reach far beyond the powers of the courts,” the justices wrote. “Because a settlement agreement creates an enforceable contract, the parties must agree on all of the material terms. … Here, the parties have failed to agree on all the material terms of the settlement, specifically, the residual funds issue.”
The court’s ruling was a particular blow to the county, leaving it in essentially the same place it was when a circuit court judge initially forced the county to stop collecting the fee.
Some county officials have said they are ready to stop wasting money on the legal fight and move on.
The terms of the latest settlement proposal have not been released, though the obvious focus of the talks has been the distribution of the $19 million. If the county and Myrtle Beach agree to the new settlement terms, the proposal would be presented to other Grand Strand cities and towns for their approval. Every party would have to sign off on the terms to finalize the deal.
Myrtle Beach City Council also scheduled a special meeting for 10 a.m. Friday.