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

There’s no deal for I-73 yet.

Horry County Council on Monday agreed to most of the terms in a proposed hospitality fee settlement with most of the Grand Strand cities, but the cities’ legal fees remain a sticking point. After a nearly three-hour special meeting, county council members voted 7-5 to support the settlement as long as the cities’ legal bills are not paid with fee money.

“I’m trying to put the onus on them to pay their attorneys’ fees,” said county councilman Dennis DiSabato, who suggested accepting the settlement on that condition. “We should not be supportive of that in any way.”

Council members also voted to amend the contract to require that all the municipalities involved in the case agree to the terms. Conway and Loris have not voted on the deal.

But Myrtle Beach is taking exception to the county’s stand.

“For the record, I would like to state that the city of Myrtle Beach voted Monday to settle the suit with Horry County, as did Atlantic Beach, North Myrtle Beach, Aynor and Surfside Beach. Not only are we disappointed by Horry County Council’s decision last night, but we are dismayed by some of the assertions made with are factually inaccurate,” responded Mayor Brenda Bethune in a written statement after the county council’s vote.

“The proposed settlement agreement that was before county council was not a surprise or new information,” Bethune’s statement continues. “The county has had access to the same details as we have throughout this entire mediation process. At this point, one has to wonder whether Horry County Council ever had the intent to reach a settlement or to support I-73.”

The city scheduled a special meeting on Thursday to discuss the issue again. The Thursday meeting is after the press deadline for the Myrtle Beach Herald, but details of the meeting will be at myhorrynews.com.

Along with county councilman DiSabato, council members Bill Howard, Gary Loftus, Cam Crawford, Orton Bellamy, Tyler Servant and Johnny Vaught voted for the conditional approval. Councilmen Danny Hardee, Al Allen, Paul Prince, Harold Worley and chairman Johnny Gardner opposed the deal. 

Those in opposition argued that the $14.5 million per year expected to be generated from the settlement won’t come close to covering the $2.4 billion cost of constructing I-73 from Horry County to the North Carolina state line.

“Let’s be real here,” Worley said. “This [$14.5 million per year] is a drop in the bucket compared to what we need. That’s exactly what it is. … It is time for the federal government, it is time for the state government, to step up and help Horry County build this road. And we cannot do it alone. They have to help us.”

Of the six local public bodies that voted on the settlement Monday, Horry County was the only one that didn't support the agreement as written. Atlantic Beach, Aynor, Myrtle Beach, North Myrtle Beach and Surfside Beach all went along with the terms. The Loris and Conway councils did not even vote on the deal.

The county's changes to the agreement must now go back to the municipalities for their approval before the settlement can be presented to a judge.

The proposed settlement was billed as the way to resolve a lawsuit that the city of Myrtle Beach filed against Horry County in March over the county’s 1.5% hospitality fee, a levy that has traditionally been collected on restaurant meals, hotel stays and admission tickets sold countywide. The fee was created in the 1990s to pay for road projects such as S.C. 31 and S.C. 22. 

The fee likely would have ended in 2019 if Horry County Council hadn’t removed a sunset provision in the ordinance that created it. That provision stated that once the road debt was paid off, the county could no longer collect that money.

County leaders had planned to use hospitality money for building I-73, but they also hoped to spend a portion of those dollars on improving public safety services. That upset some municipal leaders, who objected to fees being collected inside their borders paying for county services.

Although Myrtle Beach filed the lawsuit, court records state the case is also for a "class of similarly situated plaintiffs.” After the lawsuit was filed, municipal governments across the Grand Strand lined up in support of Myrtle Beach’s position.

So far, court rulings have gone in the cities’ favor. The county is barred from collecting the fee inside city limits while the lawsuit is pending.

The proposed settlement called for reestablishing a countywide 1.5% hospitality fee, which is projected to bring in $43.7 million per year. As part of the settlement, more than $14.5 million of that money would be set aside for I-73. The city of Myrtle Beach would receive $12.8 million (the city collects the most fee revenue of any local government) and 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 under that deal.

