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Hundreds gather on the 2nd Avenue Pier in Myrtle Beach for the Grand Strand Baptist Church Easter Sonrise Service on Sunday. The church is located at 350 Hospitality Lane near Tanger Outlets and the Myrtle Beach Speedway. Photo by Janet Morgan/janet.morgan@myhorrynews.com

Horry County and Myrtle Beach officials reached a tentative agreement in their dispute over hospitality fees Thursday, at least temporarily preserving a path to pay for Interstate 73.

The discussion marked the third day the two sides had discussed the matter. After meeting for nearly 10 hours at the McNair Law Firm in Myrtle Beach, county officials said the two sides had come to terms on a settlement proposal. Neither side would provide any details about the proposal or the mediation, which was held behind closed doors, but county leaders said Horry County Council and the councils of Grand Strand cities will vote on the proposed settlement, which could then be presented to the court for approval.

“We made significant progress today,” Horry County Council Chairman Johnny Gardner said, adding that he wanted county leaders to vote on the settlement in November. “We want to get this thing done as soon as possible.”

The legal fight between the cities and the county began 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. North Myrtle Beach and Surfside Beach leaders agreed with Myrtle Beach, which sued the county in March. 

So far, the cities have prevailed in court and the rulings have prohibited the county from collecting its fee inside municipal borders. The county still collects the fee in the unincorporated areas.

The cities maintain the hospitality tax agreement they supported in the 1990s expired in 2017 and the county never obtained their permission to extend it. They have also objected to county officials’ suggestion that some of the money be used for improving public safety services in the county.

Earlier this year, the cities approved new fee structures that did not require them to share similar revenues with the county.

County officials have argued that the traditional fee system brought in over $12 million more per year than the cities' new funding method. They also maintain that both the county and the cities should help pay for the proposed interstate.

County leaders 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 earlier this 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.

“We told him we would go back to the drawing board,” Gardner said.

The chairman is also optimistic that DOT would be willing to extend the contract deadline if there is the potential for an agreement on this issue.

“Hopefully we’ll be able to get some money for I-73,” Gardner said.

Myrtle Beach spokesman Mark Kruea cautioned that nothing has been finalized.

"The negotiators made progress in their discussions, but it's too early to say whether any agreement has been reached," he said via email. "The next step is to take the idea to the respective councils and the other municipalities for their consideration."

If the two sides can't agree to a settlement, the S.C. Supreme Court has agreed to hear the case. 

Contact Charles D. Perry at 843-488-7236

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I'm the editor of myhorrynews.com and the Carolina Forest Chronicle, a weekly newspaper in Horry County, South Carolina. I cover county government, the justice system and agriculture. Know of a story that needs to be covered? Call me at 843-488-7236.

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