Myrtle Beach hospitality fee

Myrtle Beach will be collecting the new hospitality tax as of July 1 while other Horry County cities have questions. Photo by Janet Morgan/janet.morgan@myhorrynews.com

Horry County Council on Tuesday unanimously voted to cancel its I-73 contract with the S.C. Department of Transportation.

Citing an inability to reach an agreement with Grand Strand cities to jointly pay for the interstate, council members opted to provide written notice to the DOT that it would cancel the contract in 30 days. 

“If Horry County is the only person or only entity willing to kick in money, it’s never going to get done,” Horry County Council Chairman Johnny Gardner said. “We’ve kicked the can down the road long enough. … It’s not going to hurt anything to kill it tonight.”

Council members said they could draft another contract if they could come to terms with the cities. Some also said they want state lawmakers to address the issue with legislation. On Wednesday, state House members can prefile bills and some county leaders said they expect lawmakers to file a bill addressing this issue.

“It’s time that the delegation step up to fix this problem,” councilman Harold Worley said. “They can save I-73.”  

For nearly an hour Tuesday night, council members stayed behind closed doors discussing two issues: the DOT contract and a proposal to settle the cities’ lawsuit against the county over hospitality fees, the 1.5% levies the county has traditionally collected on meals, hotel stays and admission tickets. The county had planned to use that money to pay for the I-73 contract, but Myrtle Beach officials sued the city in March, arguing that the county was illegally collecting the fee in the city limits. North Myrtle Beach and Surfside Beach also objected to the county collecting the fee in municipal borders. With that case being unresolved, county leaders said they had to make a decision Tuesday.

“I want to send a message loud and clear to the municipalities,” Worley said. “If you want to get on board and help us with I-73, good. And if you don’t just say so and let the delegation take care of the problem.”

County leaders have been particularly concerned about the hospitality fee case because they signed a contract with the DOT in late 2018. 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. 

Businesses charge the hospitality 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. 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.

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.

However, some council members have criticized the proposed settlement.

At a council meeting earlier this month, Worley expressed concerns 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. 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. He described the arrangement as a deal that could “rape the taxpayers.”

 

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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