After meeting behind closed doors for an hour and 15 minutes, county council members returned to open session and hashed out their differences in public.

Worley raised the same objection he’s been making for weeks: that Myrtle Beach's attorneys will receive $6-7 million in legal fees as part of the settlement.

That money would come from a pot of about $19 million that was collected between the time the hospitality fee-funded roads were paid off and a judge's ruling that the county had to stop collecting the 1.5% fee in the city limits. The treasurer’s office is holding that money and county officials said it would likely go to the cities under the proposed deal.

Loftus stressed that the cities can do what they want with their money.

“That does not come from any county money at all in any way, shape or form whatsoever,” he said. “That’s the cities paying these attorneys, not us.” 

Some council members blasted the cities for objecting to a similar proposal earlier this year. 

“We’re right back to the same place we were except for attorneys’ fees of $6-7 million,” Vaught said. “So you tell me who the adults are in the room?”

The marathon meeting saw both sides debate the cost of building I-73, the lack of federal and state support for the interstate, and the need for raising S.C. 22 to avoid flooding.

For proponents of the deal, a key selling point was that it would pay for a study to find out whether S.C. 22 should be elevated. That road flooded after Hurricane Florence in 2018, cutting off a key exit.

“This is not just I-73,” Servant said of the proposed settlement. “This is about raising 22. … We have no other alternatives out there to raise this road.”

DiSabato agreed.

“We can sit up here and debate the virtues of I-73 all day,” he said. “But at the end of the day, my reading of this agreement states that we have a funding source to help us fix the problems we’re having on 22, which can become the main evacuation route for this county in the event of a flood.”

Gardner, however, countered that the three mediation sessions with the city didn’t focus on raising S.C. 22.

“I’m telling you for 34, 36 hours [S.C.] 22 was not even on the radar when it came to this agreement,” he said. “Whatever we do tonight is not going to guarantee that 22 gets fixed.”

However, Myrtle Beach’s council agreed unanimously to support the agreement with the county with a 65-35 percent split of hospitality fees. The 35 percent that has been designated to go to the county is to be used to fund the local portion of constructing the proposed I-73 as well as funding the elevation and widening of S.C. 22, according to the motion approved Monday night in Myrtle Beach.

After county councilman DiSabato suggested the conditional approval of the settlement, some council members pointed out that the cities could pull money from another part of their budgets to cover their legal bills.

“They can pay them out of some other fund and take that money and put back in there,” Worley said. “It’s out of one pocket and in the other. Why does it matter? … That’s a shell game.”

When asked about the possibility of the cities not budging on the county's terms for legal fees, DiSabato maintained his stance.

“Then the deal falls apart,” he said. “And we go back where we are — negotiating again.”

After the Myrtle Beach City Council unanimous vote Monday, Bethune seemed optimistic as the county meeting was happening in Conway at the same time.

“Thank you all for your patience,” Bethune had said. “What we have before us will be great for all the county residents.”

According to the agreement reached Monday, the city’s 65 percent of the hospitality fees can be used on such expenditures as paying for beach renourishment, public transportation improvements, public parks and public safety needs.

City Attorney William Bryan Jr. added that fees collected by the county since the initial agreement expired in 2018 are addressed in the court documents that cannot be released until all the parties file the agreement in court. He had expected the county and the municipalities to file the paperwork on Tuesday, but the county vote halted that.

Bryan added the agreement does have a sunset date, but it would not be released the agreement is filed in court.

Myrtle Beach City Council members Phil Render and Mary Jeffcoat were not at the Monday meeting.

Here’s a look at the cities’ votes:

Atlantic Beach

After a brief executive session, the Atlantic Beach Town Council unanimously approved the hospitality tax agreement.

The 4-0 vote on the resolution came with no public discussion among the council members.

Following the meeting, Mayor Jake Evans referred all questions about the council’s decision to town manager Benjamin Quattlebaum.

