Differing opinions may lead to different tax allocations, unravel I-73 funding

Horry County Council plans to cancel its I-73 contract with the state Department of Transportation next week, county officials confirmed Friday.

County leaders said they don’t have the money to pay the DOT for work on the proposed interstate because of their ongoing dispute with Grand Strand cities over hospitality fees. A special council meeting has been scheduled for Wednesday to vote on terminating the deal.

“I don’t see how we have any choice,” county councilman Johnny Vaught said. “We’ve delayed it as long we could. … As far as I’m concerned, they (the cities) have killed I-73.”

The contract's demise seemed all but certain when county and city officials hit an impasse earlier this month during mediation for the cities’ lawsuit against the county over the fees. 

So far, the cities have prevailed in court and the rulings have prohibited the county from collecting its 1.5 percent fee on restaurant meals, hotel stays and admission tickets inside municipal borders.

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.

In June, DOT Secretary Christy Hall warned that the state could be forced to withdraw its request for a $348 million federal grant for I-73 because of uncertainty about how much local tax money would be available for that project. 

State officials told the county a decision would need to be made by Oct. 1, but the county had to give the DOT that notice at least 30 days in advance. 

County councilman Al Allen said the situation could have been avoided if he and other county officials had handled the DOT contract differently when they approved it last year.

“There should have been a little more due diligence done on it and the cities invited in,” he said. “Under the previous administrator and the previous council chairman, I thought it was kind of rushed through the council. I think if we’d have took our time a little more … we might have had a better outcome all the way around. I think [I-73] is DOA.”

Since the contract was approved last year, Johnny Gardner has replaced Mark Lazarus as council chairman. Chris Eldridge left the administrator’s position in April and Steve Gosnell, who had been an assistant administrator, signed a contract this month to become the county’s new administrator.

After the DOT contract was approved, the first work plan proposed by the state included road design and right-of-way acquisitions for I-73. The plan also called for a $410,000 study of S.C. 22, which flooded after Hurricane Florence. The study would look at the cost of raising that road above flood conditions.  

In South Carolina, the proposed interstate's design is split into two segments. The southern section leg links S.C. 22 with I-95 near Dillon, while the northern leg continues to S.C. 38 at the state line near Hamlet, North Carolina. County officials have said that by ponying up some hospitality money for the interstate, the federal government could match those contributions. 

But the sparring between the city and the county has drawn criticism from I-73 supporters, including U.S. Rep. Tom Rice, R-Myrtle Beach. Rice has said the feud could potentially cost the I-73 project millions.

“The county made that commitment,” Rice said earlier this summer. “DOT relied on it when they made the federal grant [application]. If we don’t keep it, then we’re wasting our time. It’s such an awful shame that this is happening right now when we’re at the doorstep of getting some federal money.”

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 the hospitality fee inside city limits. North Myrtle Beach and Surfside Beach leaders agreed with Myrtle Beach, which sued the county in March. 

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.

City officials insist they support I-73, but they don’t want to continue the existing hospitality fee system. 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 longstanding fee system brings in over $12 million more per year than the cities' proposal. That's because the state law that the 1.5 percent fee was created under has changed and the current statute won’t allow the cities to collect as much if they create their own fees. County leaders presented a plan to share hospitality fee revenues to the cities, but city officials rejected their proposal.

Although securing a federal grant for I-73 this year seems all but impossible, the DOT has not yet withdrawn its application for the project, agency spokesman Pete Poore said Friday.

The county's Wednesday meeting will begin at 2 p.m. Officials plan to discuss the issue behind closed doors and then vote in public.

Contact Charles D. Perry at 843-488-7236


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.

(2) comments


I think the council made the only decision they could if the cities do not want to chip in then scrap the I-73 deal it was for their benefit not for the people living outside the city limits.


I agree. I can not see how I-73 would generate very much, if any, benefits for inland Horry County, Aynor, Conway, Loris, and Rural residents.

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