“Based on advice from the Myrtle Beach attorneys, we felt this was in the best interest of Atlantic Beach,” Quattlebaum said. “Their attorneys had briefed us earlier on the agreement.”

Aynor

The Aynor Town Council voted 4-1 in favor of the settlement. 

Council members Chris Shelley, Tony Godsey Sr. and Cheryl Skipper Collins, along with Mayor John Gardner, were the yes votes.

“I-73 is going to be good for Horry County, and it won’t negatively affect Aynor,” Gardner said. “It might relieve local traffic and promote some business.”

Councilman Paul McCracken cast the lone dissenting vote.

“We’re a little ol’ small town, and people might think that what we do or say isn’t important,” McCracken said. “We’re probably going to pass something that the people that put us in office really know nothing about. They have a right to know. This has been going on since March. It’s a shame and disgrace that we couldn’t stand up and … think of our folks first.”

McCracken said the people of Aynor deserve to know more details. 

“It’s their tax money,” McCracken said. “I just find it hard that every municipality came together in secret  [and voted on] this resolution without the citizens’ [input]. I’m not crazy about I-73. The money should stay here in Aynor. Now I understand and have no complaint about the roads, they’ve built some great roads.”

North Myrtle Beach

North Myrtle Beach City Council approved the hospitality fee settlement without opposition.

The motion passed unanimously, save for councilman J.O. Baldwin, who was not present. 

“It’s a good agreement,” said city spokesman Pat Dowling. "It benefits all parties and it certainly benefits North Myrtle Beach. It also helps fund I-73 on a pro-rata share, which is fair to all of the parties.” 

Dowling declined to on how other municipalities who aren’t in agreement will affect the settlement, citing a confidentiality agreement.

North Myrtle Beach Mayor Marilyn Hatley also praised the proposal.

“For what we could see, we thought it was a fair settlement for the city of North Myrtle Beach,” she said. 

Surfside Beach

The Surfside Beach Town Council voted 4-3 in favor of the hospitality fee settlement.

After an executive session that lasted about an hour and 20 minutes, council members Bruce Dietrich, Debbie Scoles, David Pellegrino and Paul Holder voted to accept the agreement. Mayor Bob Hellyer and council members Michael Drake and Cynthia Keating opposed moving forward with the proposed settlement.

Hellyer said he couldn’t comment on the specifics of the agreement and why he voted against the deal.

“I didn’t personally totally agree with it,” he said.

Keating and Drake both brought up the concerns about high attorney fees.

“We need to wait for it, if it is going to go to the South Carolina Supreme Court, to let them do their job,” Drake said.

“In my opinion there’s too many of the parameters within the settlement that have not been clearly specified,” Keating said. “They're still left open to subjective decision. … especially with some of the money being collected in the future, it’s not specified what that use is supposed to be.”

Conway and Loris

Neither Conway nor Loris voted on the deal Monday. 

“We respect the other municipalities’ decisions to do what’s in the best interest of the community,” Conway City Councilman William Goldfinch said. “However, we feel like that while I-73 will be very important to our entire region, we feel as though there are more pressing needs for the City of Conway like a [U.S.] 501 Bypass, so that’s why we’re not voting. “Hopefully we’re able to keep that hospitality fee to use on projects that we deem necessary for our community.”

Conway councilman Larry White agreed.

“I guess it’s something we got to do,” he said. “I just wish they would put something in there for the city, Conway city.”

Although Conway leaders didn’t take up the issue Monday, city administrator Adam Emrick said they could revisit it.

“We just know that the information isn’t right for the City of Conway to go on,” he said. “It doesn’t preclude us from doing it later. … I don’t think we had enough information that convinced us it was in the best interest of the city.”

Loris Mayor Todd Harrelson could not be reached for comment.

Reporters Janet Morgan, Katie Powell, Christian Boschult, Tom O'Dare, Kathy Ropp, Viraj Naik and Charles D. Perry contributed to this report.

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.

(1) comment

Treetops

The only about temporary County fees or taxes is they never end

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